Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 19) Regulations 2005
- Act Code: SFA2001-S597-2005
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Power Used: Section 337(1) of the Securities and Futures Act
- Commencement: 16 September 2005
- Regulatory Status: Current version as at 27 March 2026 (per the legislation portal)
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Enacting Formula: Made by the Monetary Authority of Singapore (MAS)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 19) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In essence, it creates a narrow exemption from certain market conduct restrictions in the Securities and Futures Act (“SFA”) for stabilising activities carried out in relation to a specific bond issuance.
Market conduct rules in the SFA are designed to protect investors and maintain fair and orderly markets. They generally restrict conduct that could distort prices or mislead investors. However, in many capital market transactions—particularly new bond issuances—market participants may undertake “stabilising action” to support liquidity and reduce excessive price volatility immediately after issuance. The Regulations recognise that such stabilisation, if properly bounded, can be consistent with market integrity.
Accordingly, these Regulations exempt stabilising actions taken within a defined time window (30 days from the date of issue) in respect of defined “Bonds”, when those actions are carried out by specified categories of persons (persons referred to in section 274 of the SFA, or sophisticated investors as defined in section 275(2) of the SFA). The exemption is therefore not a general permission to stabilise; it is a transaction-specific and time-limited carve-out.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and states that the Regulations come into operation on 16 September 2005. For practitioners, this matters because the exemption is tied to the bond issuance and the relevant “30 days from the date of issue” period. Establishing the commencement date helps confirm that the regulatory instrument was in force for the relevant stabilisation activities.
Section 2 (Definitions) is critical because it defines both the scope of the bonds and the meaning of “stabilising action”. The Regulations define “Bonds” as fixed to floating rate perpetual subordinated bonds issued in September 2005 by Resona Bank, Limited, with principal amounts capped at up to US$2,000,000,000 and up to EURO 1,500,000,000. This definition is highly specific: only those bonds fall within the exemption.
The definition of “stabilising action” is equally precise. It refers to an action taken in Singapore or elsewhere by Merrill Lynch International (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. Two practical points follow from this wording:
- First, the exemption is linked to a particular stabilising actor (Merrill Lynch International and related corporations). Other dealers cannot assume the exemption applies merely because they engage in similar conduct.
- Second, the conduct is not limited to actual purchases; it includes offers or agreements to buy. Lawyers advising on compliance should therefore consider documentation and communications that could be characterised as an “offer” or “agreement” to buy.
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 carried out with 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 provided does not reproduce sections 197, 198, 274, and 275, the structure indicates that sections 197 and 198 contain prohibitions or restrictions relevant to market conduct—likely concerning dealings, trading practices, or conduct that could affect market pricing. The exemption therefore removes the application of those prohibitions for the specified stabilising action.
From a compliance perspective, the exemption is conditional in at least three ways:
- Time-limited: stabilising action must be taken within 30 days from the date of issue.
- Instrument-specific: the action must relate to the defined Resona Bank perpetual subordinated bonds issued in September 2005.
- Counterparty/participant-specific: the stabilising action must be taken with a person in section 274 or with a sophisticated investor (section 275(2)).
Practitioners should also note the geographic element embedded in the definition of stabilising action: the action may be taken in Singapore or elsewhere, and the stabilisation objective may relate to maintaining market price in Singapore or elsewhere. This matters for cross-border dealing arrangements and for determining which regulatory framework applies to the stabilising dealer’s conduct.
How Is This Legislation Structured?
The Regulations are short and consist of an enacting formula followed by three substantive provisions:
- Section 1: Citation and commencement.
- Section 2: Definitions of “Bonds” and “stabilising action”.
- Section 3: The exemption from the application of specified SFA provisions (sections 197 and 198) for stabilising action in relation to the defined bonds within the specified period and involving specified categories of persons.
There are no additional parts or schedules in the extract. The legislative design is therefore “precision by definition”: the Regulations narrow the exemption through carefully drafted definitions and a single operative exemption clause.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the defined Resona Bank bonds. In practical terms, the exemption is most relevant to the stabilising dealer—defined as Merrill Lynch International and its related corporations—because the definition of “stabilising action” is tied to that entity group.
However, the exemption also depends on the identity of the counterparty or participant in the stabilising dealings. Section 3 requires that the stabilising action be taken “with” either a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). Accordingly, the exemption is not only about who performs the stabilising trades, but also about who the trades are conducted with. Lawyers should therefore assess the status of counterparties against the SFA’s definitions and categories.
Why Is This Legislation Important?
This Regulations matters because it illustrates how Singapore’s market conduct framework balances investor protection with the practical realities of capital markets. Stabilisation can reduce disorderly trading and support price discovery after issuance, but it can also raise concerns about market manipulation if not properly constrained. By carving out stabilising action from specific prohibitions, the Regulations provide a legally recognised pathway for stabilisation—provided the strict conditions are met.
For practitioners, the key value lies in the certainty the exemption provides. Without such an exemption, stabilising trades might be argued to fall within the scope of prohibitions in sections 197 and 198 of the SFA. The Regulations therefore reduce legal risk for the stabilising dealer and its advisers, but only within the defined boundaries.
In transaction documentation and compliance programmes, this instrument should prompt careful attention to:
- Deal scope: confirm that the bonds traded are the exact instruments described (issuer, type, issuance month, and principal caps).
- Timing: track the “date of issue” and ensure stabilising action occurs within the 30-day window.
- Counterparty eligibility: verify whether counterparties fall within section 274 or qualify as sophisticated investors under section 275(2).
- Conduct characterisation: ensure that communications and arrangements (including offers or agreements to buy) are consistent with the definition of stabilising action.
Because the Regulations are transaction-specific and actor-specific, they also serve as a reminder that stabilisation permissions in Singapore are often not generic. Counsel should not assume that stabilisation exemptions for one issuance automatically apply to other issuances or other dealers.
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 legislation metadata)
- Stabilising Act (as referenced in the legislation metadata)
- 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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.