Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 16) Regulations 2004
- Act Code: SFA2001-S572-2004
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 10 September 2004
- Regulation Number: SL 572/2004
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Status: Current version as at 27 March 2026 (per the provided extract)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 16) Regulations 2004 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”). In practical terms, it allows specific market participants to take “stabilising action” in relation to a particular bond issue without breaching the general prohibitions in the SFA that would otherwise apply to dealings that may affect market prices.
Stabilisation is a familiar concept in capital markets. When a new bond is issued, market liquidity and price discovery may be fragile. Under controlled conditions, an issuer or its financial intermediaries may buy (or offer to buy) the relevant securities to help maintain an orderly market and reduce excessive volatility. However, because such activity can influence price, regulators impose strict market conduct rules. This legislation provides a narrow carve-out for stabilisation in respect of a defined bond issue.
Importantly, the exemption is not general. It is limited to a specific set of “Bonds” (defined precisely in the Regulations) and to stabilising action taken within a defined timeframe (30 days from the date of issue). It also limits who may be involved, by reference to categories of persons under the SFA (including persons referred to in section 274 and “sophisticated investors” under section 275(2)).
What Are the Key Provisions?
Section 1: Citation and commencement establishes the legal identity of the Regulations and when they take effect. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 16) Regulations 2004” and come into operation on 10 September 2004. For practitioners, this matters for determining whether stabilising action undertaken around the issuance period falls within the regulatory framework.
Section 2: Definitions is central because the exemption depends entirely on whether the relevant activity qualifies as “stabilising action” and whether the relevant instrument qualifies as “Bonds”. The Regulations define:
- “Bonds” as the 5-year zero coupon unsecured guaranteed exchangeable bonds due September 2009 issued by IOI Investment (L) Berhad for a principal amount of up to US$345 million. These bonds are guaranteed by IOI Corporation Berhad and are exchangeable into new ordinary shares in IOI Corporation Berhad with a par value of RM0.50 each.
- “stabilising action” as an action taken in Singapore or elsewhere by UBS AG (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.
From a compliance perspective, the definition is both person-specific and purpose-specific. The exemption is tied to UBS AG and its related corporations, and the activity must be undertaken for the purpose of stabilising or maintaining market price. If a different entity buys the bonds, or if the purpose is not stabilisation (for example, purely proprietary trading without a stabilisation objective), the exemption may not apply.
Section 3: Exemption is the operative provision. It provides 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, with stabilising action carried out 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.
Although the extract does not reproduce sections 197 and 198 themselves, the structure indicates that those provisions are the general market conduct rules that would otherwise restrict or prohibit certain dealings that could affect market prices. The Regulations carve out stabilising action from those prohibitions, but only if the stabilising action is conducted within the specified window and only in dealings with the specified categories of counterparties.
For practitioners, the key compliance questions arising from section 3 are:
- Timing: Was the stabilising action taken within 30 days from the date of issue of the Bonds?
- Instrument identification: Are the securities actually the defined “Bonds” (including the specific terms and issuer/guarantor/exchangeability features)?
- Counterparty category: Was the stabilising action undertaken with a person falling within section 274 or with a sophisticated investor under section 275(2)?
- Actor and conduct: Was the stabilising action taken by UBS AG or a related corporation, and does it fall within the defined meaning (buying or offering/agreement to buy for stabilisation purposes)?
How Is This Legislation Structured?
The Regulations are short and structured as a three-part instrument:
- Section 1 (Citation and commencement): provides the name and effective date.
- Section 2 (Definitions): defines “Bonds” and “stabilising action” with high specificity, thereby limiting the scope of the exemption.
- Section 3 (Exemption): sets out the legal consequence—disapplication of SFA sections 197 and 198—subject to conditions on timing and counterparties.
Because the Regulations contain only one substantive operative section (section 3), the legal analysis largely turns on the definitions and the conditions embedded in the exemption.
Who Does This Legislation Apply To?
The exemption is designed to benefit the regulated market participant(s) conducting stabilisation—namely UBS AG and its related corporations—when they engage in stabilising action in relation to the defined bond issue. However, the exemption is not simply about who acts; it also depends on who the stabilising action is undertaken with. Section 3 restricts the exemption to stabilising action carried out with persons referred to in section 274 of the SFA or with sophisticated investors under section 275(2).
Accordingly, the Regulations have practical relevance for: (i) investment banks and trading desks planning stabilisation strategies; (ii) compliance officers assessing whether stabilisation conduct falls within the exemption; and (iii) legal teams advising on counterparties and documentation to evidence the stabilisation purpose and the counterparty category. Issuers and guarantors may also be indirectly affected because stabilisation can influence market perception and pricing during the initial trading period, but the exemption is framed around the stabilising actor and the counterparties.
Why Is This Legislation Important?
This legislation is important because it demonstrates how Singapore’s market conduct regime balances two competing objectives: maintaining fair and orderly markets, and allowing legitimate market-making and stabilisation practices during security issuance. By disapplying specific SFA provisions (sections 197 and 198), the Regulations permit stabilisation that might otherwise be treated as problematic under general market conduct rules.
For practitioners, the value of the Regulations lies in their precision. The exemption is not a blanket authorisation. It is tightly scoped to a particular bond issue, a particular stabilising actor (UBS AG and related corporations), a defined stabilisation activity (buying or offering/agreement to buy for stabilisation), a defined timeframe (30 days from issue), and defined counterparties (section 274 persons or sophisticated investors). This kind of narrow exemption is typical where regulators want to allow controlled conduct while limiting opportunities for abuse.
From an enforcement and risk-management standpoint, the Regulations also highlight the importance of record-keeping and evidence. If stabilising action is challenged, the parties would need to show that: the securities were indeed the defined “Bonds”; the activity occurred within the 30-day window; the counterparties were within the relevant SFA categories; and the conduct was undertaken for stabilisation purposes. In practice, this usually requires careful internal approvals, trading records, and documentation of the stabilisation rationale and counterparty eligibility.
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).
- Stabilising Act — referenced in the provided metadata (contextual relevance to stabilisation concepts, though not reproduced in the extract).
- Futures Act — referenced in the provided metadata (contextual relevance to market conduct framework, though not reproduced in the extract).
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. 16) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.