Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 2) Regulations 2004
- Act Code: SFA2001-S98-2004
- Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Power Used: Section 337(1) of the Securities and Futures Act
- Citation: SL 98/2004
- Commencement: 4 March 2004
- Status: Current version as at 27 March 2026 (per the provided extract)
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Authority: 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. 2) Regulations 2004 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 connection with a specific bond issuance.
Stabilising action is a well-known feature of certain securities offerings. During and shortly after issuance, market makers or underwriters may buy (or offer to buy) securities to help maintain orderly trading and reduce excessive price volatility. However, securities laws often restrict conduct that could be construed as market manipulation. This set of Regulations addresses that tension by carving out stabilising conduct from particular statutory prohibitions, but only where the stabilising activity fits within the defined boundaries.
Importantly, the exemption is not general. It applies only to “Bonds” that are expressly defined in the Regulations—fixed rate bonds due March 2011 issued by National Thermal Power Corporation Limited (up to US$200 million). It also applies only to stabilising action carried out within specified time limits and against specified categories of counterparties (including certain persons and “sophisticated investors”).
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and the date the Regulations came into operation. The Regulations “shall come into operation on 4th March 2004.” This matters for practitioners because the exemption is time-sensitive: stabilising activity after the commencement date is capable of being assessed under these Regulations, and the Regulations’ own time limit (discussed below) will be measured from the bond issuance date.
Section 2 (Definitions) is central to the scope of the exemption. Two defined terms drive the analysis:
- “Bonds” are defined with precision: fixed rate bonds due March 2011 issued by National Thermal Power Corporation Limited for a principal amount of up to US$200 million.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by ABN AMRO Bank N.V., Merrill Lynch (Singapore) Pte. Ltd., or any of their related corporations. The action must involve buying, or offering or agreeing to buy, any of the Bonds in order to “stabilise or maintain the market price” of the Bonds in Singapore or elsewhere.
For legal work, these definitions are not merely descriptive—they are the gatekeeping elements. If the instrument is not the specified “Bonds,” or if the stabilising conduct is not carried out by the specified institutions (or their related corporations), the exemption will not be available. Likewise, if the purpose is not to stabilise or maintain market price, the conduct may fall outside the definition and therefore outside the exemption.
Section 3 (Exemption) is the operative provision. It states that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to stabilising action carried out in respect of any of the Bonds with either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
Although the extract does not reproduce sections 197, 198, 274, and 275, the structure indicates that the SFA contains prohibitions (or restrictions) on certain market conduct, and that those prohibitions are being disapplied for stabilising action when the counterparty is within a defined class. Practically, this means that the exemption is designed to permit stabilising conduct in a controlled setting—where the counterparties are either within a regulated category of persons (section 274) or are sophisticated investors (section 275(2)).
Section 3(2) (Time limit) imposes a hard stop: the exemption “shall not apply” to stabilising action carried out at any time after the expiry of 30 calendar days from the date of the issuance of the Bonds. This is a key compliance point. Even if the stabilising activity is otherwise within the defined institutions and counterparties, it will not be exempt if it occurs outside the 30-day window.
From a practitioner’s perspective, this time limit requires careful documentation. Market conduct compliance teams typically track: (i) the issuance date of the Bonds, (ii) the dates of each stabilising trade or commitment, and (iii) the identity and status of counterparties. The exemption is only as good as the evidence supporting that the stabilising action occurred within the permitted period and with permitted counterparties.
How Is This Legislation Structured?
The Regulations are extremely concise and consist of three substantive provisions:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions of “Bonds” and “stabilising action.” These definitions are essential for determining whether any given conduct falls within the Regulations.
- Section 3 creates the exemption by disapplying specified SFA provisions (sections 197 and 198) to stabilising action, but only subject to (i) the counterparty categories and (ii) the 30-calendar-day limit.
There are no additional parts, schedules, or procedural requirements in the extract. That simplicity is itself meaningful: the Regulations rely on the SFA’s existing framework for what constitutes market conduct restrictions and who qualifies as a sophisticated investor or a person referred to in section 274.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the defined Bonds. In practical terms, the exemption is relevant to the institutions that may conduct stabilising activity—namely ABN AMRO Bank N.V., Merrill Lynch (Singapore) Pte. Ltd., and any of their related corporations. If those entities (or their related corporations) undertake stabilising purchases or purchase commitments, the exemption may be invoked to avoid the application of the SFA provisions specified in section 3(1).
However, the exemption is also constrained by the counterparty and timing conditions. Stabilising action must be carried out with either (i) persons referred to in section 274 of the SFA or (ii) sophisticated investors as defined in section 275(2). Additionally, the stabilising action must occur within 30 calendar days from the issuance date of the Bonds. Therefore, even within the relevant institutions, not all stabilising activity will be exempt.
Why Is This Legislation Important?
This Regulations matters because it provides legal certainty for a specific, time-bound market practice: stabilisation of bond prices during the post-issuance period. Without an exemption, stabilising trades could potentially be scrutinised under general market conduct prohibitions. By disapplying sections 197 and 198 of the SFA for qualifying stabilising action, the Regulations reduce the risk that legitimate stabilisation is treated as unlawful market manipulation.
For practitioners advising issuers, underwriters, or financial institutions, the Regulations highlight three compliance pillars:
- Instrument specificity: the exemption is limited to the defined Bonds (National Thermal Power Corporation Limited fixed rate bonds due March 2011, up to US$200 million). Advice must confirm the exact bond terms and issuance details.
- Counterparty eligibility: stabilising trades must be with persons in the section 274 category or with sophisticated investors under section 275(2). This requires diligence on counterparty classification and documentation.
- Time window control: stabilising action must occur within 30 calendar days from issuance. Trading systems and compliance monitoring must be able to evidence trade dates and link them to the issuance date.
From an enforcement perspective, the MAS can focus on whether the stabilising activity fits the exemption’s boundaries. Because the Regulations are narrow, any deviation—wrong bond, wrong institution, wrong counterparty category, or trades after the 30-day period—could expose the conduct to the underlying SFA prohibitions that the exemption otherwise disapplies.
Finally, the Regulations illustrate how Singapore’s market conduct regime balances market integrity with practical underwriting mechanics. Stabilisation can support orderly markets, but it must be constrained to avoid undermining fair price discovery. This instrument is one example of how the legal framework permits controlled stabilisation while maintaining regulatory oversight.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions disapplied by section 3 of these Regulations)
- Sections 274 and 275(2) (counterparty categories referenced in the exemption)
- Section 337(1) (authorising power for MAS to make these Regulations)
- Futures Act (referenced in the provided metadata as related legislation)
- Stabilising Act (referenced in the provided metadata as related legislation)
- Timeline (referenced in the provided metadata as a navigation aid for versions)
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. 2) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.