Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) Regulations 2005
- Act Code: SFA2001-S8-2005
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically section 337(1)
- Enacting Body: Monetary Authority of Singapore (MAS)
- Commencement: 6 January 2005
- Current Version Status: Current version as at 27 March 2026 (per the legislation record)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (“Notes”, “stabilising action”)
- Section 3: Exemption from sections 197 and 198 of the Securities and Futures Act for stabilising action in respect of specified notes
- Regulatory Focus: Market conduct rules for stabilising activities in connection with a particular issuance of notes
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Notes) Regulations 2005 (“Stabilising Action Exemption Regulations”) provide a narrow, targeted regulatory exemption within Singapore’s market conduct framework. In essence, the Regulations carve out certain stabilising activities—conducted to support or maintain the market price of specific notes—from the general prohibitions found in the Securities and Futures Act (“SFA”).
Stabilisation is a common feature of certain capital market transactions. During the initial period after issuance, market makers or arrangers may take steps to reduce volatility and support orderly trading. However, stabilising conduct can overlap with market conduct rules designed to prevent manipulation or misleading market behaviour. This is why the SFA contains provisions regulating or prohibiting particular dealing practices, and why the MAS may grant exemptions where stabilisation is legitimate and appropriately bounded.
These Regulations are not a general stabilisation regime for all securities. Instead, they are transaction-specific: they define “Notes” as a particular issuance (3-year floating rate notes due December 2007 issued by National Agricultural Cooperative Federation, up to ¥10,000,000,000) and define “stabilising action” as stabilisation efforts by a specified financial institution group (Daiwa Securities SMBC Hong Kong Limited and its related corporations). The exemption is therefore best understood as a bespoke regulatory permission for a particular deal, rather than a broad policy statement.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title and states that the Regulations come into operation on 6 January 2005. For practitioners, this matters because the exemption only applies to stabilising action taken within the defined time window and in relation to the defined notes; the commencement date confirms the regulatory instrument was effective from the start of the relevant transaction period.
Section 2 (Definitions) is the core interpretive gateway. Two defined terms control the scope of the exemption:
- “Notes” are defined precisely as the 3-year floating rate notes due December 2007 issued by National Agricultural Cooperative Federation for a principal amount of up to ¥10,000,000,000. This precision is critical: stabilising action in respect of other notes, even if issued by the same issuer or under similar terms, would not fall within the exemption unless the notes match this definition.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by Daiwa Securities SMBC Hong Kong Limited (or any of its 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. The definition is functional (it focuses on the purpose—stabilisation/price maintenance) and includes both actual purchases and offers/agreements to purchase.
For legal analysis, the inclusion of “offer or agree to buy” is significant. It suggests that the exemption is intended to cover not only executed trades but also certain pre-trade commitments or conditional arrangements that could otherwise be captured by the SFA’s market conduct prohibitions. Likewise, the “in Singapore or elsewhere” language indicates that the exemption is not geographically limited; stabilisation may occur outside Singapore while still benefiting from the exemption, provided the action is in relation to the defined Notes and taken by the defined stabilising entity group.
Section 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the Act shall not apply to any stabilising action taken in respect of the Notes within 30 days from the date of issue, with stabilising action undertaken by either:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
In plain language, Section 3 grants a time-limited exemption from the SFA’s market conduct restrictions for stabilising trades relating to the specified notes, but only when carried out by the permitted categories of persons. The exemption is therefore conditional on both time (within 30 days from issue) and counterparty/participant status (either a person in the section 274 category or a sophisticated investor under section 275(2)).
Although the extract does not reproduce sections 197, 198, 274, and 275, practitioners should treat this as a “permission overlay” on top of the SFA’s general prohibitions. The Regulations do not repeal the SFA provisions; they suspend their application for the specified stabilising action in the specified circumstances. This is a common legislative technique: it preserves the integrity of the general market conduct framework while allowing controlled exceptions for legitimate transaction mechanics.
How Is This Legislation Structured?
The Regulations are concise and consist of an enacting formula followed by three substantive sections:
- Section 1 (Citation and commencement): sets the short title and effective date.
- Section 2 (Definitions): defines the scope-limiting terms (“Notes” and “stabilising action”).
- Section 3 (Exemption): provides the exemption from specified SFA provisions, subject to timing and permitted persons.
There are no additional parts, schedules, or complex procedural provisions in the extract. The structure reflects the Regulations’ bespoke nature: they exist to define a particular stabilisation scenario and to exempt it from particular statutory prohibitions.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action taken in respect of the defined “Notes” by the defined stabilising actor group (Daiwa Securities SMBC Hong Kong Limited and its related corporations), and only to the extent that such action is taken within 30 days from the date of issue.
However, Section 3 adds an additional layer: the exemption applies only where the stabilising action is taken by a person falling within one of two categories—either a person referred to in section 274 of the SFA or a sophisticated investor as defined in section 275(2) of the SFA. Practically, this means that even if the stabilising activity matches the definition of “stabilising action” and relates to the defined notes, the exemption may not apply if the relevant participant does not fall within the permitted categories.
Why Is This Legislation Important?
For practitioners advising issuers, arrangers, dealers, and investors, the key value of these Regulations lies in their ability to provide regulatory certainty for stabilisation activities that might otherwise be treated as potentially problematic market conduct. Without an exemption, stabilising trades could risk contravening the SFA’s prohibitions in sections 197 and 198. The Regulations therefore facilitate legitimate market-making and stabilisation practices in a controlled manner.
Second, the Regulations demonstrate how Singapore’s market conduct regime balances investor protection with market efficiency. Stabilisation can support orderly trading and reduce disruptive price swings immediately after issuance. At the same time, the exemption is narrow: it is limited to a specific note issuance, a specific stabilising actor group, and a short post-issuance window (30 days). This narrow tailoring helps ensure that the exemption does not become a general loophole for manipulation.
Third, the conditional structure—especially the dual requirement of (i) timing and (ii) permitted persons—creates practical compliance tasks. Legal teams should ensure that transaction documentation, dealing instructions, and internal compliance controls align with the defined “Notes”, the defined stabilising actor group, and the relevant participant categories under sections 274 and 275(2). Where stabilisation involves multiple entities (e.g., related corporations, syndicate members, or counterparties), mapping each entity’s role to the statutory categories becomes essential.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions from which the exemption applies)
- Sections 274 and 275(2) (categories of persons/sophisticated investors relevant to the exemption)
- Section 337(1) (the enabling provision authorising MAS to make these Regulations)
- Futures Act (listed in the metadata as related legislation context)
- Stabilising Act (listed in the metadata as related legislation context)
- Legislation Timeline (for version control and amendment history 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) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.