Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 16) Regulations 2005
- Act Code: SFA2001-S530-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Regulation Number: 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 March 2026 (per provided extract)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (Series A Bonds, Series B Bonds, stabilising action)
- Section 3: Exemption from sections 197 and 198 of the SFA for specified stabilising action in specified bonds within a defined period and subject to specified investor categories
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 Exemption Regulations”) is a targeted regulatory instrument that carves out a narrow exemption from certain market conduct rules under the Securities and Futures Act (SFA). In plain terms, it allows specified market participants to take “stabilising action” in relation to two defined series of convertible bonds issued by Uttam Galva Steels Limited, without being caught by particular prohibitions in the SFA—provided strict conditions are met.
Stabilisation is a familiar concept in securities markets. During or shortly after an issuance, stabilising purchases (or offers to buy) may be used to reduce excessive price volatility and support orderly trading. However, stabilisation can also resemble prohibited market manipulation if not properly constrained. The SFA therefore regulates market conduct, including restrictions that may otherwise prohibit stabilising behaviour. These Regulations provide a controlled exception for stabilising action in respect of specific bonds, within a limited time window, and only involving certain categories of counterparties.
Importantly, this is not a general stabilisation regime for all bonds. It is a bond-specific exemption: it applies only to “Series A Bonds” and “Series B Bonds” as defined, and only to stabilising action taken by Macquarie Securities Limited (or its related corporations). The exemption is also limited to stabilising action within 30 days from the date of issue of the relevant bonds, and only when the stabilising transactions are with persons identified in the SFA or with “sophisticated investors” as defined in the SFA.
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the short title and states that the Regulations came into operation on 8 August 2005. For practitioners, this matters primarily for determining the temporal scope of the exemption—i.e., whether stabilising activity falls within the regulatory framework in force at the relevant time.
2. Definitions that “lock in” the scope (Section 2)
Section 2 is the gateway to the exemption. It defines three critical terms:
- “Series A Bonds”: the 5-year and 1-day 2% convertible bonds due August 2010 issued by Uttam Galva Steels Limited, for a principal amount up to US$25 million, convertible into ordinary shares with a par value of 10 Indian Rupees each.
- “Series B Bonds”: the 5-year and 1-day 2% convertible bonds due August 2010 issued by Uttam Galva Steels Limited, for a principal amount up to US$20 million, convertible into ordinary shares (same par value), and also 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 Bonds or Series B Bonds in order to stabilise or maintain the market price of those bonds.
These definitions are deliberately specific. They ensure that the exemption cannot be extended to other issuers, other bond tranches, or other stabilisation strategies. For counsel advising issuers, arrangers, or dealers, the practical takeaway is that the exemption is “fact-locked”: the bond terms, the issuer, the dealer identity, and the purpose (stabilising or maintaining market price) must align with the statutory definitions.
3. The exemption from SFA sections 197 and 198 (Section 3)
Section 3 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 defined bonds, subject to three main conditions:
- Time limit: stabilising action must be taken within 30 days from the date of issue of the relevant bonds (Series A within 30 days of issue of Series A Bonds; Series B within 30 days of issue of Series B Bonds).
- Counterparty category: the stabilising action must be 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.
- Nature of action: the action must fall within the defined concept of “stabilising action” (i.e., buying or offering/agreeing to buy the specified bonds to stabilise or maintain market price, taken by Macquarie Securities Limited or its related corporations).
While the extract does not reproduce sections 197 and 198 of the SFA, the structure indicates that those provisions likely impose prohibitions or restrictions on certain market conduct behaviours that could otherwise capture stabilisation. The Regulations therefore function as a targeted “safe harbour” for stabilising behaviour, but only for the specified bonds and only under the specified conditions.
4. Compliance implications of the counterparty limitation
A particularly important practitioner point is the counterparty restriction. The exemption is not simply “any stabilising trades.” It is stabilising action “with” persons in section 274 or sophisticated investors. This means that if stabilising purchases are executed with retail investors or other categories not covered by those definitions, the exemption may not apply, and the stabilising trades could be exposed to the prohibitions in sections 197 and 198. In practice, counsel should ensure that trade documentation, order routing, and investor eligibility checks are aligned with the SFA definitions.
How Is This Legislation Structured?
The Regulations are short and structured around three provisions:
- Section 1 (Citation and commencement): sets the name and effective date.
- Section 2 (Definitions): defines the bond series and the stabilising action, including the specific dealer (Macquarie Securities Limited and related corporations) and the purpose (stabilise or maintain market price).
- Section 3 (Exemption): provides the operative exemption from SFA sections 197 and 198, with conditions on timing (30 days from issue) and counterparties (section 274 persons or sophisticated investors).
There are no additional parts or schedules in the extract. The Regulations operate as a narrow, bond-specific exemption rather than a comprehensive market conduct framework.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to parties involved in stabilising action for the defined bonds—most directly Macquarie Securities Limited and its related corporations—because the definition of “stabilising action” is limited to actions taken by those entities. However, the exemption’s effect also matters to other market participants (for example, issuers, arrangers, and trading counterparties) because it determines whether stabilising trades are legally permissible under the SFA’s market conduct restrictions.
The exemption is also conditional on the counterparty category. Stabilising action must be taken with persons referred to in section 274 of the SFA or with sophisticated investors under section 275(2) of the SFA. Therefore, even if the stabilising dealer and bond series match the definitions, the exemption may fail if the trades are executed with ineligible counterparties.
Why Is This Legislation Important?
This legislation is important because it demonstrates how Singapore’s market conduct rules balance two competing policy objectives: (1) allowing legitimate market stabilisation to support orderly trading after issuance, and (2) preventing stabilisation from becoming a vehicle for manipulation. By granting a narrowly tailored exemption, the Monetary Authority of Singapore (MAS) provides legal certainty for stabilising activity that meets defined parameters.
For practitioners, the key significance lies in the precision of the exemption. The Regulations are not a general permission to stabilise. They are a conditional safe harbour tied to specific bond terms, specific dealer identity, a strict 30-day post-issue window, and a restricted set of counterparties. This makes the Regulations highly relevant in transaction documentation and compliance planning for bond issuances where stabilisation is contemplated.
From an enforcement and risk perspective, the counterparty limitation and time limit are likely the most common failure points. If stabilising action occurs outside the 30-day window, or if trades are executed with counterparties not within section 274 or not “sophisticated investors,” the exemption would not apply. In that scenario, the stabilising trades could be assessed under the prohibitions in sections 197 and 198 of the SFA, potentially exposing the dealer and related parties to regulatory action.
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 (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline (legislation timeline reference in the provided metadata)
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.