Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 15) Regulations 2005
- Act Code: SFA2001-S529-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Commencement: 8 August 2005
- Legislative Status: Current version as at 27 March 2026
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Body: Monetary Authority of Singapore (MAS)
- Regulation Number: SL 529/2005
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 15) Regulations 2005 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory carve-out from certain market conduct rules under the Securities and Futures Act (SFA). In plain terms, it allows specified persons to take “stabilising action” in relation to a particular set of bonds during a limited period after issuance, without those stabilising trades being treated as prohibited conduct under the relevant SFA provisions.
Stabilisation is a common market practice in securities offerings. When new bonds are issued, market prices can fluctuate sharply due to initial liquidity and investor demand. Stabilising action is intended to help maintain orderly trading conditions and reduce extreme price volatility. However, market conduct laws are designed to prevent manipulation and unfair trading practices. This legislation balances those objectives by permitting stabilisation only where strict conditions are met.
Importantly, the exemption is narrow and instrument-specific. The Regulations define “Bonds” as a particular bond issue: the 5-year convertible bonds due August 2010 issued by Aurobindo Pharma Limited, up to a specified principal amount, and convertible into ordinary shares. The exemption also defines “stabilising action” as actions taken by Barclays Bank PLC (or its related corporations) to buy or offer/agree to buy the Bonds to stabilise or maintain their market price in Singapore or elsewhere.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they came into operation on 8 August 2005. For practitioners, this matters because the exemption is time-bound: the Regulations operate from the commencement date and the stabilising period is measured from the date of issue of the Bonds.
Section 2 (Definitions) is central because it determines the scope of the exemption. Two defined terms are used in the operative provision:
- “Bonds” are defined with precision: the 5-year convertible bonds due August 2010 issued by Aurobindo Pharma Limited for a principal amount of up to US$60 million, convertible into ordinary shares of Aurobindo Pharma Limited with a par value of 5 Indian Rupees each.
- “Stabilising action” is defined as an action taken in Singapore or elsewhere by Barclays Bank PLC (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.
This drafting approach is typical of MAS stabilisation exemptions: it avoids uncertainty by tying the exemption to a specific bond issue and a specific stabilisation participant (Barclays and its related corporations). As a result, the exemption cannot be relied upon for other bond issues, other issuers, or stabilisation by other financial institutions unless a separate exemption is issued.
Section 3 (Exemption) is the operative clause. 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 of the Bonds, provided the stabilising action is taken with respect to transactions involving 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.
Practically, Section 3 does two things. First, it identifies the SFA provisions from which stabilising action is exempted—Sections 197 and 198. While the extract provided does not reproduce those sections, the legal effect is clear: stabilising trades that would otherwise fall within the scope of those market conduct prohibitions are carved out, but only if the stabilisation occurs within the specified window and involves the specified categories of counterparties.
Second, Section 3 imposes a time limit and a counterparty condition. The stabilising action must occur within 30 days from the date of issue of the Bonds. This is a critical compliance point: even if stabilisation is otherwise legitimate, trades outside the 30-day period would not benefit from the exemption and could expose the stabilising participant to enforcement risk under the SFA provisions that remain applicable.
The counterparty condition is equally important. Stabilising action must be taken “with” a person referred to in section 274 or with a sophisticated investor under section 275(2). In practice, counsel should treat this as a requirement to verify the identity and regulatory status of counterparties involved in stabilisation trades. Where stabilisation involves multiple counterparties (e.g., intermediaries, brokers, or clients), the compliance analysis should focus on who the stabilising participant is actually dealing with and whether that party fits within the statutory categories.
How Is This Legislation Structured?
The Regulations are short and structured around three provisions:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions for “Bonds” and “stabilising action”. These definitions are highly specific and effectively delimit the exemption’s subject matter.
- Section 3 contains the exemption itself, specifying which SFA sections are disapplied, the 30-day stabilisation window, and the permitted counterparty categories.
From a practitioner’s perspective, the Regulations function less like a comprehensive code and more like a targeted instrument granting a narrow exemption for a particular bond issue and stabilisation activity.
Who Does This Legislation Apply To?
The exemption is relevant primarily to the stabilising participant identified in the definition of “stabilising action”—Barclays Bank PLC and its related corporations. If those entities undertake stabilising trades in relation to the defined Bonds, they may rely on the exemption, provided all conditions in Section 3 are satisfied.
However, the exemption is also conditioned on the nature of the counterparties. It applies to stabilising action taken within the 30-day period when the stabilising trades are conducted with either (i) persons referred to in section 274 of the SFA or (ii) sophisticated investors as defined in section 275(2). Therefore, issuers, arrangers, and trading desks should ensure that counterparties are properly classified and documented to support reliance on the exemption.
Why Is This Legislation Important?
This Regulations matters because it provides legal certainty for a market practice that could otherwise be constrained by anti-manipulation and market conduct rules. Without such exemptions, stabilising activity—despite being intended to support orderly trading—might be argued to fall within prohibited conduct under the SFA. By disapplying Sections 197 and 198 for qualifying stabilising action, MAS enables structured stabilisation while maintaining regulatory oversight through strict conditions.
For practitioners, the most significant compliance implications are:
- Instrument specificity: the exemption applies only to the defined Aurobindo Pharma convertible bonds (up to US$60 million principal) due August 2010.
- Participant specificity: stabilising action must be taken by Barclays Bank PLC or its related corporations.
- Time window: stabilisation must occur within 30 days from the date of issue.
- Counterparty limitation: stabilising trades must be with persons in section 274 or sophisticated investors under section 275(2).
In enforcement terms, the narrowness of the exemption means that any deviation—wrong bond issue, wrong stabiliser, trades outside the 30-day period, or trades with counterparties that do not meet the statutory categories—could remove the benefit of the exemption and expose the stabilising participant to liability under the SFA provisions that remain applicable.
Finally, this Regulations illustrates how MAS uses subsidiary legislation to tailor exemptions to specific capital market transactions. Counsel advising on bond offerings should therefore check not only the general SFA market conduct framework but also whether transaction-specific stabilisation exemptions exist.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — in particular, Sections 197, 198, 274, 275(2), and the exemption-making power in section 337(1).
- Futures Act — referenced in the legislation metadata context.
- Stabilising Act — referenced in the legislation metadata context.
- Timeline / Legislation timeline — for confirming the correct version and effective date.
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.