Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 18) Regulations 2005
- Act Code: SFA2001-S592-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Citation: SL 592/2005
- Commencement: 15 September 2005
- Status: Current version as at 27 March 2026 (per the provided extract)
- 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. 18) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument made under the Securities and Futures Act (SFA). Its central function is to carve out a narrow exemption from certain market conduct restrictions that would otherwise apply to stabilising trades in specified bonds.
In plain language, the Regulations recognise that, during the early period after a bond is issued, market participants may undertake “stabilising action” to help maintain orderly trading and prevent excessive volatility. Such activity can be legitimate in the context of a new issuance, but it can also resemble conduct that market conduct rules are designed to prevent (for example, manipulative or misleading trading). The Regulations therefore provide a controlled exemption, but only for a defined class of bonds, a defined stabiliser, and a defined time window.
Importantly, the exemption is not general. It is limited to stabilising action taken in respect of particular bonds issued by Hotel Leelaventure Limited, and it applies only within 30 days from the date of issue. Further, the exemption is available only when the stabilising action is taken by specified categories of persons, namely a person referred to in section 274 of the SFA or a “sophisticated investor” as defined in section 275(2) of the SFA.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and sets the effective date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 18) Regulations 2005” and come into operation on 15 September 2005. For practitioners, this matters when assessing whether stabilising trades were conducted within the regulatory framework and whether any enforcement analysis would apply from that date.
Section 2 (Definitions) is the engine of the Regulations because it defines the scope of both the instruments and the conduct. Two key terms are defined:
“Bonds” are specifically identified as the 5-year and 1-day 1% convertible bonds due September 2010 issued by Hotel Leelaventure Limited, for a principal amount of up to EURO 73 million. The definition also describes the conversion feature: the bonds are convertible into ordinary shares of Hotel Leelaventure Limited with a par value of 10 Indian Rupees each. This level of specificity is crucial—stabilising trades in other bonds, even if similar in structure, would not automatically fall within the exemption.
“stabilising action” is defined as an action taken in Singapore or elsewhere by Macquarie Bank Limited (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. The definition is therefore both:
- Person-specific: it is tied to Macquarie Bank Limited and its related corporations; and
- Conduct-specific: it covers buying and offers/agreements to buy, directed at stabilising or maintaining market price.
Section 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the Act shall not apply to stabilising action taken in respect of any of the Bonds, within 30 days from the date of issue, provided that the stabilising action is taken with one of the following:
- (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.
From a practitioner’s perspective, the exemption is best understood as a conditional “permission” that suspends the application of specified market conduct provisions for a limited period and for a limited set of counterparties. The key elements to check in any compliance review are:
- Timing: stabilising action must occur within 30 days from the date of issue of the bonds.
- Instrument identity: the trades must relate to the defined Hotel Leelaventure convertible bonds.
- Actor: the stabilising action must be taken by Macquarie Bank Limited or its related corporations (as defined in section 2).
- Counterparty category: the stabilising action must be taken with a person falling within section 274 or with a sophisticated investor under section 275(2).
Although the extract does not reproduce sections 197 and 198 of the SFA, the structure indicates that those sections impose restrictions on certain dealing or market conduct activities. The Regulations effectively remove the risk of breach for stabilising trades that meet the defined criteria. For lawyers, the practical takeaway is that compliance cannot be assessed solely by “stabilising” intent; it must be assessed against the statutory conditions.
How Is This Legislation Structured?
The Regulations are short and structured in a conventional format for Singapore subsidiary legislation:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption (the specific bonds and the stabilising action, including the stabiliser).
- Section 3 contains the exemption from the application of specified SFA provisions (sections 197 and 198), subject to timing and counterparty conditions.
There are no additional parts or schedules in the provided extract, reflecting the Regulations’ purpose as a narrowly tailored exemption instrument rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
The Regulations apply to persons who engage in stabilising action in relation to the defined bonds, but the exemption is specifically framed around stabilising action taken by Macquarie Bank Limited or its related corporations. In practice, this means the primary compliance burden sits with the stabilising arranger/dealer and its corporate group entities that execute or authorise stabilising trades.
However, the exemption also depends on the counterparty category. The stabilising action must be taken with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor under section 275(2). Accordingly, the Regulations indirectly affect how counterparties are selected and documented during the stabilisation period, because trades that otherwise look like stabilising trades could fall outside the exemption if the counterparty does not meet the statutory category.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework balances two competing objectives: (1) preventing manipulative or improper trading practices, and (2) allowing legitimate stabilisation in connection with new bond issuances. By exempting stabilising action from particular SFA provisions, it provides legal certainty to market participants who perform stabilisation activities in a controlled manner.
For practitioners advising issuers, lead managers, or dealing firms, the Regulations offer a compliance roadmap. The exemption is not “automatic” for any stabilisation activity; it is conditional on meeting all defined criteria—especially the instrument, the stabiliser, the 30-day window, and the counterparty category. This makes it essential to maintain robust trade documentation (e.g., evidence of the bond series, the stabilisation purpose, the timing relative to the issue date, and the counterparty classification).
From an enforcement perspective, the Regulations also signal that stabilising action is treated as potentially sensitive conduct. The exemption’s narrow drafting suggests that regulators expect stabilisation to be conducted within defined boundaries. If stabilising activity occurs outside the 30-day period, in respect of different bonds, or with counterparties not within the specified categories, the exemption would likely not apply, exposing the firm to potential liability under the underlying SFA provisions.
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).
- Futures Act (as referenced in the provided metadata context)
- Stabilising Act (as referenced in the provided metadata context)
- Timeline (legislation timeline reference in the provided source interface)
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. 18) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.