Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 21) Regulations 2004
- Act Code: SFA2001-S669-2004
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 1 November 2004
- Regulation number: SL 669/2004
- Status: Current version as at 27 March 2026 (per platform display)
- Key provisions: Regulation 1 (Citation and commencement); Regulation 2 (Definitions); Regulation 3 (Exemption)
- Relevant Act provisions referenced: Sections 197, 198, 274, 275(2) of the Securities and Futures Act
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 21) Regulations 2004 (“Stabilising Action Exemption Regulations”) creates a targeted regulatory exemption from certain market conduct rules under the Securities and Futures Act (“SFA”). In plain language, it allows specified market participants to take “stabilising action” in relation to a particular bond issue without being treated as breaching the SFA’s general prohibitions on certain market conduct activities.
Stabilising action is a well-known mechanism in capital markets. When new securities are issued, market makers or arrangers may intervene to support the trading price and reduce volatility in the immediate post-issuance period. However, because such interventions can resemble manipulative trading, securities laws typically restrict or prohibit stabilisation unless it is conducted within a defined framework. This subsidiary legislation is one such framework: it carves out an exemption for stabilising actions in respect of a specific bond, for a limited time window, and only when undertaken by specified categories of persons.
Importantly, the Regulations are not a general stabilisation regime for all bonds. They are issue-specific and definition-specific. The “Bonds” are precisely identified (including issuer, instrument type, maturity, currency/amount, and issuance timing), and the “stabilising action” is tied to a particular stabilising entity (Citigroup Global Markets Limited and its related corporations). This makes the Regulations highly relevant for practitioners advising on compliance for that particular bond transaction and for understanding how the SFA’s market conduct rules interact with stabilisation practices.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) is straightforward. It provides the short title and states that the Regulations come into operation on 1 November 2004. For practitioners, this matters mainly for determining whether any stabilising conduct occurred after the legal instrument took effect.
Regulation 2 (Definitions) does the heavy lifting by defining the scope of the exemption. Two definitions are central:
- “Bonds” are defined as the zero coupon convertible bonds due October 2009 issued by Air Water Inc. in November 2004 for a principal amount of up to ¥20,000,000,000, convertible into fully paid and non-assessable shares of common stock of Air Water Inc.
- “stabilising action” means an action taken in Singapore or elsewhere by Citigroup Global Markets 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.
From a compliance perspective, these definitions are critical. The exemption is limited to stabilising conduct that fits both the instrument (the Bonds as defined) and the actor (Citigroup Global Markets Limited or its related corporations). It also covers not only actual purchases but also offers or agreements to buy, which can broaden the range of conduct that must be monitored and documented.
Regulation 3 (Exemption) is the operative provision. It provides 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 of the Bonds, provided the stabilising action is taken with one of two categories of counterparties/participants:
- (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.
In practical terms, Regulation 3 creates a time-limited safe harbour from the SFA’s market conduct restrictions for stabilisation activities in the immediate post-issuance period. The exemption is conditional: it is not enough that the stabilising action is performed by the defined stabiliser; it must also be conducted in dealings with the specified classes of persons (section 274 persons or sophisticated investors). This is a common legislative technique to balance market integrity with the operational needs of underwriting and market making.
Although the extract does not reproduce Sections 197 and 198, the structure indicates that those sections contain prohibitions or restrictions relevant to market conduct (often including prohibitions on market manipulation or improper trading practices). The exemption therefore functions as a legislative override: stabilising action that meets the conditions is treated as outside the scope of those prohibitions.
Interaction with the “30 days from issue” limitation is another key compliance point. Practitioners should identify the “date of issue” of the Bonds and ensure that any stabilising purchases, offers, or agreements to buy fall within the 30-day window. If stabilisation continues beyond that period, the exemption would no longer apply, and the stabiliser would need to rely on other exemptions, comply with other regimes, or cease the relevant conduct.
Finally, the Regulations were “Made” on 18 October 2004 by the Monetary Authority of Singapore (MAS). For legal advice, this date can be relevant when considering whether any pre-commencement conduct occurred (though the Regulations themselves commence on 1 November 2004).
How Is This Legislation Structured?
The Regulations are compact and consist of an enacting formula and three substantive regulations:
- Regulation 1: Citation and commencement.
- Regulation 2: Definitions of “Bonds” and “stabilising action”.
- Regulation 3: The exemption from SFA Sections 197 and 198 for stabilising action in respect of the defined Bonds, within 30 days from issue, and when conducted with specified categories of persons.
There are no additional parts or schedules in the extract. The legislative design is therefore “definition-led”: once the Bonds and stabilising action are properly characterised, the exemption in Regulation 3 follows automatically—subject to the time and counterparty conditions.
Who Does This Legislation Apply To?
The exemption is directed at conduct by Citigroup Global Markets Limited and its related corporations (as defined within the stabilising action definition). It applies to stabilising action taken in Singapore or elsewhere—meaning that the geographic location of the trading activity is not determinative. What matters is that the action is stabilisation in respect of the defined Bonds and that it is intended to stabilise or maintain the market price of the Bonds in Singapore or elsewhere.
However, the exemption is also conditional on the counterparty or dealing context. Regulation 3 requires that the stabilising action be taken with either (i) a person referred to in section 274 of the SFA, or (ii) a sophisticated investor under section 275(2). Accordingly, the Regulations do not provide a blanket exemption for stabilisation against any market participant; they are limited to dealings with the relevant categories recognised by the SFA framework.
Why Is This Legislation Important?
For practitioners, the significance of these Regulations lies in their role as a targeted compliance tool. Market conduct rules in the SFA are designed to prevent manipulation and protect market integrity. Yet stabilisation is a legitimate market practice when conducted properly. This subsidiary legislation demonstrates how MAS uses exemptions to permit stabilisation while still imposing boundaries—here, by limiting the exemption to a specific bond issue, a specific stabiliser, a defined stabilisation activity, a strict time window, and dealings with specified categories of persons.
From an advisory standpoint, the Regulations are particularly useful when reviewing or defending trading conduct around a bond issuance. They provide a clear legal basis to argue that certain stabilising trades (or offers/agreements to buy) are exempt from the SFA’s Sections 197 and 198, provided the conditions are met. This can be critical in internal compliance reviews, regulatory engagement, and post-transaction investigations.
Practically, the Regulations also highlight the importance of documentation and trade classification. Because the exemption depends on whether the activity qualifies as “stabilising action” and whether it is carried out within 30 days from the issue date, firms should ensure that:
- the relevant instrument is correctly identified as the “Bonds” under the definition;
- the trading entity is within the Citigroup group covered by the definition;
- the trades are within the 30-day period from the Bonds’ issue date;
- the counterparties fall within section 274 persons or sophisticated investors under section 275(2); and
- the purpose of the trades is consistent with stabilising or maintaining the market price (which may require evidence of intent and compliance controls).
Finally, because the Regulations are issue-specific, they also serve as a cautionary example: stabilisation exemptions may not generalise across bond issues. Counsel should not assume that stabilising conduct in other instruments will be exempt unless there is a corresponding exemption or a broader stabilisation regime applicable to that transaction.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly Sections 197, 198, 274, 275(2), and the exemption-making power in Section 337(1).
- Futures Act (as referenced in the platform metadata timeline context).
- Stabilising Act (as referenced in the platform metadata timeline context).
- Legislation Timeline / MAS subsidiary legislation register (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. 21) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.