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
- Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically section 337(1)
- Commencement: 6 January 2005
- Enacting date: Made on 5 January 2005
- Regulatory status: Current version as at 27 March 2026
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory focus: Exemption from market conduct prohibitions for stabilising actions in relation to specified 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”) create a narrow, targeted exemption from certain market conduct provisions in the Securities and Futures Act (the “SFA”). In plain language, the Regulations allow specified market participants to take certain “stabilising” steps in connection with a particular issuance of notes, without breaching the SFA’s general prohibitions on market manipulation or improper conduct.
Stabilisation is a common feature of some debt and securities offerings. During the initial period after issuance, stabilising actions may be used to support or maintain the market price of the newly issued instruments. Without an exemption, such conduct could be argued to fall within broad statutory prohibitions relating to market conduct. These Regulations therefore carve out a controlled exception, but only for a defined set of notes, a defined stabilising actor, and a defined time window.
Importantly, the Regulations are not a general stabilisation regime for all securities. They are bespoke: the definition of “Notes” is limited to a specific 3-year floating rate notes programme issued by National Agricultural Cooperative Federation, with a specified maximum principal amount. The exemption is also limited to stabilising actions taken within 30 days from the date of issue, and only where the stabilising action is undertaken by (or involves) persons meeting particular criteria under the SFA.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations came into operation on 6 January 2005. For practitioners, this matters for determining whether stabilising conduct could rely on the exemption for actions taken on or after commencement.
2. Definitions (Regulation 2)
Regulation 2 is the gateway to the exemption. It defines two critical terms:
- “Notes” means 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.
- “stabilising action” means 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.
From a legal risk perspective, these definitions are highly restrictive. If the instrument is not the specified notes, or if the stabilising activity is not undertaken by the specified entity (or its related corporations), the exemption will not apply. Likewise, the definition focuses on buying (or offers/agreements to buy) for stabilisation purposes. Conduct outside that scope—such as selling, hedging strategies not framed as stabilisation, or stabilisation by other intermediaries—may not be covered.
3. The exemption from SFA sections 197 and 198 (Regulation 3)
Regulation 3 is the operative provision. It states that Sections 197 and 198 of the SFA shall not apply to any stabilising action taken in respect of the Notes within 30 days from the date of issue, provided the stabilising action is taken with one of the following categories of counterparties or participants:
- (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.
Practically, this means the exemption is conditional not only on time and instrument, but also on who is involved in the stabilising transactions. Sections 274 and 275(2) typically operate as “eligibility” concepts for certain investor categories (for example, persons with sufficient sophistication or professional status). The Regulations therefore align stabilisation with a higher investor-protection threshold: stabilising actions are permitted only in dealings involving eligible persons or sophisticated investors.
4. Time-limited nature of the exemption
The exemption is limited to stabilising actions “within 30 days from the date of issue.” This is a critical compliance point. Even if all other conditions are met, stabilisation outside the 30-day window would fall back within the general application of SFA sections 197 and 198. Lawyers advising on stabilisation programmes should ensure that internal trading controls, documentation, and audit trails can demonstrate the relevant timing.
How Is This Legislation Structured?
The Regulations are short and structured as a three-part instrument:
- Regulation 1 (Citation and commencement): establishes the name and effective date.
- Regulation 2 (Definitions): defines “Notes” and “stabilising action” with specificity to the relevant issuance and stabilising actor.
- Regulation 3 (Exemption): provides the substantive carve-out from SFA sections 197 and 198, subject to the 30-day limit and the involvement of persons under section 274 or sophisticated investors under section 275(2).
There are no additional parts or schedules in the extract provided. The legislative design is therefore “precision by definition”: the exemption is achieved by tightly defining the instrument and the stabilising activity, then limiting the exemption through conditional eligibility and timing.
Who Does This Legislation Apply To?
The Regulations apply to stabilising actions in respect of the defined “Notes” and only where the stabilising action is undertaken by Daiwa Securities SMBC Hong Kong Limited or its related corporations. In other words, the exemption is not available to all market participants; it is tied to a particular intermediary and its corporate group.
Additionally, the exemption is conditional on the stabilising action being taken with a person falling within section 274 of the SFA or with a sophisticated investor under section 275(2). Accordingly, the Regulations affect both the stabilising intermediary and the counterparties involved in the stabilising transactions. For legal practice, this means due diligence on counterparty classification is essential: parties must be able to justify that the relevant counterparty meets the statutory category for the exemption to operate.
Why Is This Legislation Important?
Although the Regulations are narrow, they are significant for market participants because they demonstrate how Singapore law reconciles two competing objectives: (1) preventing market misconduct and improper price influence, and (2) allowing legitimate market practices such as stabilisation in the context of securities issuance. By exempting stabilising actions from specific SFA provisions, the Regulations reduce legal uncertainty for intermediaries involved in the distribution and early trading of notes.
From an enforcement and compliance standpoint, the Regulations also highlight the importance of conditions precedent. The exemption is not automatic. It depends on meeting all of the following: the instrument must be the specified notes; the stabilising actor must be the specified entity (or related corporations); the action must be within 30 days from issue; and the counterparties must fall within section 274 or be sophisticated investors under section 275(2). Failure on any one element could expose the conduct to the general prohibitions in SFA sections 197 and 198.
For practitioners advising on issuance documentation, trading policies, or regulatory risk, the Regulations provide a concrete example of how stabilisation can be structured to fit within Singapore’s market conduct framework. They also underscore the need for contemporaneous records—such as trade confirmations, internal approvals, and investor classification documentation—so that the exemption can be evidenced if questioned by regulators or in disputes.
Related Legislation
- Securities and Futures Act (Cap. 289): In particular, sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act (as referenced in the provided metadata context).
- Stabilising Act (as referenced in the provided metadata context).
- 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) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.