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
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Citation: SL 98/2004
- Commencement: 4 March 2004
- Status: Current version (as at 27 Mar 2026)
- Key Provisions: Section 1 (Citation and commencement); 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. 2) Regulations 2004 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory carve-out from certain market conduct rules under the Securities and Futures Act (the “SFA”). In plain language, it allows specified market participants to carry out “stabilising action” in relation to a particular bond issue without the usual statutory restrictions applying—provided the stabilisation is carried out within defined limits.
Stabilisation is a common feature of certain bond and securities offerings. When a new bond is issued, liquidity and price discovery may be volatile in the early trading period. Stabilising action is intended to support orderly trading and reduce extreme price swings. However, stabilisation can also raise market integrity concerns if it is used to mislead investors or artificially influence prices. Accordingly, the SFA contains market conduct provisions that generally restrict stabilisation-like conduct, unless an exemption applies.
This specific set of Regulations is narrow in scope: it is tied to a defined set of “Bonds” (fixed rate bonds due March 2011 issued by National Thermal Power Corporation Limited for up to US$200 million) and a defined set of actors (ABN AMRO Bank N.V., Merrill Lynch (Singapore) Pte. Ltd., and their related corporations). It also imposes a time limit: the exemption does not apply to stabilising action carried out after the expiry of 30 calendar days from the date of issuance of the Bonds.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the legal identity of the Regulations and states when they take effect. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 2) Regulations 2004” and come into operation on 4 March 2004. For practitioners, this matters when assessing whether particular stabilisation activities fall within the regulatory framework at the relevant time.
Section 2 (Definitions) is crucial because the exemption turns entirely on whether the activity fits within the defined terms. The Regulations define two key concepts:
- “Bonds”: 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”: an action taken in Singapore or elsewhere by ABN AMRO Bank N.V., Merrill Lynch (Singapore) Pte. Ltd., or any of their 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 these definitions. First, stabilisation is not limited to purchases already executed; it includes offers and agreements to buy. Second, the conduct may occur in Singapore or elsewhere, but the objective is to stabilise or maintain the market price of the Bonds in Singapore or elsewhere—meaning the exemption is not geographically confined to Singapore trading venues.
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 any stabilising action carried out in respect of any of the Bonds with either:
- a person referred to in section 274 of the SFA; or
- a sophisticated investor as defined in section 275(2) of the SFA.
While the text provided does not reproduce sections 197, 198, 274, or 275, the structure indicates that the SFA’s market conduct restrictions are being lifted only for stabilising transactions involving particular categories of counterparties—namely, persons within the SFA’s specified framework (section 274) and sophisticated investors (section 275(2)). For legal advisers, this is a key compliance gate: stabilising action that involves other categories of investors may not benefit from the exemption and could therefore trigger the underlying prohibitions.
Section 3(2) (Time limitation) further narrows the exemption. Even if the counterparty is within the permitted categories, the exemption does not apply to stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of issuance of the Bonds. This is a hard stop. Practically, counsel should ensure that any stabilisation programme, trading instructions, and operational controls are aligned to the issuance date and that records can demonstrate compliance with the 30-day window.
How Is This Legislation Structured?
The Regulations are short and deliberately focused. They consist of:
- Enacting formula: MAS makes the Regulations under section 337(1) of the SFA.
- Section 1: citation and commencement.
- Section 2: definitions of “Bonds” and “stabilising action”.
- Section 3: the exemption from sections 197 and 198 of the SFA, subject to counterparty conditions and a 30-day limit.
There are no separate Parts or schedules in the extract. The entire legal effect is concentrated in Section 3, with Section 2 ensuring the exemption is confined to the specific bond issue and specified stabilising actors.
Who Does This Legislation Apply To?
Although the Regulations are an exemption from provisions in the SFA, they effectively apply to stabilising action carried out by the defined stabilising entities—ABN AMRO Bank N.V., Merrill Lynch (Singapore) Pte. Ltd., and their related corporations—when they undertake specified buy/offer-to-buy conduct in relation to the defined Bonds.
In addition, the exemption is conditional on the counterparty category. Stabilising action must be carried out with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor under section 275(2) of the SFA. Therefore, the practical applicability is not only about who is trading, but also about who they are trading with. If stabilisation involves counterparties outside those categories, the exemption may not apply, and the underlying SFA market conduct provisions may continue to govern the conduct.
Why Is This Legislation Important?
This Regulations is important because it provides a legally sanctioned pathway for stabilisation in a specific bond offering while preserving the broader market integrity framework in the SFA. For issuers, arrangers, and trading desks, stabilisation can be commercially valuable—especially in the early period after issuance—yet it must be conducted within strict legal boundaries to avoid regulatory breaches.
From an enforcement and compliance perspective, the Regulations demonstrate how exemptions operate in Singapore’s market conduct regime: they are narrowly tailored (specific bonds, specific actors), conditional (specific counterparty categories), and time-bound (30 calendar days). These features reduce the risk of broad or indefinite circumvention of market conduct restrictions.
For practitioners advising on bond transactions, the key practical impacts are:
- Transaction structuring and documentation: Counsel should confirm that the bond issue falls within the defined “Bonds” description (issuer, maturity, and principal amount cap).
- Trading programme governance: Stabilisation activities must be designed to fit the definition of “stabilising action” (buying, offering, or agreeing to buy for the purpose of stabilising or maintaining market price).
- Counterparty eligibility checks: Legal teams should verify that counterparties are within section 274 categories or are “sophisticated investors” under the SFA definition.
- Timing controls: The 30-day limit requires operational discipline. Trading records and compliance attestations should be capable of demonstrating that stabilising action did not occur after the expiry of the permitted period.
In short, the Regulations provide certainty for a controlled stabilisation process, but only within clearly defined legal parameters.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 274, 275(2), and the exemption-making power in section 337(1).
- Stabilising Act — referenced in the metadata as part of the broader stabilisation framework (practitioners should confirm the exact Singapore instrument and its relationship to the SFA provisions).
- Futures Act — referenced in the metadata; relevant only insofar as it forms part of the legislative context for market conduct and related regulatory concepts.
- Timeline — the legislation timeline is relevant for confirming the correct version as at the relevant date of the transaction or compliance review.
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.