Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 12) Regulations 2004
- Act Code: SFA2001-S347-2004
- Type: Subsidiary Legislation (SL)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically section 337(1)
- Citation: SFA2001-S347-2004 (Regulations 2004)
- Commencement: 17 June 2004
- Key Provisions: Section 1 (Citation and commencement), Section 2 (Definitions), Section 3 (Exemption)
- Relevant Exempted Provisions: Sections 197 and 198 of the Securities and Futures Act
- Target Instrument: Specific bonds described in the definition of “Bonds” (5-year zero coupon convertible bonds due July 2009 issued by Universal Scientific Industrial Co., Ltd)
- Stabilising Actor: ABN AMRO Bank N.V. and related corporations
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 12) Regulations 2004 is a targeted regulatory instrument. In essence, it creates a narrow exemption from certain market conduct restrictions in the Securities and Futures Act (the “SFA”) for a defined set of “stabilising actions” relating to a particular bond issue.
In plain language, the Regulations recognise that, in some bond offerings, market participants may take steps to stabilise the trading price of the bonds shortly after issuance. Such stabilisation can help reduce volatility and support orderly trading. However, stabilisation activities can also resemble conduct that market regulators typically prohibit—such as manipulative trading or improper dealing—unless the law provides a controlled carve-out.
This exemption is therefore not a general permission to trade in any way. It is limited by (i) the specific bonds covered, (ii) the specific stabilising actor (ABN AMRO Bank N.V. and its related corporations), (iii) the time window (within 30 days from the date of issue), and (iv) the counterparties (either persons referred to in section 274 of the SFA or “sophisticated investors” as defined in section 275(2) of the SFA). The Regulations are best understood as a compliance “bridge” between legitimate stabilisation practices and the SFA’s market integrity rules.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the legal identity and effective date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 12) Regulations 2004” and come into operation on 17 June 2004. For practitioners, this matters because the exemption only becomes available from the commencement date, and stabilising conduct must be assessed against the law in force at the relevant time.
Section 2 (Definitions) is critical because the exemption is only as broad as its defined terms. Two definitions drive the scope:
(1) “Bonds” are precisely identified as the 5-year zero coupon convertible bonds due July 2009 issued by Universal Scientific Industrial Co., Ltd, for a principal amount of up to US$120 million, including bonds issued pursuant to an option of up to US$20 million. The bonds are convertible into common shares of the issuer with a par value of NT$10 each. This specificity means the exemption is not available for other bond series, other issuers, or different maturities/structures.
(2) “Stabilising action” means an action taken in Singapore or elsewhere by ABN AMRO Bank N.V. (or any of its related corporations) to buy, or to offer or agree to buy, any of the Bonds in order to stabilise or maintain the market price of the Bonds in Singapore or elsewhere. The definition is functional: it focuses on the purpose (stabilisation/price maintenance) and the nature of the conduct (buying or offering to buy). It also expressly covers actions taken outside Singapore, which is important for cross-border dealing.
Section 3 (Exemption) 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 any of the Bonds within 30 days from the date of issue, provided the stabilising action is taken 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.
Although the extract does not reproduce sections 197 and 198, the legal effect is clear: the SFA’s market conduct prohibitions (whatever their precise wording) are carved out for stabilising conduct that meets the conditions. The practitioner’s task is to map the exemption conditions to the underlying SFA provisions and to ensure that the stabilising activity is properly characterised and documented.
Two practical points follow from the structure of section 3:
- Time limitation: the stabilising action must occur within 30 days from the date of issue. This requires careful recordkeeping of the bond issue date and the timing of each stabilising trade or commitment.
- Counterparty limitation: stabilising actions must be taken with either the specific category of persons in section 274 or with sophisticated investors. This implies that dealing with ordinary retail investors (unless they fall within the sophisticated investor definition) would not be covered by the exemption.
How Is This Legislation Structured?
The Regulations are structured as a short, self-contained instrument with three substantive provisions:
- Section 1: Citation and commencement (administrative/temporal entry into force).
- Section 2: Definitions of “Bonds” and “stabilising action” (scope-defining terms).
- Section 3: The exemption clause (the legal carve-out from SFA sections 197 and 198, subject to time and counterparty conditions).
There are no additional parts or schedules in the extract. The Regulations operate by reference: they define the relevant bonds and stabilising actor, and they cross-reference the SFA’s market conduct provisions and investor categories (sections 274 and 275(2)). This “reference-based” drafting is typical for exemptions, because it avoids duplicating the SFA’s general framework.
Who Does This Legislation Apply To?
The exemption is directed at stabilising actions taken by ABN AMRO Bank N.V. or its related corporations. While the Regulations do not expressly state that only these entities may rely on the exemption, the definition of “stabilising action” confines the relevant conduct to actions taken by ABN AMRO and its related corporations. Accordingly, other dealers or arrangers would not fall within the definition and would not benefit from the exemption.
In addition, the exemption is conditional on the counterparty to the stabilising dealings. Stabilising actions must be taken with either:
- persons referred to in section 274 of the SFA; or
- sophisticated investors under section 275(2) of the SFA.
For practitioners, this means the exemption is not merely about what the stabiliser does, but also about who it deals with. Compliance teams should therefore verify investor status and ensure that any stabilising trades are executed within the permitted counterparty universe.
Why Is This Legislation Important?
This Regulations matters because it illustrates how Singapore law balances market integrity with practical market-making and stabilisation needs in capital markets transactions. Stabilisation can be legitimate and beneficial, but it can also create risks of misleading the market if not constrained. By carving out stabilising actions from specific SFA prohibitions, the Regulations provide legal certainty for a limited stabilisation programme tied to a particular bond issue.
From an enforcement and compliance perspective, the exemption is significant because it sets out clear boundaries. A stabiliser that exceeds the boundaries—by trading outside the 30-day period, dealing with the wrong counterparty category, or acting outside the defined “stabilising action” concept—would likely lose the protection of the exemption and could face liability under the SFA provisions that were intended to be excluded.
For deal counsel and compliance officers, the Regulations also highlight the importance of transaction-specific regulatory mapping. The definition of “Bonds” is highly specific (issuer, instrument type, maturity, principal amount, and option size). This suggests that stabilisation exemptions are not automatically transferable across offerings. Each bond issue may require its own regulatory instrument or analysis. Practitioners should therefore treat this Regulations as a template for how exemptions are crafted, rather than assuming a general stabilisation regime.
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 — referenced in the metadata as related legislation (context-dependent; may relate to broader market conduct frameworks).
- Stabilising Act — referenced in the metadata as related legislation (context-dependent; may relate to stabilisation concepts and regulatory approach).
- Timeline / Legislation timeline — for confirming the correct version as at the relevant date (the document indicates “current version as at 27 Mar 2026” with earlier amendments).
Source Documents
This article provides an overview of the Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 12) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.