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
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: 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 (per the legislation portal)
- 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 regulatory instrument that creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (“SFA”). In plain terms, it allows specified parties to take “stabilising action” in relation to a particular bond issue without automatically breaching the SFA provisions that would otherwise restrict or regulate such dealings.
Stabilisation is a common feature of securities issuance. When bonds are first issued and begin trading, market prices can be volatile. Under certain controlled circumstances, stabilising purchases or offers may be made to help maintain an orderly market or reduce extreme price fluctuations. However, stabilisation can also raise concerns about market manipulation. Singapore’s approach is therefore to permit stabilisation only where the law expressly provides an exemption and where the stabilising conduct fits within defined parameters.
This Regulations instrument is deliberately specific: it defines “Bonds” as a particular convertible bond issue by United Phosphorus Limited, issued for a capped principal amount, and it defines “stabilising action” as action taken by UBS AG (and its related corporations) to buy or offer to buy the Bonds in Singapore or elsewhere to stabilise or maintain the market price. The exemption is time-limited and applies only to stabilising action taken within 30 days from the date of issue of the Bonds.
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the short title and commencement date. The Regulations come into operation on 9 January 2006. For practitioners, this matters because the exemption only becomes effective from that date, and any stabilising action must be assessed against the legal framework applicable at the time the action was taken.
2. Definitions (Section 2)
Section 2 is crucial because the exemption turns entirely on whether the relevant instrument and conduct fall within the defined terms.
“Bonds” are defined as 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. The bonds are convertible into new ordinary shares of United Phosphorus Limited with a par value of 2 Indian Rupees each. This definition is highly specific and effectively limits the exemption to that exact bond programme and its specified conversion mechanics.
“stabilising action” is defined as 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. The definition therefore captures both actual purchases and commitments/undertakings to purchase, and it is not limited to Singapore execution—cross-border actions are included.
“securities” has the same meaning as in section 239(1) of the SFA. This is a standard incorporation-by-reference provision to ensure consistency with the SFA’s definitional architecture.
3. The exemption from Sections 197 and 198 of the SFA (Section 3)
The heart of the Regulations is Section 3. It states that Sections 197 and 198 of the Act shall not apply to any stabilising action taken in respect of any of the Bonds, within 30 days from the date of issue, with specified categories of persons.
In practical terms, this means that the stabilising conduct—if it is within the time window and undertaken by (or for) the relevant categories—will be treated as exempt from the SFA restrictions contained in Sections 197 and 198. While the extract provided does not reproduce the text of Sections 197 and 198, those provisions are part of the SFA’s market conduct framework and are typically concerned with prohibitions or requirements relating to dealings that may affect market prices or create misleading impressions. The exemption therefore functions as a legal “safe harbour” for stabilisation, but only within the defined boundaries.
Section 3 specifies three categories of eligible counterparties/participants:
- (a) an institutional investor
- (b) a relevant person as defined in section 275(2) of the SFA
- (c) a person who acquires the Bonds as principal, provided the consideration is not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets
The inclusion of a minimum consideration threshold in paragraph (c) is particularly important. It suggests that the exemption is not intended to cover small-lot or retail-style acquisitions that could be used to simulate demand. Instead, it is aimed at larger, more institutional or professional participation, or principal acquisitions of a sufficiently material size.
4. Time limitation (the 30-day window)
The exemption is expressly limited to stabilising action taken within 30 days from the date of issue of the Bonds. This is a common stabilisation constraint designed to prevent ongoing price support beyond the initial issuance period. For compliance purposes, the “date of issue” should be identified from the offering documents and issuance documentation, and the stabilising activity logs should be mapped to that timeline.
5. Making and signature
The Regulations were made on 5 January 2006 by the Managing Director of the Monetary Authority of Singapore (MAS), Heng Swee Keat. This indicates the instrument is an official MAS regulation under the SFA’s delegation powers.
How Is This Legislation Structured?
The Regulations are short and structured around three operative components:
(i) Section 1 sets out the citation and commencement date.
(ii) Section 2 provides the key definitions that determine the scope of the exemption—particularly the definitions of “Bonds” and “stabilising action”.
(iii) Section 3 creates the exemption by disapplying Sections 197 and 198 of the SFA to stabilising action in respect of the defined Bonds, but only when undertaken within the 30-day post-issue period and involving the specified categories of persons.
Notably, there are no additional parts or complex procedural requirements in the extract. The Regulations function as a targeted disapplication instrument rather than a comprehensive stabilisation code.
Who Does This Legislation Apply To?
The exemption is relevant to parties involved in stabilising activities for the specific United Phosphorus Limited convertible bond issue. Because “stabilising action” is defined as action by UBS AG (or its related corporations), the practical beneficiaries are the UBS group entities and any persons who transact with them in the stabilisation context.
Section 3 then limits the exemption to stabilising action taken with or involving particular categories of counterparties: institutional investors, relevant persons (as defined in the SFA), and principal acquirers meeting the $200,000 minimum consideration per transaction threshold. Accordingly, the exemption is not a blanket permission for all market participants; it is conditional on both the nature of the bond and the identity/characteristics of the persons involved in the relevant transactions.
Why Is This Legislation Important?
For practitioners, the significance of these Regulations lies in how they manage the tension between legitimate market-making/stabilisation practices and the SFA’s market conduct prohibitions. Without an exemption, stabilising purchases or offers to buy could potentially trigger prohibitions or regulatory concerns under Sections 197 and 198. This Regulations provides a narrow legal basis to carry out stabilisation for a defined bond issue within a defined period.
From a compliance perspective, the Regulations create a checklist approach:
- Confirm the instrument: the Bonds must match the defined United Phosphorus Limited convertible bonds (terms, maturity, conversion feature, and issuance cap).
- Confirm the stabiliser: the stabilising action must be taken by UBS AG or its related corporations.
- Confirm the conduct: the action must be buying, or offering/agreeing to buy, to stabilise or maintain market price.
- Confirm the timing: the stabilising action must occur within 30 days from the date of issue.
- Confirm the counterparties: transactions must involve institutional investors, relevant persons, or principal acquirers meeting the $200,000 minimum consideration threshold.
Enforcement risk is therefore reduced—but not eliminated. The exemption disapplies specified SFA sections for qualifying stabilising action; it does not necessarily immunise all conduct. Market conduct regimes often include broader prohibitions (for example, on fraud, false or misleading statements, or other forms of manipulation) that may still apply depending on the facts. Practitioners should therefore treat the exemption as a targeted safe harbour rather than a general licence to engage in any price-support activity.
Finally, the Regulations illustrate MAS’s legislative technique: rather than issuing a broad stabilisation framework applicable to all bond issues, MAS can create issue-specific exemptions. This can be advantageous for issuers and stabilising managers because it provides certainty for a particular transaction, while allowing regulators to calibrate safeguards to the specific issuance and participants.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular Sections 197, 198, 239(1), 275(2), and the regulation-making power in Section 337(1)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation metadata)
- Timeline / 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. 2) Regulations 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.