Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 16) Regulations 2005
- Act/Regulations Type: Subsidiary Legislation (SL)
- Act Code: SFA2001-S530-2005
- Authorising Act: Securities and Futures Act (SFA) (specifically powers under section 337(1))
- Legislation Number (SL): SL 530/2005
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 16) Regulations 2005
- Commencement: 8 August 2005
- Status: Current version (as at 27 Mar 2026)
- Key Provisions: Section 1 (citation and commencement); 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. 16) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted set of rules that creates a limited exemption from certain market conduct prohibitions in the Securities and Futures Act (SFA). In plain terms, it allows a specific market participant to take “stabilising action” in relation to two defined series of convertible bonds issued by Uttam Galva Steels Limited, without falling foul of the SFA’s restrictions on particular types of dealings.
The legislation is best understood against the backdrop of Singapore’s market conduct regime. The SFA contains provisions designed to protect market integrity by restricting conduct that could artificially influence prices or mislead investors. However, stabilisation mechanisms are sometimes permitted in regulated markets to reduce volatility immediately after issuance of securities—provided the stabilising activity is constrained, time-limited, and subject to defined conditions.
This particular exemption is narrow and instrument-specific: it applies only to stabilising action taken in respect of “Series A Bonds” and “Series B Bonds” (as defined), only within a specified time window after issuance (30 days), and only when the stabilising action is undertaken with certain counterparties (persons referred to in section 274 of the SFA, or sophisticated investors as defined in section 275(2) of the SFA). It also defines “stabilising action” as action taken by Macquarie Securities Limited (or its related corporations).
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and states that the Regulations come into operation on 8 August 2005. For practitioners, this matters when assessing whether stabilising activity occurred within the legal framework and whether any regulatory compliance analysis should be anchored to the effective date.
Section 2 (Definitions) is central because the exemption turns entirely on whether the activity falls within the defined terms. The Regulations define:
- “Series A Bonds”: 5-year and 1-day 2% convertible bonds due August 2010 issued by Uttam Galva Steels Limited, up to US$25 million, convertible into ordinary shares with a par value of 10 Indian Rupees each.
- “Series B Bonds”: similar 5-year and 1-day 2% convertible bonds due August 2010 issued by Uttam Galva Steels Limited, up to US$20 million, convertible into ordinary shares as above, and additionally redeemable at the option of the holder on 9 August 2008 (subject to certain conditions) at 117.25% of the principal amount.
- “stabilising action”: an action taken in Singapore or elsewhere by Macquarie Securities Limited (or any of its related corporations) to buy, or to offer or agree to buy, either Series A or Series B Bonds in order to stabilise or maintain the market price of those bonds.
From a legal risk perspective, the definition is both participant-specific and purpose-specific. If the buying/offering/agreeing to buy is not undertaken by Macquarie Securities Limited or its related corporations, or if it is not undertaken for the purpose of stabilising or maintaining market price, the exemption will not apply. Likewise, if the instrument is not one of the defined series, the exemption is unavailable.
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 the Series A Bonds within 30 days from the date of issue of the Series A Bonds, or in respect of the Series B Bonds within 30 days from the date of issue of the Series B Bonds, 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.
This structure is significant. The exemption does not create a blanket permission to stabilise; it removes the application of specified SFA market conduct provisions only within a defined period and only in dealings with specified categories of counterparties. In practice, counsel should treat the 30-day window and counterparty category as conditions precedent to the exemption.
Although the extract does not reproduce the text of sections 197 and 198 of the SFA, the legal effect is clear: those sections would otherwise regulate or prohibit the relevant conduct. The Regulations carve out stabilising action for the defined bonds, by the defined stabiliser, within the defined time, and with the defined counterparties. If any condition is not met, the exemption falls away and the general SFA prohibitions may apply.
How Is This Legislation Structured?
The Regulations are short and structured around three provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions of the relevant bond series and the stabilising action concept.
- Section 3 contains the exemption from the application of specified SFA provisions (sections 197 and 198), subject to time and counterparty conditions.
For practitioners, the brevity is a feature: there are no additional procedural steps, reporting obligations, or detailed stabilisation mechanics in the extract. The compliance analysis therefore focuses on whether the stabilising activity fits squarely within the defined terms and conditions.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action undertaken by Macquarie Securities Limited (or its related corporations) in relation to the specific instruments defined as Series A Bonds and Series B Bonds. While the Regulations are “made” by the Monetary Authority of Singapore (MAS), the practical beneficiaries are the stabilising participants and their dealing counterparties.
In terms of counterparties, 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). This means that even if Macquarie (or its related corporation) undertakes stabilising purchases/offers, the exemption may not apply if the dealing is with an investor category outside those provisions. Counsel should therefore verify the counterparty classification for each relevant transaction.
Why Is This Legislation Important?
This Regulations is important because it provides a legally sanctioned pathway for stabilisation activity in the immediate post-issuance period for particular convertible bonds. Market stabilisation can be commercially necessary to manage liquidity and price discovery, but it can also raise market integrity concerns. By carving out stabilising action from specific SFA prohibitions, the Regulations balance market functioning with investor protection.
From a compliance and enforcement standpoint, the Regulations also illustrate how Singapore’s market conduct framework uses targeted exemptions rather than broad permissions. The exemption is limited by: (1) the exact bond series, (2) the exact stabiliser (Macquarie Securities Limited and related corporations), (3) a strict 30-day time limit from the date of issue, and (4) the counterparty categories (section 274 persons or sophisticated investors). These constraints are the practical “guardrails” that counsel should document and monitor.
For practitioners advising issuers, stabilising managers, or dealing desks, the key practical impact is that stabilisation trades may be structured and executed with greater certainty—provided the conditions are met. Conversely, if stabilisation is attempted outside the 30-day window, in relation to different instruments, by a different entity, or with counterparties not within the defined categories, the exemption may not apply, exposing the stabiliser to potential contraventions of the SFA’s general market conduct provisions.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — in particular, sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act — referenced in the legislation metadata context (relevant for broader market conduct and regulatory framework).
- Stabilising Act — referenced in the legislation metadata context (relevant to stabilisation concepts and regulatory approach).
- Timeline — MAS legislation timeline and versioning materials (useful for confirming the applicable version as at the relevant transaction 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. 16) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.