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
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Enacting authority: Monetary Authority of Singapore (MAS)
- Citation: SL 597/2005
- Commencement: 16 September 2005
- Status: Current version as at 27 March 2026 (per the legislation record)
- 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 2005 is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain market conduct rules in the Securities and Futures Act (SFA) for specific “stabilising actions” carried out in relation to a particular bond issuance.
Market conduct provisions in the SFA are designed to prevent manipulative or misleading trading practices and to ensure fair dealing in securities markets. However, in some bond offerings, it is common for market participants to take stabilising steps—such as buying or offering to buy bonds—to support liquidity and reduce volatility immediately after issuance. This Regulations addresses the tension between (i) prohibitions on certain dealing conduct and (ii) the practical need for stabilisation in a new bond issue.
Accordingly, the Regulations does not broadly legalise stabilisation. Instead, it narrowly exempts stabilising actions taken within a defined time window (30 days from issue) and only for specified bonds issued by a specified issuer (Resona Bank, Limited) in September 2005, and only when the stabilising action is taken by specified persons or categories of investors.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations came into operation on 16 September 2005. This matters for practitioners because the exemption can only apply to stabilising actions taken after the Regulations is in force (subject to how the 30-day stabilisation period is calculated in practice, i.e., from the “date of issue of the Bonds”).
2. Definitions (Regulation 2)
The Regulations contains two critical definitions that determine the scope of the exemption:
- “Bonds” are defined very specifically as fixed to floating rate perpetual subordinated bonds issued in September 2005 by Resona Bank, Limited, with principal amounts capped at US$2,000,000,000 and EURO 1,500,000,000. This specificity is a hallmark of exemption regulations: the exemption is not intended to apply to other bond issues, even if they are similar in structure.
- “stabilising action” is defined as 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.
For legal analysis, these definitions are decisive. If the stabilising activity is carried out by a different entity (not Merrill Lynch International or its related corporations), or if the activity is not directed at stabilising/maintaining market price, the exemption may not apply. Similarly, if the bonds are not within the defined issuance parameters, the exemption will not be available.
3. The exemption from sections 197 and 198 of the Act (Regulation 3)
The operative provision is Regulation 3. It provides that sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of the defined Bonds within 30 days from the date of issue.
The exemption is further conditioned on the stabilising action being taken with one of two categories of counterparties/participants:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, Regulation 3 creates a “safe harbour” for certain stabilisation conduct, but only when the dealings occur with specified types of persons. This is important for compliance planning: stabilising activity may still be constrained by who the stabiliser can transact with, and by the need to ensure that counterparties fall within the relevant statutory categories.
4. Temporal limitation: “within 30 days from the date of issue”
Even if all other conditions are met, the exemption is time-bound. The stabilising action must occur within 30 days from the “date of issue” of the Bonds. For practitioners, this raises operational questions: what constitutes the “date of issue” for the bonds (e.g., issue date stated in offering documentation, settlement date, or another contractual milestone)? Compliance teams typically align their monitoring and record-keeping to the issue date stated in the bond documentation and prospectus/offering circular.
How Is This Legislation Structured?
The Regulations is short and consists of an enacting formula and three substantive regulations:
- Regulation 1 (Citation and commencement): sets the name and commencement date.
- Regulation 2 (Definitions): defines “Bonds” and “stabilising action” with precision, anchoring the exemption to a particular bond issuance and a particular stabiliser (Merrill Lynch International and related corporations).
- Regulation 3 (Exemption): provides the exemption from specified SFA provisions (sections 197 and 198) for stabilising actions within a 30-day period and subject to counterpart categories (section 274 persons or sophisticated investors under section 275(2)).
There are no additional parts or schedules in the extract provided, reflecting the Regulations’ narrow, transaction-specific nature.
Who Does This Legislation Apply To?
The exemption is directed at stabilising actions in relation to the defined Bonds. While the Regulations is framed as an exemption from the SFA’s market conduct provisions, the practical beneficiaries are the entities conducting stabilisation—here, Merrill Lynch International and its related corporations—and the persons with whom they deal (persons within section 274 or sophisticated investors under section 275(2)).
It is also important to note who is not covered. The exemption does not automatically extend to other dealers, arrangers, or market participants who may participate in secondary trading. Unless their conduct fits within the definition of “stabilising action” (including the identity of the stabiliser) and the counterparties fall within the statutory categories, the exemption may not apply.
Why Is This Legislation Important?
This Regulations is significant because it demonstrates how Singapore manages the regulatory balance between market integrity and market functioning. Stabilisation can be a legitimate mechanism to support orderly trading after issuance, but it can also resemble prohibited market manipulation if not carefully bounded. By carving out a narrow exemption, MAS allows stabilisation while still preserving the general prohibitions in the SFA for conduct outside the defined parameters.
For practitioners, the key value lies in its precision. The exemption is not generic; it is tied to:
- a specific bond issuance (Resona Bank, September 2005; defined principal caps),
- a specific stabiliser (Merrill Lynch International and related corporations),
- a defined purpose (stabilise or maintain market price),
- a defined time window (30 days from issue), and
- defined counterpart categories (section 274 persons or sophisticated investors).
From an enforcement and compliance perspective, these limitations reduce ambiguity. A compliance officer advising on stabilisation must be able to evidence that the stabilising trades were executed within the permitted period, by the permitted entity, in relation to the permitted bonds, and with permitted counterparties. The Regulations therefore functions as a compliance “checklist” for whether stabilising conduct can be treated as exempt from the relevant SFA provisions.
Finally, the Regulations is a reminder that exemptions in Singapore securities regulation are typically legislatively enumerated and fact-specific. Even where stabilisation is commercially common, legal permissibility depends on fitting within the exemption’s defined boundaries.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act (referenced in the metadata as related legislation).
- Stabilising Act (referenced in the metadata as related legislation).
- 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. 19) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.