Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 2) Regulations 2006
- Act Code: SFA2001-S16-2006
- 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 16/2006
- Commencement: 9 January 2006
- Status: Current version as at 27 March 2026
- 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. 2) Regulations 2006 (“Stabilising Action (Bonds) Regulations”) is a targeted exemption instrument made under the Securities and Futures Act. In plain terms, it creates a narrow “safe harbour” allowing certain market participants to take stabilising actions in relation to a specific bond issue without being treated as breaching the general market conduct rules in the Securities and Futures Act.
Stabilising actions are common in capital markets. When a new bond is issued, market makers or underwriters may take steps to support the bond’s trading price in the immediate aftermath of issuance. This can reduce volatility and help the bond establish liquidity. However, stabilisation can also raise concerns about market manipulation. Singapore’s market conduct framework therefore generally restricts conduct that could distort prices or mislead investors, while still permitting stabilisation under controlled conditions.
This Regulations does not create a general stabilisation regime for all securities. Instead, it is bond-specific and time-limited. It defines “Bonds” very precisely (the 5-year fixed rate convertible bonds due January 2011 issued by United Phosphorus Limited) and limits the exemption to stabilising actions taken within 30 days from the date of issue. It also restricts who may benefit from the exemption and sets a minimum consideration threshold for certain categories of persons.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
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 2006” and came into operation on 9 January 2006. For practitioners, the commencement date matters because the exemption only applies to stabilising actions that fall within the statutory conditions, including the 30-day window from the bond’s date of issue.
2. Definitions (Regulation 2)
The operative scope of the exemption turns on the defined terms. The Regulations defines:
- “Bonds”: the 5-year fixed rate convertible bonds due January 2011 issued by United Phosphorus Limited for a principal amount of up to US$80 million, convertible into new ordinary shares of United Phosphorus Limited with a par value of 2 Indian Rupees each.
- “securities”: has the same meaning as in section 239(1) of the Securities and Futures Act.
- “stabilising action”: an action taken in Singapore or elsewhere by UBS AG (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 these definitions. First, the exemption is not available for stabilisation by any market participant; it is tied to UBS AG and its related corporations. Second, the stabilising conduct is limited to buying (or offers/agreements to buy) the Bonds for stabilisation purposes. Other types of conduct—such as selling to influence price, or conduct not directed at stabilising the market price—would not fit the definition.
3. The exemption from sections 197 and 198 of the Act (Regulation 3)
The core operative provision is Regulation 3. It provides that sections 197 and 198 of the Securities and Futures Act shall not apply to any stabilising action taken in respect of any of the Bonds, within 30 days from the date of issue of the Bonds, provided the stabilising action is taken with one of the specified counterparties/participant categories:
- (a) an institutional investor
- (b) a “relevant person” as defined in section 275(2) of the Act
- (c) a person who acquires the Bonds as principal, where the consideration for the acquisition is not less than $200,000 (or its equivalent in foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets
In effect, the exemption is conditional on both time (within 30 days from issue) and counterparty/transaction characteristics. The Regulations is designed to permit stabilisation in a controlled manner—primarily in dealings with sophisticated counterparties (institutional investors and relevant persons) and with principal acquirers only where the transaction size is sufficiently large (at least $200,000 per transaction).
4. Transaction-by-transaction threshold for principal acquirers
The $200,000 minimum consideration requirement in Regulation 3(c) is particularly important for deal documentation and compliance. It applies “for each transaction” and covers both cash and non-cash consideration (including exchange of securities or other assets). This means that practitioners should ensure that trade confirmations, allocation records, and internal compliance checks can evidence the consideration amount and the basis for meeting the threshold.
How Is This Legislation Structured?
The Regulations are short and structured in a conventional format for subsidiary legislation:
- Regulation 1 (Citation and commencement) sets the name and the date the Regulations came into force.
- Regulation 2 (Definitions) defines the key terms that determine the scope of the exemption—especially “Bonds” and “stabilising action”.
- Regulation 3 (Exemption) provides the operative legal effect: it disapplies specified sections of the Securities and Futures Act (sections 197 and 198) to stabilising actions meeting the time and counterparty conditions.
Notably, there are no additional parts or complex procedural requirements in the text extract provided. The legal work therefore focuses on mapping the contemplated stabilisation activity to the defined “stabilising action”, confirming the bond issue identity, verifying the 30-day window, and ensuring the counterparties fall within the categories in Regulation 3.
Who Does This Legislation Apply To?
The Regulations applies to stabilising actions in relation to the defined “Bonds” that are taken by UBS AG or its related corporations. While the exemption is framed as a disapplication of sections 197 and 198 of the Securities and Futures Act, in practice it is relevant to the parties conducting the stabilisation (UBS AG and related corporations) and to the counterparties with whom they trade during the stabilisation period.
For the exemption to apply, the stabilising action must be taken within 30 days from the date of issue and must involve one of the specified counterparty categories: institutional investors, relevant persons (as defined in the Act), or principal acquirers meeting the $200,000 per transaction minimum consideration threshold. Consequently, the Regulations is not a blanket permission for any stabilisation activity; it is a narrow permission tied to both the stabiliser and the nature of the counterparty relationship.
Why Is This Legislation Important?
For practitioners, the significance of this Regulations lies in its role as a compliance “switch”: it determines whether stabilising conduct will be treated as falling within (or outside) the prohibitions in the Securities and Futures Act. Without such an exemption, stabilising activity could potentially be characterised as conduct prohibited under market conduct provisions, exposing firms and individuals to regulatory action, enforcement risk, and reputational harm.
At the same time, the Regulations reflects Singapore’s balancing approach. It permits stabilisation—recognising its market function—while constraining it through strict conditions: a specific bond issue, a defined stabiliser (UBS AG and related corporations), a limited stabilisation period (30 days from issue), and controlled counterparties (institutional investors, relevant persons, or principal acquirers with a minimum transaction size). This structure helps ensure stabilisation does not become a mechanism for improper price support or misleading market signals.
From a practical standpoint, lawyers advising on bond issuance, underwriting, and post-issuance trading should treat this Regulations as a checklist instrument. Key diligence items include: confirming the bond terms match the statutory definition; confirming the stabiliser identity; ensuring trades occur within the 30-day window; verifying counterparty classification; and documenting the consideration amount for principal acquirers. These steps are essential to support the availability of the exemption and to defend the firm’s market conduct compliance posture if questioned by regulators.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 239(1), 275(2), and the regulation-making power in 337(1).
- Futures Act (as referenced in the provided metadata context)
- Stabilising Act (as referenced in the provided metadata context)
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 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.