Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 14) Regulations 2004
- Act Code: SFA2001-S461-2004
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Powers conferred by section 337(1) of the Securities and Futures Act
- Commencement: 30 July 2004
- Regulations Made: 28 July 2004
- Regulator: Monetary Authority of Singapore (MAS)
- Status: Current version as at 27 March 2026
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Relevant Market Conduct Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
- Amendments Noted in Extract: Definitions amended by S 489/2004 (w.e.f. 16 Aug 2004) and S 554/2004 (w.e.f. 1 Sep 2004)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 14) Regulations 2004 (“Stabilising Action (Bonds) Regulations”) is a targeted regulatory instrument that creates a limited exemption from certain market conduct restrictions in the Securities and Futures Act (the “SFA”). In essence, it allows specified market participants to take “stabilising action” in relation to a particular bond issue without breaching the prohibitions found in sections 197 and 198 of the SFA.
Stabilising action is a well-known feature of securities markets, particularly around new issues. When a bond is first issued, trading can be volatile and liquidity may be thin. Market stabilisation practices—such as buying (or offering to buy) the bonds—are sometimes used to support orderly trading and reduce extreme price fluctuations. However, because stabilisation can resemble manipulative conduct, the SFA contains prohibitions that generally prevent conduct that could distort market prices.
This set of Regulations narrows the general prohibition by carving out an exemption for stabilising action taken in relation to a specific bond, within a defined time window, and for stabilisation carried out with specified counterparties. The exemption is not a general permission for any stabilisation in any bond; it is tightly scoped to the “Bonds” described in the Regulations and to stabilisation occurring within 30 days from the date of issue.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal title and sets the commencement date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 14) Regulations 2004” and came into operation on 30 July 2004. For practitioners, this matters because exemptions and compliance obligations typically turn on the effective date—particularly where stabilisation activity may occur around the issuance timeline.
Section 2 (Definitions) is critical because it defines both the instrument being stabilised and the conduct that qualifies as stabilising action. The Regulations define:
- “Bonds” as the 5-year zero coupon convertible bonds due September 2009 issued by Lite-On Technology Corporation for a principal amount of up to US$300 million. The bonds are convertible into new common shares of Lite-On Technology Corporation with a par value of NT$10 each. The definition also reflects an amendment (S 554/2004) effective from 1 September 2004, indicating that the precise description of the bonds may have been refined.
- “stabilising action” as an action taken in Singapore or elsewhere by Citigroup Global Markets Limited (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. This definition was amended by S 489/2004 effective from 16 August 2004, again underscoring that the regulatory scope is tied to the specific stabilising conduct and the specific stabiliser.
Section 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the SFA shall not apply to 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 person referred to in section 274 of the SFA; or
- a “sophisticated investor” as defined in section 275(2) of the SFA.
In practical terms, Section 3 creates a conditional exemption: even if the conduct is “stabilising action” as defined, the exemption only applies if it is undertaken within the specified 30-day post-issue window and the counterparty is within the permitted categories (section 274 persons or sophisticated investors). For counsel, this means that compliance analysis must cover not only the nature of the trades (buying/offering to buy to stabilise price) but also the timing and the identity/eligibility of the counterparties.
Although the extract does not reproduce sections 197 and 198 of the SFA, the exemption’s structure indicates that those provisions likely impose prohibitions or restrictions on market conduct that could include market manipulation, false or misleading conduct, or other forms of improper trading. The Regulations therefore function as a “safe harbour” for stabilisation, but only to the extent the stabilisation fits the defined parameters.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, short form with three sections:
- Section 1: Citation and commencement (when the Regulations take effect).
- Section 2: Definitions of “Bonds” and “stabilising action”. These definitions are the gatekeepers for whether conduct falls within the exemption.
- Section 3: The exemption clause, specifying the SFA provisions that are disapplied (sections 197 and 198), the time period (within 30 days from issue), and the permitted counterparties (section 274 persons or sophisticated investors).
From a drafting and compliance perspective, the Regulations follow a typical exemption pattern: define the relevant subject matter precisely, define the relevant conduct precisely, and then disapply specified statutory provisions subject to strict conditions.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in relation to the specified “Bonds” and, by definition, stabilising action is limited to actions taken by Citigroup Global Markets Limited or its related corporations. Accordingly, the exemption is not directed at issuers or general market participants; it is aimed at the stabilising intermediary (the stabiliser) and its corporate group.
However, the exemption is also conditional on the identity of the counterparty. Section 3 restricts the exemption to stabilising action taken with either (i) persons referred to in section 274 of the SFA or (ii) sophisticated investors under section 275(2) of the SFA. Therefore, even where the stabiliser undertakes qualifying stabilisation activity, the exemption may not apply if the trades are executed with counterparties outside those categories. Practitioners should therefore treat counterparty eligibility as a core compliance requirement.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework balances two competing policy goals: (1) preventing market manipulation and improper price support, and (2) allowing legitimate market stabilisation practices during the initial period after a bond issue. By disapplying sections 197 and 198, MAS effectively recognises that stabilisation—when conducted within strict boundaries—can be consistent with orderly market functioning.
For legal practitioners advising on bond issuance, underwriting, or trading around new issues, the Regulations provides a narrow safe harbour that can reduce regulatory risk. The key practical value lies in the precision of the exemption: it is limited to a particular bond issue (Lite-On Technology Corporation’s 5-year zero coupon convertible bonds), limited to a particular stabiliser (Citigroup Global Markets Limited and related corporations), limited to a defined conduct (buying or offering to buy to stabilise price), and limited to a defined timeframe (within 30 days from issue) and counterparty categories (section 274 persons or sophisticated investors).
In enforcement terms, the Regulations also signals that stabilisation outside the exemption’s boundaries would remain subject to the SFA’s market conduct prohibitions. Counsel should therefore ensure that internal trading instructions, documentation, and compliance monitoring systems can demonstrate: (i) the trades were within the 30-day window; (ii) the trades were in the specified bonds; (iii) the stabiliser and its related corporations were the actors; and (iv) the counterparties meet the statutory categories. Where any of these elements cannot be shown, reliance on the exemption may be unavailable.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 274, 275(2), and the authorising provision 337(1).
- Futures Act (referenced in the metadata context of the platform timeline)
- Stabilising Act (referenced in the metadata context of the platform timeline)
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. 14) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.