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
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), specifically section 337(1)
- Commencement: 15 September 2005
- Regulation Number: SL 592/2005
- 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 Securities and Futures Act 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. 18) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument that carves out a limited exemption from certain market conduct prohibitions under the Securities and Futures Act (SFA). In plain terms, it allows a specified financial institution to engage in “stabilising action” in relation to a particular bond issue, without breaching the SFA provisions that would otherwise restrict or prohibit certain dealings.
Stabilisation is a common market practice in securities offerings. When new bonds are issued, the market price may be volatile. Under stabilisation arrangements, an appointed dealer may buy (or offer to buy) the relevant bonds for a limited period to help maintain orderly trading conditions and reduce extreme price fluctuations. The law recognises that, if properly constrained, stabilisation can support market functioning—while still requiring safeguards to prevent manipulation.
This particular set of Regulations is narrow in scope. It does not create a general stabilisation regime for all bonds or all issuers. Instead, it defines a specific bond issue—“the 5-year and 1-day 1% convertible bonds due September 2010” issued by Hotel Leelaventure Limited—and specifies who may take the stabilising action (Macquarie Bank Limited and its related corporations). It also limits the exemption to stabilising action taken within 30 days from the date of issue.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the formal name of the Regulations and states that they come into operation on 15 September 2005. For practitioners, this matters when assessing whether stabilising activities were conducted within the legal framework applicable at the time.
Section 2 (Definitions) is the heart of the instrument because it determines the boundaries of the exemption. Two defined terms are critical:
- “Bonds” are precisely 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. They are convertible into ordinary shares of Hotel Leelaventure Limited, with a specified par value (10 Indian Rupees each). This level of specificity means the exemption is not available for other bond series, other issuers, or different terms.
- “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 functional: it focuses on the purpose (stabilisation/price maintenance) and the permitted conduct (buying, offering to buy, agreeing to buy).
Section 3 (Exemption) 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 the Bonds within 30 days from the date of issue, provided the stabilising action is taken with a person falling within one of two categories:
- Section 3(a): a person referred to in section 274 of the Act; or
- Section 3(b): a sophisticated investor as defined in section 275(2) of the Act.
From a practitioner’s perspective, the exemption is conditional in three ways:
- Time-limited: only stabilising action within 30 days from the date of issue is exempt.
- Instrument-specific: only stabilising action in respect of the defined Bonds qualifies.
- Counterparty-specific: the stabilising action must be taken with a counterparty that fits either section 274 or the sophisticated investor definition in section 275(2).
Although the Regulations do not reproduce the text of sections 197 and 198 of the SFA, the legal significance is clear: those sections likely impose prohibitions or restrictions on certain dealings or market conduct. This Regulation removes the applicability of those prohibitions for the narrowly described stabilising activity. In practice, lawyers should treat this as a “safe harbour” (or more precisely, a statutory exemption) that must be strictly complied with, because the exemption is not general and is not open-ended.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with a conventional layout:
- Enacting formula: confirms that the Monetary Authority of Singapore (MAS) makes the Regulations under the powers conferred by section 337(1) of the SFA.
- Section 1: citation and commencement.
- Section 2: definitions that precisely identify the relevant bonds and the stabilisation conduct.
- Section 3: the exemption clause, specifying the SFA provisions excluded, the time window, and the permitted counterparty categories.
Notably, the Regulations contain no schedules or detailed procedural requirements within the extract provided. The legal effect therefore turns primarily on the definitions and the conditions in section 3.
Who Does This Legislation Apply To?
In terms of persons, the exemption is designed for stabilising action taken by Macquarie Bank Limited or its related corporations. The definition of “stabilising action” is drafted to capture actions taken by those entities, which means other market participants cannot rely on this exemption unless they fall within the defined stabilising actor.
In terms of counterparties, section 3 restricts the exemption to stabilising action taken “with” a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). This counterparty limitation is crucial: even if the stabilising actor and the bond issue and time window are correct, the exemption may fail if the stabilising trades were executed with a counterparty outside those categories.
Why Is This Legislation Important?
This Regulation is important because it demonstrates how Singapore law balances two competing policy goals: (1) preventing market manipulation and improper market conduct, and (2) allowing legitimate market stabilisation in connection with securities offerings. By exempting stabilising action from specific SFA provisions, MAS permits a controlled form of market intervention—one that is time-bound, instrument-specific, and counterparty-restricted.
For practitioners, the practical impact is that legal compliance for stabilisation activities must be assessed against the exemption’s conditions. When advising an arranger, dealer, or financial institution involved in a bond issue, counsel should verify:
- the bond terms match the defined “Bonds” (issuer, maturity, coupon, conversion features, and principal amount parameters);
- the stabilising activity is undertaken by the defined stabilising actor (Macquarie Bank Limited or related corporations);
- the stabilisation occurred within the 30-day period from the date of issue; and
- the counterparties were within the categories permitted by section 274 or were sophisticated investors under section 275(2).
From an enforcement and risk perspective, exemptions of this kind are typically interpreted strictly. If stabilising action falls outside the defined scope—such as exceeding the 30-day window, trading in different bonds, or dealing with non-qualifying counterparties—then the exemption would not apply and the underlying SFA prohibitions in sections 197 and 198 could become relevant. Lawyers should therefore treat this Regulation as a compliance checklist rather than a general permission to stabilise.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act (as referenced in the legislation metadata/taxonomy of the platform).
- Stabilising Act (as referenced in the legislation metadata/taxonomy of the platform).
- Legislation Timeline (for version control and amendment history).
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.