Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 15) Regulations 2004
- Act Code: SFA2001-S480-2004
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically powers under section 337(1)
- Legislation Number: SL 480/2004
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 15) Regulations 2004
- Commencement: 11 August 2004
- Enacting date: Made on 10 August 2004
- Status: Current version as at 27 March 2026
- Key Provisions: Section 2 (definitions), Section 3 (exemption)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 15) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain market conduct restrictions in the Securities and Futures Act (the “SFA”) for a specific type of stabilising activity carried out in relation to a particular bond issue.
Stabilising action is a practice commonly used in capital markets. During the initial period after a bond is issued, market makers or arrangers may buy (or offer to buy) the bonds to help maintain orderly trading and reduce excessive price volatility. Without an exemption, such conduct could potentially fall within prohibitions or restrictions designed to prevent market manipulation and improper dealing.
This Regulations set out (i) what “Bonds” and “stabilising action” mean for this specific instrument, and (ii) the conditions under which stabilising action is exempted. The exemption is time-limited (within 30 days from the date of issue) and limited to stabilising action undertaken by specified categories of persons (including a person referred to in section 274 of the SFA, or a “sophisticated investor” as defined in section 275(2) of the SFA).
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. 15) Regulations 2004” and came into operation on 11 August 2004. For practitioners, this matters when assessing whether any stabilising trades were conducted after the exemption regime took effect.
Section 2 (Definitions) is central because it tightly constrains the scope of the exemption. Two defined terms are used:
(a) “Bonds” are defined very specifically as the 5-year zero coupon convertible bonds due August 2009 issued by Yaskawa Electric Corporation, with a principal amount “up to ¥15,000,000,000”. The definition also includes the key economic feature: the bonds carry stock acquisition rights (shinkabu yoyakuken) enabling holders to acquire fully-paid and non-assessable shares of Yaskawa Electric Corporation.
(b) “stabilising action” is defined as an action taken in Singapore or elsewhere by Nomura International plc (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 is important for compliance: it requires both (i) the identity of the actor (Nomura International plc or its related corporations) and (ii) the purpose (stabilising/maintaining market price).
Section 3 (Exemption) provides the operative relief. 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) a person referred to in section 274 of the SFA; or
- (b) a sophisticated investor as defined in section 275(2) of the SFA.
In practical terms, Section 3 creates a conditional “safe harbour” for stabilising conduct during the early trading window after issuance. The exemption is not blanket: it is limited to (1) the specified bond issue, (2) stabilising action by the defined stabiliser, (3) the time window of 30 days from issue, and (4) dealings involving the specified counterparty categories (section 274 persons or sophisticated investors).
Why sections 197 and 198 matter (contextual note for practitioners): while the extract does not reproduce the text of sections 197 and 198 of the SFA, the structure indicates that those sections contain prohibitions or restrictions relevant to market conduct—likely including rules against improper dealing, market manipulation, or conduct that could distort price discovery. This Regulations effectively carve out stabilising activity that would otherwise be caught, but only when the statutory conditions are satisfied.
Compliance implications: because the exemption is conditional, counsel should ensure that trade documentation, internal approvals, and trading records can establish each element: the bond identification, the stabilising purpose, the actor (Nomura International plc or related corporations), the timing (within 30 days from issue), and the counterparty category (section 274 person or sophisticated investor). Where any element is uncertain, the exemption may not apply and the conduct could be treated as potentially unlawful under the SFA.
How Is This Legislation Structured?
The Regulations are extremely concise and consist of an enacting formula and three substantive provisions:
Section 1 sets out the citation and commencement date.
Section 2 provides definitions of “Bonds” and “stabilising action”, which are drafted with specificity to the particular bond issue and the particular stabilising actor.
Section 3 contains the exemption mechanism, identifying the SFA provisions disapplied (sections 197 and 198), the time limit (30 days from issue), and the counterparty conditions (section 274 persons or sophisticated investors).
From a practitioner’s perspective, the structure is designed for certainty: the exemption is narrow, and the definitions in section 2 do most of the work in limiting scope.
Who Does This Legislation Apply To?
This Regulations applies to stabilising action in relation to the defined Yaskawa Electric Corporation bonds (the “Bonds”). Although the exemption is framed as disapplying sections 197 and 198 of the SFA, the practical beneficiaries are the entities that may conduct stabilising trades—specifically Nomura International plc and its related corporations, acting in Singapore or elsewhere, as captured by the definition of “stabilising action”.
However, the exemption is also conditional on the stabilising action being taken “with” either (a) a person referred to in section 274 of the SFA or (b) a sophisticated investor under section 275(2). This means that even if the stabiliser and bonds are correct, the exemption may fail if the counterparty does not fall within the specified categories.
Why Is This Legislation Important?
Market stabilisation can be commercially beneficial. In the immediate aftermath of issuance, bonds may experience thin liquidity and volatility. Stabilising bids can support price formation and reduce disorderly trading. The Regulations recognise this market practice and provide a controlled legal pathway for stabilisation without triggering market conduct prohibitions.
At the same time, the Regulations reflect the regulatory balance in Singapore’s market conduct framework: exemptions are not granted broadly. Instead, they are tightly bounded by (i) the specific bond issue, (ii) the stabiliser’s identity and purpose, (iii) a short time horizon (30 days), and (iv) counterparty eligibility (section 274 persons or sophisticated investors). This design helps regulators manage the risk that stabilising activity could be used as a pretext for manipulation.
For practitioners—lawyers advising issuers, arrangers, dealers, or compliance teams—the key value of this instrument is operational clarity. It tells you when stabilising trades may be conducted with reduced legal risk under the SFA, and it highlights the evidence you must be able to produce if questioned by regulators: trade timing, bond identification, stabilisation intent, and counterparty classification.
Related Legislation
- Securities and Futures Act (Cap. 289), including sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation metadata)
- Timeline (legislation versioning reference)
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. 15) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.