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
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Citation: SL 146/2004
- Commencement: 29 March 2004
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Focus: Exemption from market conduct restrictions for “stabilising action” in relation to specified notes
- Notes Covered: 10-year fixed rate subordinated notes due April 2014 issued by Korea Highway Corporation (up to US$750 million)
- Stabilising Actors (as defined): Citigroup Global Markets Inc., Deutsche Bank Securities Inc., JP Morgan Securities Ltd, and related corporations
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 (Notes) Regulations”) is a targeted regulatory instrument. It creates a narrow exemption from certain market conduct provisions in the Securities and Futures Act (“SFA”) for stabilising activity undertaken in connection with a specific bond issuance.
In plain language, the Regulations recognise that, during the initial period after a bond is issued, market participants may engage in limited buying or offers to buy to help stabilise the trading price of the notes. Such activity can reduce volatility and support orderly trading. However, the SFA’s general market conduct rules are designed to prevent manipulation and improper conduct. This subsidiary legislation therefore carves out a controlled exception—so that stabilising actions can occur without triggering the prohibitions that would otherwise apply.
The scope is deliberately constrained. The exemption applies only to “stabilising action” as defined, only for the particular notes identified in the Regulations, only when carried out by the specified stabilising entities (or their related corporations), and only for a limited time window—up to 30 calendar days from the date of issuance.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the formal citation and commencement date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) (No. 8) Regulations 2004” and come into operation on 29 March 2004. For practitioners, this matters when assessing whether stabilising activity occurred within the legal framework applicable at the time.
2. Definitions (Regulation 2)
Regulation 2 defines two central terms:
- “Notes” means 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” means 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.
These definitions are critical because they determine whether conduct falls within the exemption. If the notes are not the specified Korea Highway Corporation subordinated notes, or if the stabilising actor is not one of the defined entities (or its related corporation), the exemption will not apply.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
Regulation 3 is the operative provision. It states that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to stabilising action carried out in respect of any of the Notes with either:
- (a) a person referred to in section 274 of the SFA; or
- (b) a sophisticated investor as defined in section 275(2) of the SFA.
While the extract provided does not reproduce the text of sections 197, 198, 274, or 275, the structure indicates that the exemption is not blanket. It is conditional on the counterparty category—either the specific category of persons in section 274, or sophisticated investors. For legal practice, this means counsel must map the stabilising transactions to the relevant investor classification under the SFA regime.
4. Time limitation: 30 calendar days from issuance (Regulation 3(2))
Paragraph (2) imposes a hard stop: the exemption does not apply to stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of issuance of the Notes.
This is a key compliance point. Even if all other conditions are met (correct notes, correct stabilising actors, correct counterparty categories), stabilising activity beyond the 30-day period would fall outside the exemption and could expose the conduct to the SFA’s general market conduct prohibitions.
5. Administrative and formal elements
The Regulations are made on 23 March 2004 by the Managing Director of MAS (Koh Yong Guan). The administrative details are not merely ceremonial; they confirm the instrument’s legal validity and the regulator’s role in granting the exemption under the statutory power in section 337(1) of the SFA.
How Is This Legislation Structured?
The Regulations are concise and consist of a short set of provisions:
- Regulation 1 (Citation and commencement): establishes the name and the date the Regulations take effect.
- Regulation 2 (Definitions): defines “Notes” and “stabilising action,” including the specific issuer, instrument type, maturity, and the stabilising entities.
- Regulation 3 (Exemption): sets out the exemption from specified SFA sections, the permitted counterparty categories, and the 30-calendar-day limitation.
For practitioners, the structure signals that the legal analysis will largely turn on Regulation 2’s definitions and Regulation 3’s conditions.
Who Does This Legislation Apply To?
The exemption is relevant primarily to market participants involved in stabilising activity in connection with the specified notes—namely the defined stabilising entities (Citigroup Global Markets Inc., Deutsche Bank Securities Inc., JP Morgan Securities Ltd, and their related corporations) and any persons acting through or in coordination with them.
However, the exemption is also conditional on the counterparty. Stabilising action must be carried out with either a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). Accordingly, the Regulations indirectly affect issuers, arrangers, and compliance teams by requiring them to ensure that stabilising transactions are structured and documented in a way that satisfies these counterparty requirements.
Why Is This Legislation Important?
This Regulations matters because it demonstrates how Singapore’s market conduct framework balances two competing objectives: (1) preventing manipulation and improper conduct in securities markets, and (2) allowing legitimate market support mechanisms during the post-issuance period. Stabilising actions can be commercially important for bond issuances, particularly where liquidity is initially thin and price discovery is still developing.
From an enforcement and compliance perspective, the exemption is narrow and time-bound. MAS has not authorised stabilising activity generally; instead, it has exempted stabilising conduct only for a specific bond and only within a defined period. This design reduces the risk that stabilising mechanisms become a loophole for broader market manipulation.
Practically, counsel advising on bond issuance and distribution should treat this exemption as a checklist instrument:
- Confirm the instrument: the notes must match the defined “Notes” (issuer, maturity, type, and principal amount parameters).
- Confirm the actor: stabilising action must be taken by the defined entities or their related corporations.
- Confirm the counterparty category: transactions must be with persons in section 274 or sophisticated investors under section 275(2).
- Confirm the timing: stabilising action must occur within 30 calendar days from the date of issuance.
Failure on any of these points could mean the exemption does not apply, leaving the conduct potentially subject to the prohibitions in sections 197 and 198 of the SFA.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 274, 275(2), and the exemption-making power in section 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Legislation Timeline (for version control and amendment history)
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.