Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 12) Regulations 2005
- Act Code: SFA2001-S483-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Enacting authority: Monetary Authority of Singapore (MAS)
- Commencement: 22 July 2005
- Legislation number: SL 483/2005
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Related concepts: “Stabilising action”, “Bonds”, exemptions from market conduct rules
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 12) Regulations 2005 (“Stabilising Action Exemption Regulations”) creates a targeted exemption from certain market conduct prohibitions under the Securities and Futures Act (SFA). In plain terms, it allows specified market participants to take limited “stabilising” steps in relation to a particular set of bonds, without breaching the SFA’s general rules against certain types of dealing and market manipulation.
Stabilising action is a well-known market practice in securities issuance. When bonds are newly issued, liquidity and price discovery may be volatile. Under controlled conditions, an issuer-related or designated dealer may buy (or offer to buy) the bonds to help stabilise or maintain the market price. The policy rationale is to reduce disorderly trading and support orderly price formation during the early post-issuance period.
This legislation is narrow and bespoke. It does not create a general exemption for all bonds or all stabilising activity. Instead, it defines a specific class of “Bonds” (perpetual subordinated bonds issued in July 2005 by Sumitomo Mitsui Banking Corporation) and defines stabilising action as purchases (or offers to purchase) by Goldman Sachs International (or its related corporations). The exemption is time-limited and applies only within a specified window after issuance.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations come into operation on 22 July 2005. For practitioners, this matters because the exemption is only available for stabilising actions taken within the relevant statutory period after the bonds’ issue date (and the Regulations themselves are effective from 22 July 2005).
2. Definitions (Regulation 2)
Regulation 2 is critical because the exemption depends entirely on whether the activity falls within the defined terms.
“Bonds” are defined as fixed to floating rate perpetual subordinated bonds issued in July 2005 by Sumitomo Mitsui Banking Corporation, with principal amounts capped at:
- up to US$3,000,000,000; and
- up to EURO 3,000,000,000.
This definition is highly specific: it ties the exemption to a particular issuer, bond type, issuance timing (July 2005), and issuance size caps.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by Goldman Sachs International (or any of its related corporations) to buy, or 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. Two practical implications follow:
- The exemption is limited to stabilising activity by the specified dealer group (Goldman Sachs International and related corporations).
- The purpose element is essential: the dealing must be undertaken to stabilise or maintain market price, not for other trading objectives.
3. The exemption from sections 197 and 198 (Regulation 3)
The operative provision is Regulation 3. It states that sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Bonds within 30 days from the date of issue of the Bonds, provided the stabilising action is taken with a person who is either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, the exemption is conditional on the counterparty category. The Regulations do not simply permit stabilising trades with any market participant. Instead, stabilising action must be conducted “with” either a section 274 person or a sophisticated investor. For a lawyer advising on compliance, this means the documentation and trade counterparties must be checked against the SFA definitions and categories.
Time limitation is also central. The exemption applies only to stabilising action taken within 30 days from the date of issue. After that period, the exemption no longer applies, and the general prohibitions in sections 197 and 198 would potentially become relevant again.
Scope limitation is equally important. The exemption is limited to stabilising action “in respect of any of the Bonds” as defined. If the bonds fall outside the defined description (different issuer, different bond structure, different issuance date, or exceeding the principal caps), the exemption would not be available.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, short format typical of targeted market conduct exemptions:
- Regulation 1 sets out the citation and commencement.
- Regulation 2 provides definitions of the key terms: “Bonds” and “stabilising action”.
- Regulation 3 contains the exemption, specifying which SFA provisions are disapplied, the time window, and the permitted counterparty categories.
There are no additional parts or complex schedules in the extract provided. The legal effect is therefore concentrated in Regulation 3, supported by the definitional precision in Regulation 2.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and relate to “market conduct”, their practical application is directed at the entities that would conduct stabilising activity for the specified bonds. In particular, the definition of “stabilising action” points to Goldman Sachs International and its related corporations as the relevant stabilising actors.
However, the exemption’s availability also depends on the counterparty. Regulation 3 requires that the stabilising action be taken “with” either a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). Accordingly, the Regulations indirectly affect issuers, dealers, and trading counterparties by determining which trades can be structured to fall within the exemption.
From a compliance perspective, the legislation is best understood as a permission framework: it does not authorise stabilising action in a vacuum; it disapplies specific SFA provisions only when the stabilising activity meets all definitional and conditional requirements.
Why Is This Legislation Important?
This Regulations matters because it provides a narrow legal safe harbour for stabilisation activities during a bond issuance period. Without such an exemption, stabilising purchases could potentially trigger prohibitions under the SFA relating to market conduct—particularly where such purchases might otherwise be characterised as prohibited dealing or conduct that could distort market prices.
For practitioners, the key value is certainty and scope control. The Regulations specify:
- the exact bonds (issuer, bond type, issuance timing, and principal caps);
- the exact stabilising actor group (Goldman Sachs International and related corporations);
- the time window (30 days from the date of issue); and
- the permitted counterparty categories (section 274 persons or sophisticated investors).
This reduces ambiguity and supports defensible compliance decisions.
In enforcement and risk management terms, the exemption also highlights what MAS likely expects: stabilising activity should be limited, purposeful (price stabilisation), and confined to appropriate counterparties and a defined post-issuance period. Lawyers advising on bond issuance documentation, dealer arrangements, and trading controls should therefore treat these conditions as compliance “gates” that must be evidenced.
Related Legislation
- Securities and Futures Act (SFA) (including sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1))
- Futures Act (listed in the provided metadata as related legislation)
- Stabilising Act (listed in the provided metadata as related legislation)
- Timeline (legislation timeline reference for version control)
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.