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)
- Power Used: Section 337(1) of the Securities and Futures Act
- Commencement: 9 January 2006
- Enacting Formula: Made by the Monetary Authority of Singapore (MAS)
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Relevant Market Conduct Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
- Regulation Number in the Year: SL 16/2006
- Current Version Reference: Current version as at 27 March 2026 (timeline indicates original enactment dated 9 January 2006)
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 is a targeted regulatory instrument that creates a specific exemption from certain “market conduct” rules under the Securities and Futures Act (SFA). In plain terms, it allows certain parties to take stabilising actions in relation to a defined bond issue without breaching the SFA provisions that would otherwise restrict or prohibit particular trading or dealing practices.
Stabilising actions are commonly used in capital markets to support the orderly trading of newly issued securities. When a bond is first issued, trading liquidity and price discovery may be volatile. Market makers or underwriting banks may therefore buy (or offer to buy) the bonds for the limited purpose of stabilising or maintaining the market price. This regulation recognises that such conduct can be legitimate and necessary, provided it is confined to a narrow window and to specified categories of participants.
Importantly, the exemption is not general. It is limited to stabilising actions taken in respect of a particular bond issue: the 5-year fixed rate convertible bonds due January 2011 issued by United Phosphorus Limited, up to a stated principal amount, and with defined conversion terms. The regulation also imposes a time limit (within 30 days from the date of issue) and specifies who may be involved, including thresholds for principal acquisitions.
What Are the Key Provisions?
Section 1 (Citation and commencement) sets the legal identity and start date of the Regulations. 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 come into operation on 9 January 2006. For practitioners, this matters when assessing whether stabilising trades were conducted within the regulatory framework at the relevant time.
Section 2 (Definitions) is critical because it determines the scope of the exemption. Three definitions drive the analysis:
(1) “Bonds” are precisely 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 specificity means the exemption cannot be used for other bond issues, even if they are similar in structure.
(2) “securities” adopts the meaning in section 239(1) of the SFA. This is a standard legislative technique: rather than restating the definition, the Regulations incorporate the SFA’s broader definitional framework.
(3) “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. This definition is both participant-specific (UBS AG and related corporations) and purpose-specific (stabilisation/maintenance of market price). It also covers not only actual purchases but also offers or agreements to buy.
Section 3 (Exemption) is the operative provision. It provides that sections 197 and 198 of the SFA shall not apply to any stabilising action taken in respect of any of the Bonds within 30 days from the date of issue, with 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 that the consideration for the acquisition 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.
For legal practice, the exemption’s architecture is important:
- Time limitation: stabilising actions must occur within 30 days from the bond issue date. Conduct outside this window would not be covered.
- Instrument limitation: only the defined “Bonds” are covered.
- Participant limitation: stabilising trades must be with, or involve, the specified categories (institutional investors, “relevant persons”, or principal acquirers meeting the minimum consideration threshold).
- Regulatory effect: the exemption is expressly from sections 197 and 198 of the SFA, meaning those market conduct prohibitions/requirements are displaced for qualifying stabilising action.
Although the extract does not reproduce the text of sections 197 and 198, the practitioner takeaway is that the Regulations are designed to carve out stabilisation from otherwise applicable market conduct restrictions. In practice, counsel should still confirm the exact scope of sections 197 and 198 (e.g., whether they relate to false or misleading conduct, market manipulation, dealing restrictions, or other prohibited behaviours) to ensure the exemption aligns with the intended trading strategy.
How Is This Legislation Structured?
This instrument is short and focused, consisting of:
- Section 1: Citation and commencement (9 January 2006).
- Section 2: Definitions, including the precise identification of the bond issue and the definition of “stabilising action”.
- Section 3: The exemption clause, specifying that sections 197 and 198 of the SFA do not apply to qualifying stabilising actions within the 30-day post-issue period and for specified categories of counterparties/participants.
There are no additional parts or complex schedules in the extract. The Regulations operate as a narrow carve-out rather than a comprehensive market conduct regime.
Who Does This Legislation Apply To?
The exemption is directed at stabilising actions taken by UBS AG (or its related corporations) in relation to the defined United Phosphorus Limited convertible bond issue. In other words, the “doing” of stabilising action is anchored to UBS AG and its corporate group.
However, the exemption’s practical reach depends on the counterparty category involved in the stabilising transactions. Section 3 permits stabilising actions only when the stabilising dealings are with:
- institutional investors,
- relevant persons (as defined in the SFA), or
- principal acquirers who meet the minimum consideration threshold of $200,000 per transaction (or equivalent), including where consideration is paid through exchange of securities or other assets.
Accordingly, while the stabiliser is UBS AG (and related corporations), the exemption is not a blanket permission to trade with any market participant. Counsel should therefore assess counterparties and transaction sizes/structures to confirm eligibility.
Why Is This Legislation Important?
This Regulations matters because it provides legal certainty for stabilisation activities in a specific bond issuance. Without an exemption, stabilising trades could potentially be scrutinised under general market conduct prohibitions in the SFA. By carving out stabilising action from sections 197 and 198 (within defined parameters), the Regulations reduce compliance risk for underwriting banks and market makers engaged in legitimate price support.
For practitioners, the key significance lies in the precision of the carve-out. The bond is uniquely identified, the stabiliser is specified (UBS AG and related corporations), the time window is fixed (30 days from issue), and the counterparties are limited. These constraints are typical of stabilisation regimes: they aim to balance market integrity with the practical realities of new issuance trading.
From an enforcement and compliance perspective, the exemption also creates a clear checklist for documentation and monitoring. Firms should be able to demonstrate: (i) that the trades were genuinely for stabilisation/price maintenance; (ii) that they were executed within the 30-day period; (iii) that the instruments traded were the defined Bonds; and (iv) that the counterparties fall within the permitted categories and, where relevant, that the $200,000 minimum consideration threshold is satisfied per transaction.
Finally, the Regulations illustrate how Singapore’s market conduct framework uses targeted subsidiary legislation to implement nuanced market practices. Even though the SFA provides the general rules, subsidiary regulations can tailor exemptions for particular transactions or issuances—an approach that practitioners should anticipate when advising on capital markets transactions.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Section 197
- Section 198
- Section 239(1) (definition of “securities”)
- Section 275(2) (definition of “relevant person”)
- Section 337(1) (power to make regulations)
- Futures Act (not directly reproduced in the extract, but referenced in the platform metadata as related legislation)
- Stabilising Act (referenced in platform metadata; practitioners should verify the exact Singapore instrument intended by this label)
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.