Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 8) Regulations 2004
- Act Code: SFA2001-S146-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Power Used: Section 337(1) of the Securities and Futures Act
- Citation: SL 146/2004
- Commencement: 29 March 2004
- Status: Current version as at 27 March 2026
- Key Provisions: Section 1 (citation and commencement), Section 2 (definitions), Section 3 (exemption)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 8) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument made under the Securities and Futures Act (“SFA”). In plain language, it creates a limited exemption from certain market conduct rules when specified parties undertake “stabilising action” in connection with a particular issuance of notes.
Stabilisation is a common feature of securities markets. When new debt securities are issued, market makers or arrangers may take steps to support or maintain the trading price in the immediate aftermath of issuance. The policy rationale is typically to reduce volatility and facilitate orderly trading. However, stabilisation can also raise concerns about market manipulation or misleading price formation. Accordingly, the SFA contains market conduct provisions that restrict certain dealing practices. This subsidiary legislation carves out a narrow exception for stabilising activities, but only for a defined set of notes, defined actors, and a strict time window.
Practically, the Regulations are not a general stabilisation regime for all securities. They are issuance-specific: they define the “Notes” precisely (10-year fixed rate subordinated notes due April 2014 issued by Korea Highway Corporation, up to US$750 million) and define “stabilising action” by reference to named financial institutions and their related corporations. The exemption is therefore best understood as a compliance “permission slip” for a particular transaction and set of participants.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal commencement date. The Regulations “shall come into operation on 29th March 2004.” For practitioners, this matters because stabilising action must be assessed against the regulatory framework applicable at the time the dealing occurs. If stabilising activity were undertaken before commencement, the exemption would not be available under these Regulations.
Section 2 (Definitions) is central because the exemption is only as broad as its defined terms. The Regulations define:
- “Notes”: the 10-year fixed rate subordinated notes due April 2014 issued by Korea Highway Corporation, for a principal amount of up to US$750 million.
- “stabilising action”: an action taken in Singapore or elsewhere by Citigroup Global Markets Inc., Deutsche Bank Securities Inc., JP Morgan Securities Ltd, or any of their related corporations, to buy, or to offer or agree to buy, any of the Notes in order to stabilise or maintain the market price of the Notes in Singapore or elsewhere.
Two practical implications follow. First, the exemption is limited to the specified notes; it does not extend to other tranches, other maturities, or other issuers. Second, the exemption is limited to the specified stabilising actors (and their related corporations). If a different dealer or arranger undertakes stabilisation, the exemption may not apply, even if the activity is conceptually similar.
Section 3 (Exemption) is the operative provision. Section 3(1) states that, subject to paragraph (2), “sections 197 and 198 of the Act shall not apply” to stabilising action carried out in respect of any of the Notes with either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
Although the extract does not reproduce sections 197, 198, 274, and 275(2), the structure indicates that the SFA’s market conduct restrictions in sections 197 and 198 would otherwise capture certain dealing conduct. The exemption removes that application for stabilising action, but only when the counterparty/participant relationship fits within the categories in section 274 or when the dealing is with a “sophisticated investor.” For lawyers, this means the exemption is not purely about the stabilising actor; it also depends on who is involved in the dealing (or the relevant capacity/relationship under the SFA framework).
Section 3(2) (Time limit) imposes a strict temporal restriction: the exemption “shall not apply to any stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of the issuance of the Notes.” This is a hard stop. Even if all other conditions are met (correct notes, correct stabilising actors, correct dealing counterparties), stabilisation beyond the 30-day period would fall outside the exemption and would revert to the baseline SFA market conduct rules.
From a compliance perspective, the “date of issuance” and the calculation of “30 calendar days” are critical. Practitioners should ensure that internal dealing logs, trade confirmations, and any public announcements align with the issuance date used for regulatory purposes, and that stabilising activity ceases (or is re-scoped) before the expiry of the 30-day window.
How Is This Legislation Structured?
The Regulations are short and structured as a three-section instrument:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that precisely identify the Notes and the stabilising action and its authorised actors.
- Section 3 contains the exemption, including (i) the categories of persons/investors for which the exemption applies and (ii) the 30-calendar-day limitation.
There are no additional parts or schedules in the extract, reflecting the Regulations’ function as a transaction-specific exemption rather than a comprehensive regulatory code.
Who Does This Legislation Apply To?
In scope are stabilising actions undertaken by the defined stabilising actors—Citigroup Global Markets Inc., Deutsche Bank Securities Inc., JP Morgan Securities Ltd, or their related corporations—when they buy (or offer or agree to buy) the specified Notes in order to stabilise or maintain market price, whether the action occurs in Singapore or elsewhere.
However, the exemption’s effect is conditional on the dealing being carried out with either (i) a person referred to in section 274 of the SFA or (ii) a “sophisticated investor” as defined in section 275(2) of the SFA. Therefore, the practical applicability depends on the counterparty/investor category and the legal characterisation under the SFA. Lawyers advising market participants should not assume that the exemption is automatic merely because the stabilising actor is one of the named institutions.
Why Is This Legislation Important?
This subsidiary legislation is important because it reconciles two competing regulatory objectives: enabling legitimate market stabilisation and preventing market manipulation. By exempting stabilising action from the application of sections 197 and 198 of the SFA, the Regulations provide legal certainty for stabilisation activities that would otherwise be constrained by market conduct rules.
For practitioners, the value lies in the precision of the exemption. The Regulations are narrow by design: they specify the exact notes, the exact stabilising actors, and the exact time window. This narrowness reduces regulatory ambiguity and helps participants structure stabilisation programmes that are defensible if later questioned by regulators or in the context of market integrity investigations.
From an enforcement and risk perspective, the 30-calendar-day limit is the most obvious compliance “tripwire.” If stabilising activity continues after the expiry of the period, the exemption ceases to apply and the underlying SFA market conduct provisions would potentially become relevant again. Accordingly, legal teams should ensure that stabilisation documentation, internal approvals, and operational controls (including trade monitoring and stop dates) are aligned with the exemption’s conditions.
Finally, because the exemption is tied to sections 274 and 275(2) of the SFA, lawyers should treat this Regulations as part of a broader statutory framework. A correct analysis requires reading the SFA provisions referenced by the exemption to confirm how “sophisticated investor” is defined and how section 274 persons are identified. In practice, this often affects investor onboarding, dealing authorisations, and contractual arrangements for stabilisation.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 274, 275(2), and the enabling power in section 337(1)
- Futures Act (as referenced in the platform metadata)
- Stabilising Act (as referenced in the platform metadata)
- Timeline (legislation versioning reference)
Source Documents
This article provides an overview of the Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 8) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.