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)
- Authorising Provision: Section 337(1) of the Securities and Futures Act
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Citation: SL 621/2004
- Commencement: 8 October 2004
- Status: Current version as at 27 March 2026 (per legislation platform timeline)
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Legislative Focus: Exemption from market conduct restrictions for “stabilising action” in relation to specified bonds
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 Action Exemption Regulations”) is a targeted set of subsidiary rules made by the Monetary Authority of Singapore (MAS) under the Securities and Futures Act (SFA). In plain language, it creates a narrow exemption that allows certain market participants to take stabilising actions in connection with a specific bond issue, without breaching particular “market conduct” provisions in the SFA.
Stabilising actions are common in capital markets. When a new bond is issued, liquidity and price discovery may be volatile. Market participants may therefore conduct limited buying (or related offers to buy) to help maintain orderly trading and reduce extreme price fluctuations. However, stabilisation can also raise regulatory concerns—particularly where it might be perceived as manipulative or inconsistent with fair and orderly markets. The SFA contains provisions designed to prevent improper trading practices. These Regulations carve out an exemption, but only for a defined bond and only within a defined time window.
Importantly, this is not a general stabilisation regime applicable to all bonds. The Regulations define “Bonds” very specifically (a particular issue by Lopro Corporation) and define “stabilising action” by reference to a particular stabilising entity (Deutsche Bank AG London and its related corporations). The exemption is therefore highly constrained and should be treated as a bespoke instrument for that bond issuance.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the legal identity of the Regulations and states that they come into operation on 8 October 2004. For practitioners, this matters because the exemption is time-bound and must be assessed against the commencement date and the “within 30 days from the date of issue” requirement in Section 3.
Section 2 (Definitions) sets the scope of the exemption by defining two critical terms: “Bonds” and “stabilising action”. The definition of “Bonds” is highly specific. It refers to the 7-year zero coupon convertible bonds due October 2011 issued by Lopro Corporation, with a principal amount “up to ¥15,000,000,000”, convertible into fully paid and non-assessable shares of common stock of Lopro Corporation. This specificity means that the exemption does not automatically extend to other tranches, other maturities, other issuers, or other convertible instruments.
The definition of “stabilising action” is similarly constrained. It means an action taken in Singapore or elsewhere by Deutsche Bank AG London (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 for two reasons. First, it limits the eligible stabiliser to a particular entity group. Second, it includes not only actual purchases but also offers or agreements to buy—so compliance teams must consider communications and contractual commitments, not merely executed trades.
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, provided the stabilising action is taken with a counterparty that is 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.
From a practitioner’s perspective, Section 3 contains three compliance “gates” that must all be satisfied:
- Gate 1: The activity must be “stabilising action” as defined in Section 2—i.e., undertaken by Deutsche Bank AG London or its related corporations, involving buying (or offers/agreements to buy) the specified Bonds for the purpose of stabilising or maintaining market price.
- Gate 2: The timing must fall within 30 days from the date of issue. The exemption is not indefinite; it is a short-term carve-out intended to cover the initial distribution and early trading period.
- Gate 3: The counterparty must be within the permitted categories—either a person under section 274 of the SFA or a sophisticated investor under section 275(2). This means that even if the stabiliser and the bond are correct, the exemption may fail if the trades are executed with an ineligible counterparty.
While the extract does not reproduce Sections 197 and 198 of the SFA, the legal effect is clear: those provisions are excluded for the specified stabilising actions meeting the conditions. In practice, this exemption is designed to prevent technical breaches of market conduct rules that would otherwise apply to trading activity that could be construed as affecting price or market behaviour.
How Is This Legislation Structured?
The Regulations are structured in a simple, three-section format:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions that determine the scope of the exemption.
- Section 3 contains the exemption from specified SFA provisions, including the time limit and the permitted counterparty categories.
There are no additional parts, schedules, or detailed procedural requirements in the extract. This brevity is typical of bespoke exemption regulations: they focus on defining the instrument and the permitted conduct, rather than establishing a comprehensive stabilisation framework.
Who Does This Legislation Apply To?
Although the exemption is framed as an exemption from the application of Sections 197 and 198 of the SFA, it effectively applies to the stabilising entity and the counterparties involved in stabilising trades. The stabilising action must be taken by Deutsche Bank AG London or its related corporations, and it must relate to the defined Lopro Corporation bond issue.
On the counterparty side, Section 3 limits the exemption to stabilising actions taken with a person falling within section 274 of the SFA or with a sophisticated investor under section 275(2). Therefore, the Regulations are not aimed at retail investors or general market participants; rather, they are aimed at transactions that occur within regulated categories of investors and counterparties.
Why Is This Legislation Important?
This Regulations matters because it reconciles two competing regulatory objectives: (1) allowing legitimate market-making and stabilisation practices that support orderly trading in new issues, and (2) preventing conduct that could be characterised as market manipulation or otherwise inconsistent with market conduct standards.
For practitioners advising issuers, arrangers, or stabilising agents, the key practical impact is that the exemption can remove legal risk under the SFA for certain stabilising trades—but only if the conditions are strictly met. The definition of “Bonds” and the identity of the stabiliser are narrow, and the time window is short (30 days from issue). Additionally, the counterparty restriction means that trade execution and documentation must be checked against the SFA’s investor classification regime.
From an enforcement and compliance perspective, the Regulations also highlight the importance of record-keeping and trade attribution. Because “stabilising action” includes offers or agreements to buy, firms should ensure that internal approvals, communications, and contractual arrangements are aligned with the stabilisation purpose and the permitted counterparties. Where stabilisation is conducted outside the exemption parameters—such as after the 30-day period, in relation to different bonds, or with ineligible counterparties—Sections 197 and 198 of the SFA would presumably apply, exposing the firm and potentially individuals to regulatory scrutiny.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions from which the exemption applies)
- Section 274 (persons eligible for the exemption)
- Section 275(2) (definition of “sophisticated investor”)
- Section 337(1) (power authorising MAS to make such regulations)
- Stabilising Act (as referenced in the platform metadata)
- Futures Act (as referenced in the platform 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. 19) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.