Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 19) Regulations 2004
- Act Code: SFA2001-S621-2004
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically section 337(1)
- Enacting authority: Monetary Authority of Singapore (MAS)
- Citation: SL 621/2004
- Commencement: 8 October 2004
- Status: Current version as at 27 March 2026 (per the legislation portal)
- Key provisions: 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. 19) Regulations 2004 (“Stabilising Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain “market conduct” rules in the Securities and Futures Act (the “SFA”) for stabilising activities carried out in relation to a specific bond issuance.
Market conduct provisions in the SFA are designed to prevent improper trading practices, including conduct that may mislead investors or distort market prices. However, in some capital markets transactions—particularly new bond issuances—market participants may undertake “stabilising action” to support orderly trading and reduce volatility immediately after issuance. The Regulations recognise that stabilisation, if properly constrained, can serve a legitimate market function.
Accordingly, the Regulations exempt stabilising action from the application of sections 197 and 198 of the SFA, but only for a defined set of bonds, a defined stabiliser, and a defined time window (30 days from the date of issue). The exemption is also limited to stabilising action undertaken by specified categories of persons (as referenced in the SFA) or by sophisticated investors.
What Are the Key Provisions?
Section 1: Citation and commencement provides the formal name of the Regulations and states that they come into operation on 8 October 2004. For practitioners, this matters primarily for determining whether stabilising conduct falls within the regulatory framework applicable at the time of the relevant bond issuance and trading period.
Section 2: Definitions is crucial because the exemption is highly specific. Two defined terms drive the scope of the Regulations:
- “Bonds” are defined narrowly as the 7-year zero coupon convertible bonds due October 2011 issued by Lopro Corporation, for a principal amount of up to ¥15,000,000,000, convertible into fully paid and non-assessable shares of common stock of Lopro Corporation.
- “stabilising action” means an action taken in Singapore or elsewhere by Deutsche Bank AG London (or any of its related corporations) to buy, or 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.
From a legal compliance perspective, these definitions mean that the exemption is not a general stabilisation regime. It is an exemption tied to a particular instrument (the Lopro convertible bonds) and a particular stabilising actor (Deutsche Bank AG London and its related corporations). If stabilising activity is carried out in respect of different bonds, or by different entities, the exemption will not automatically apply.
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 any of the Bonds, within 30 days from the date of issue, with stabilising action undertaken by either:
- (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.
Although the extract does not reproduce sections 197, 198, 274, or 275, the structure signals how the exemption operates:
- Temporal limitation: stabilising action must occur within 30 days from the bond issue date.
- Instrument limitation: the action must be in respect of the defined “Bonds”.
- Actor limitation: the stabilising action must be taken by persons within the SFA’s specified category (section 274) or by sophisticated investors (section 275(2)).
- Regulatory effect: the stabilising action is carved out from the prohibitions or requirements in sections 197 and 198.
For practitioners, the most important compliance question is whether the stabilising conduct fits squarely within all three constraints—time, bond identity, and permitted category of person. The Regulations do not suggest a “reasonableness” or “public interest” test; instead, they provide a formal exemption conditioned on meeting defined criteria.
Practical reading of the exemption: The Regulations appear designed to allow a lead or stabilising bank (Deutsche Bank AG London and related corporations) to support price formation in the immediate post-issuance period, without triggering the SFA’s market conduct restrictions that would otherwise apply to trading activity. However, the exemption is not open-ended; it is limited to the first 30 days and to the specified bond issue.
How Is This Legislation Structured?
The Regulations are short and structured around three sections:
- Section 1 (Citation and commencement): sets the legal identity and start date.
- Section 2 (Definitions): defines “Bonds” and “stabilising action” with high specificity, thereby controlling the scope of the exemption.
- Section 3 (Exemption): provides the operative carve-out from the SFA’s sections 197 and 198, conditioned on the timing (30 days), the bond type, and the category of person taking the stabilising action.
There are no additional parts or schedules in the extract, reflecting the Regulations’ function as a transaction-specific exemption instrument rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
The Regulations apply to parties involved in stabilising action in relation to the defined Lopro convertible bonds. In practice, this will typically include the stabilising entity (here, Deutsche Bank AG London and its related corporations, as defined) and any other persons who may be involved in executing or arranging stabilising trades within the exemption’s conditions.
However, the exemption’s availability depends on the stabilising action being taken by a person falling within section 274 of the SFA or by a sophisticated investor under section 275(2) of the SFA. Therefore, the Regulations do not merely regulate “any market participant”; they regulate the subset of participants who can rely on the exemption for stabilising conduct. Lawyers advising issuers, underwriters, or trading desks should confirm the relevant status of the executing entity and the investor classification, as those are gating issues for whether the carve-out applies.
Why Is This Legislation Important?
Although the Regulations are narrow, they are significant because they demonstrate how Singapore’s market conduct framework accommodates legitimate market practices while preserving investor protection. Stabilising action can be controversial if it is used to mislead the market; the exemption therefore operates as a controlled exception rather than a blanket permission.
For practitioners, the key value of the Regulations lies in their precision. They provide a clear legal basis to structure stabilising activities for a specific bond issuance without breaching the SFA’s market conduct provisions in sections 197 and 198. This can reduce legal uncertainty for transaction parties and help ensure that stabilising activity is documented and executed within a defined compliance perimeter.
From an enforcement and risk perspective, the limitations are equally important. The exemption is time-bound (30 days), instrument-bound (the specific Lopro bonds), and person-bound (section 274 persons or sophisticated investors). If stabilising trades fall outside these boundaries—such as extending beyond the 30-day period, stabilising different securities, or involving a non-qualifying counterparty—the exemption may not apply, exposing the conduct to potential regulatory action under the underlying SFA provisions.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions from which the exemption applies)
- Section 274 (category of persons referenced for eligibility)
- Section 275(2) (definition of “sophisticated investor”)
- Section 337(1) (authorising provision for MAS to make these Regulations)
- Futures Act (listed in the metadata as related legislation)
- Stabilising Act (listed in the metadata as related legislation)
- Timeline (legislation portal timeline reference)
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. 19) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.