Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 13) Regulations 2004
- Act Code: SFA2001-S433-2004
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 16 July 2004
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Relevant Act provisions referenced: Sections 197 and 198 (market conduct rules); Sections 274 and 275(2) (categories of persons/investors)
- Bond description (defined term): US$ fixed rate bonds issued by LG-Caltex Oil Corporation in August 2004 (up to US$500 million)
- Stabilising action description (defined term): Stabilisation by specified financial institutions (or related corporations) through buying or offering/agreeing to buy the bonds
- Exemption window: Within 30 days from the date of issue of the bonds
- Current status (per metadata): Current version as at 27 Mar 2026
- Amendment noted in extract: Definition of “Bonds” amended by S 471/2004 with effect from 05/08/2004
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 13) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted set of subsidiary rules made under the Securities and Futures Act (SFA). In practical terms, it creates a narrow exemption from certain “market conduct” restrictions that would otherwise apply to stabilising activities in connection with a specific bond issuance.
Stabilisation is a common feature of bond and securities offerings. Under market practice, stabilising managers may take limited steps—typically buying (or offering to buy) the bonds—to help maintain orderly trading and reduce excessive price volatility immediately after issuance. However, stabilisation can also resemble conduct that market conduct rules seek to prevent, such as manipulation or misleading price formation. The SFA therefore contains provisions that regulate or prohibit certain dealing practices.
This legislation resolves that tension by carving out a defined exemption. It allows specified financial institutions to take stabilising action in relation to the defined “Bonds” during a defined period, but only when the stabilising dealings are made with specified categories of counterparties (persons under section 274 of the SFA, or “sophisticated investors” under section 275(2)). The exemption is therefore not a general permission to stabilise; it is a carefully bounded permission for a particular transaction and within a limited timeframe.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 sets the formal citation and provides that the Regulations come into operation on 16 July 2004. For practitioners, commencement matters because exemptions from statutory prohibitions only apply once the subsidiary legislation is in force. Here, the exemption regime is effective from mid-July 2004, aligning with the lead-up to the August 2004 bond issuance described in the definition of “Bonds”.
2. Definitions (Regulation 2)
Regulation 2 defines two central concepts: “Bonds” and “stabilising action”. The definition of “Bonds” is highly specific: it refers to US$ fixed rate bonds issued by LG-Caltex Oil Corporation in August 2004, with a principal amount of up to US$500 million. This specificity is crucial: the exemption is transaction-specific and does not automatically extend to other issuances, tranches, or similarly structured bonds.
The definition of “stabilising action” is equally specific. It covers an action taken in Singapore or elsewhere by Banc of America Securities LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., or any of their related corporations. The action must be 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. This definition matters for two reasons. First, it limits the exemption to stabilisation conducted by the named entities (or their related corporations). Second, it ties the permitted conduct to a stabilisation purpose—maintaining market price—rather than any other dealing objective.
3. The exemption from sections 197 and 198 of the SFA (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 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.
From a lawyer’s perspective, this is the heart of the regulatory bargain. The exemption is conditional on both time and counterparty category. The 30-day window is a classic stabilisation period: it targets the immediate post-issuance phase when price discovery and liquidity formation are most sensitive. The counterparty limitation ensures that stabilising dealings occur within a framework that the SFA treats as appropriate for higher-capability or regulated counterparties (as reflected by the section 274 and section 275(2) categories).
4. Practical boundaries implied by the conditional structure
Although the extract does not reproduce sections 197 and 198 in full, the structure indicates that those provisions impose restrictions on certain dealing or market conduct activities. Regulation 3 does not repeal those provisions; it suspends their application for the defined stabilising action in the defined circumstances. Practitioners should therefore treat Regulation 3 as a specific exemption rather than a broad authorisation. If stabilising action falls outside the defined “Bonds”, is conducted by an entity not covered by the definition of “stabilising action”, occurs outside the 30-day period, or involves counterparties outside the section 274 / sophisticated investor categories, the exemption would not apply and the underlying market conduct rules may still be engaged.
How Is This Legislation Structured?
The Regulations are short and structured around a conventional subsidiary-legislation format:
(i) Regulation 1 (Citation and commencement) establishes the name and the effective date.
(ii) Regulation 2 (Definitions) provides the interpretive backbone for the exemption by defining “Bonds” and “stabilising action”.
(iii) Regulation 3 (Exemption) sets out the legal effect: it disapplies sections 197 and 198 of the SFA for stabilising action meeting the defined criteria (Bonds, time window, and eligible counterparties).
Notably, the Regulations do not create a standalone compliance regime with detailed reporting requirements in the extract provided. Instead, they operate by carving out a narrow exemption from existing SFA market conduct provisions. In practice, this means that compliance teams must read the exemption alongside the underlying SFA provisions and any related regulatory guidance applicable to stabilisation and dealing conduct.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in relation to the defined LG-Caltex Oil Corporation bonds issued in August 2004. The persons who can benefit from the exemption are effectively limited by the definition of “stabilising action”: the stabilising action must be taken by Banc of America Securities LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., or their related corporations.
In addition, the exemption is conditional on the counterparty to the stabilising dealings. Regulation 3 restricts the exemption to stabilising action taken with either (a) a person referred to in section 274 of the SFA or (b) a sophisticated investor under section 275(2). Accordingly, even if a covered stabilising manager undertakes stabilisation, the exemption may be unavailable if the dealings are with counterparties that do not fall within those categories.
Why Is This Legislation Important?
This legislation is important because it enables legitimate market stabilisation while preserving the integrity of Singapore’s securities market conduct framework. Without an exemption, stabilising activities—particularly buying or offering to buy in the immediate post-issuance period—could be argued to fall within the ambit of prohibitions or restrictions in the SFA. The Regulations therefore provide legal certainty for market participants involved in bond issuance and distribution.
For practitioners advising issuers, lead managers, or dealing counterparties, the key significance lies in the precision of the exemption. It is transaction-specific (defined bonds), participant-specific (named stabilising entities and related corporations), time-bound (30 days from issue), and counterparty-bound (section 274 persons or sophisticated investors). This precision reduces regulatory ambiguity but increases the need for careful factual and documentary alignment.
From an enforcement and risk perspective, the conditional structure means that compliance failures can have immediate consequences. If stabilising action is executed outside the 30-day window, involves a non-eligible counterparty, or is undertaken by an entity not covered by the definition, the exemption would not apply and sections 197 and 198 could be engaged. Lawyers should therefore ensure that stabilisation programs are designed and executed with clear internal controls: eligibility checks for counterparties, tracking of timing relative to the bond issue date, and confirmation that the dealing entity is within the defined stabilising manager group.
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 (listed in metadata as related legislation)
- Stabilising Act (listed in metadata as related legislation)
- Timeline (legislation timeline reference in the metadata)
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. 13) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.