Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 17) Regulations 2005
- Act Code: SFA2001-S545-2005
- Legislative Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Regulation Number: SL 545/2005
- Date of Making: 16 August 2005
- Commencement: 17 August 2005
- Status: Current version (as at 27 March 2026)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (“Bonds”, “stabilising action”)
- Section 3: Exemption from sections 197 and 198 of the SFA for specified stabilising action
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 17) Regulations 2005 (“Stabilising Action Regulations”) create a targeted regulatory carve-out in Singapore’s market conduct framework. In essence, the Regulations permit certain market stabilisation activities in relation to a specific bond issuance, even though the general market conduct rules in the Securities and Futures Act (SFA) would otherwise restrict those activities.
Market stabilisation is a practice commonly used during or shortly after the launch of a new security. The stabilising party may buy (or offer to buy) the relevant securities to help maintain an orderly market and reduce excessive volatility. However, because stabilisation can resemble prohibited conduct—such as manipulation or misleading price formation—securities laws typically impose strict limits and conditions. This Regulations package provides a narrow exemption for a defined stabilisation scenario.
Practically, the Regulations are not a general authorisation for stabilisation in all bond offerings. Instead, they are tied to a particular set of “Bonds” and a particular stabilising participant (Goldman Sachs (Singapore) Pte. and its related corporations), and they apply only within a defined time window after issuance. This makes the instrument highly relevant for transaction counsel, compliance officers, and legal teams supporting underwriting and distribution arrangements.
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 17 August 2005. For practitioners, this matters when assessing whether stabilising activity falls within the legal permission period. Because the Regulations are dated to the issuance timeline, counsel should align stabilising conduct with both the statutory exemption and the bond issuance date.
2. Definitions: the “Bonds” and “stabilising action” (Section 2)
Section 2 is the heart of the Regulations because it defines the scope with precision.
“Bonds” are defined as the 5-year fixed rate amortising bonds due August 2010 issued by Chartered Semiconductor Manufacturing Ltd for a principal amount of up to US$75 million. Importantly, the definition also specifies that each bond is to be sold together with one of the 5-year convertible redeemable preference shares due August 2010 issued by the same issuer for a principal amount of up to US$500 million. This indicates that the stabilisation exemption is linked to a structured offering where bonds are bundled with preference shares.
“stabilising action” is defined as an action taken in Singapore or elsewhere by Goldman Sachs (Singapore) Pte. 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 significant in two ways:
- It restricts the stabilising party to Goldman Sachs (Singapore) Pte. and its related corporations.
- It covers not only actual purchases but also offers or agreements to buy—meaning compliance teams must consider communications and conditional commitments, not just executed trades.
3. The exemption from market conduct provisions (Section 3)
Section 3 provides the operative legal effect. It states that sections 197 and 198 of the Act 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, with respect to stabilising action taken by:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
Although the extract does not reproduce the text of sections 197 and 198, the structure indicates that those provisions are part of the SFA’s market conduct rules—likely rules that would otherwise restrict certain dealing practices during distribution or in connection with price formation. The exemption therefore functions as a statutory permission: stabilising action that fits the defined parameters is treated as outside the scope of those prohibitions.
Key practical constraints embedded in Section 3
- Time limit: only stabilising action “within 30 days from the date of issue” is exempt. Counsel should ensure the “date of issue” is clearly identified in offering documentation and that stabilisation records track the relevant dates.
- Security specificity: the exemption applies only to the defined “Bonds” (including the bundled preference share structure).
- Participant categories: the exemption is available only where the stabilising action is taken by a person within section 274 or by a sophisticated investor (as defined). This requires careful mapping of counterparties and roles in the transaction.
- Geographic reach: “stabilising action” may be taken in Singapore or elsewhere, and the market price may be stabilised in Singapore or elsewhere. This is relevant for cross-border trading and for ensuring that foreign-market conduct is still captured by the exemption.
How Is This Legislation Structured?
The Regulations are short and structured around three provisions:
- Section 1 (Citation and commencement): identifies the instrument and its effective date.
- Section 2 (Definitions): defines the two critical concepts—what the “Bonds” are and what constitutes “stabilising action”.
- Section 3 (Exemption): provides the legal exemption from specified SFA provisions (sections 197 and 198) for stabilising action meeting the defined criteria, including the 30-day post-issue window and the relevant categories of persons.
From a practitioner’s perspective, the Regulations operate as a targeted “exception regulation” rather than a comprehensive code. It should be read alongside the SFA provisions it references (sections 197, 198, 274, and 275(2)) and alongside any broader stabilisation framework under the SFA and related subsidiary legislation.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the defined “Bonds” and are directed at the conduct of Goldman Sachs (Singapore) Pte. and its related corporations, as the stabilising party is built into the definition of “stabilising action”. However, the exemption in Section 3 also requires that the stabilising action be taken by a person within section 274 of the SFA or by a sophisticated investor under section 275(2). This means that the exemption’s availability depends not only on who is trading, but also on how the relevant parties fit within the SFA’s defined categories.
In practical terms, the Regulations are most relevant to:
- Underwriters, dealers, and distribution participants involved in the issuance and market support of the specified bonds;
- Compliance and legal teams advising on whether stabilisation trades could breach market conduct prohibitions;
- Issuers and transaction counsel coordinating offering timelines and ensuring that stabilisation activities align with the exemption window and documentation.
Why Is This Legislation Important?
This Regulations instrument is important because it demonstrates how Singapore law balances two competing objectives: (i) preventing market manipulation and improper price support, and (ii) allowing legitimate stabilisation practices that support orderly markets during security issuance. By carving out stabilising action from certain prohibitions, the Regulations provide legal certainty for a specific transaction and stabilisation programme.
For practitioners, the value lies in the precision of the exemption. The Regulations do not merely say “stabilisation is allowed”; they define the exact securities, the stabilising actor, the permissible conduct (including offers or agreements to buy), and the limited time period. This precision reduces ambiguity and helps compliance teams implement controls—such as trade monitoring, record-keeping, and internal approvals—within the boundaries of the exemption.
From an enforcement and risk perspective, the exemption’s narrow scope means that conduct outside the defined parameters could still trigger liability under the SFA’s general market conduct rules. Therefore, lawyers should treat Section 3 as a checklist: confirm the bonds match the definition, confirm the stabilising party and its related corporations, confirm the counterparty/role fits section 274 or sophisticated investor status, and confirm the trades occur within the 30-day post-issue period.
Related Legislation
- Securities and Futures Act (SFA) (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)
- Legislation Timeline (for version control and confirmation of the applicable instrument 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. 17) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.