Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 2) Regulations 2005
- Act Code: SFA2001-S37-2005
- Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Authorising Provision: Section 337(1) of the Securities and Futures Act
- Citation: SL 37/2005
- Commencement: 18 January 2005
- Status: Current version as at 27 March 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 2005 (“Stabilising Action Exemption Regulations”) creates a targeted exemption from certain market conduct rules under the Securities and Futures Act (the “SFA”) for stabilising activity relating to a specific bond issuance.
In plain language, the Regulations recognise that, in certain bond offerings, market participants may undertake “stabilising action” to help maintain orderly trading and reduce excessive price volatility shortly after issuance. However, stabilising conduct can resemble prohibited market manipulation if it is not clearly carved out. The Regulations therefore permit stabilising action for a defined set of bonds, within a defined time window, and only when carried out by specified persons and counterparties.
Notably, this is not a general stabilisation regime for all bonds. It is an instrument tailored to a particular transaction: the January 2005 issuance of zero coupon guaranteed exchangeable bonds by First Pacific Finance Limited, guaranteed by First Pacific Company Limited, and exchangeable into shares of Philippine Long Distance Telephone Company (“PLDT”). The exemption is time-limited and conditional, reflecting the SFA’s broader policy of protecting investors and ensuring fair, transparent markets.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal legal identity of the Regulations and 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 2005” and come into operation on 18 January 2005. For practitioners, commencement matters because the exemption can only be relied upon for stabilising actions taken after the Regulations are in force.
Section 2 (Definitions) is central because it tightly constrains the scope of the exemption. Two defined terms do the work:
“Bonds” are defined as the zero coupon guaranteed exchangeable bonds issued by First Pacific Finance Limited in January 2005 for up to US$300 million, guaranteed by First Pacific Company Limited, and exchangeable into existing PLDT shares (with a par value of 5 Philippine Peso each). This definition is transaction-specific and therefore limits the exemption to those particular instruments.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by UBS Limited (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. The definition is also broad in terms of geography (Singapore or elsewhere) and in terms of conduct (buying, offering to buy, or agreeing to buy). However, it is narrow in terms of actor (UBS Limited and related corporations) and purpose (stabilising/maintaining market price).
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 being permitted only when undertaken with counterparties that fall into one of two categories:
- (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.
For a lawyer advising on compliance, the practical effect is that the SFA’s prohibitions in Sections 197 and 198—whatever their precise wording—are suspended for the specified stabilising activity, but only if all conditions are met: (i) the instruments are the defined “Bonds”; (ii) the conduct qualifies as “stabilising action” by UBS (or related corporations) as defined; (iii) the stabilising action occurs within the 30-day post-issuance window; and (iv) the stabilising action is carried out with counterparties in the permitted categories (section 274 persons or sophisticated investors).
Because the exemption is conditional, it is not enough to show that the conduct was intended to stabilise the market. The exemption also requires correct counterparties and timing. In enforcement or dispute scenarios, these elements become factual questions: when the stabilising trades were placed, who the counterparties were, and whether the counterparties meet the statutory definitions.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, three-section format:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of “Bonds” and “stabilising action”.
- Section 3 contains the exemption from specified SFA provisions (Sections 197 and 198), including the time limit (30 days from date of issue) and the permitted counterparty categories (section 274 persons or sophisticated investors).
There are no additional parts or schedules in the extract provided, which is consistent with the nature of an exemption regulation: it is designed to be narrow, transaction-specific, and operationally usable for the relevant market participants.
Who Does This Legislation Apply To?
The exemption is relevant primarily to UBS Limited and its related corporations because the definition of “stabilising action” is limited to actions taken by those entities. In practice, this means the exemption is aimed at the stabilising manager/lead underwriter or a related trading entity responsible for stabilisation activities in connection with the bond issuance.
However, the exemption also depends on the counterparty to the stabilising transactions. Section 3 restricts the exemption to stabilising actions taken with either (i) persons referred to in section 274 of the SFA or (ii) sophisticated investors under section 275(2). Therefore, even if UBS (or its related corporation) undertakes stabilising trades, the exemption will not apply if the trades are executed with counterparties outside those categories.
For practitioners, this means that compliance teams should verify both sides of the transaction: the identity and role of the stabilising actor (UBS/related corporations) and the regulatory status of the counterparty (section 274 person or sophisticated investor). Where counterparties are mixed, a trade-by-trade compliance review may be necessary.
Why Is This Legislation Important?
This legislation is important because it demonstrates how Singapore’s market conduct framework balances two competing objectives: (1) preventing manipulation and unfair market practices, and (2) allowing legitimate stabilisation practices in the context of new bond issuance. Stabilisation can be beneficial in the immediate post-issuance period by supporting orderly price formation. But without a clear exemption, stabilisation could fall within broad statutory prohibitions.
From an enforcement and compliance perspective, the Regulations provide a safe harbour—but only within strict boundaries. The exemption is limited to a defined bond issue, a defined stabilising actor, a defined time period (30 days from issue), and defined counterparty categories. This structure reduces regulatory uncertainty for market participants who comply with the conditions, while preserving the SFA’s protective purpose for conduct outside the exemption.
For lawyers advising issuers, underwriters, or trading desks, the key practical impact is that the exemption can be relied upon to permit certain trades that might otherwise be prohibited under Sections 197 and 198 of the SFA. However, reliance must be supported by evidence: documentation of the bond series, trade dates relative to the issue date, the role of UBS/related corporations, and the counterparty classification. In complex cross-border stabilisation activity (“in Singapore or elsewhere”), maintaining an audit trail is especially important.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Section 197
- Section 198
- Section 274
- Section 275(2)
- Section 337(1) (authorising provision)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation 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. 2) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.