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 provided extract)
- Key provisions (from extract): Regulation 1 (Citation and commencement); Regulation 2 (Definitions); Regulation 3 (Exemption)
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”) is a targeted set of subsidiary rules made under the Securities and Futures Act (SFA). In plain language, it creates a specific exemption from certain market conduct provisions in the SFA for “stabilising action” taken in relation to a particular bond issue.
Stabilisation is a common feature of capital markets transactions. When new securities are issued, market participants may take steps to support or “stabilise” the trading price to reduce volatility during the initial trading period. However, stabilisation can overlap with conduct rules designed to prevent manipulation or misleading market activity. This legislation resolves that tension by carving out a narrow exemption—if stabilisation is carried out within the defined parameters.
Importantly, the exemption is not general. It is tied to a defined instrument (“Bonds”) and to a defined stabilising actor (“Citigroup Global Markets Limited, or any of its related corporations”). It also applies only during a limited timeframe: within 30 days from the date of issue of the Bonds. Finally, it restricts the counterparties to those identified in the SFA (section 274) or to “sophisticated investors” as defined in the SFA (section 275(2)).
What Are the Key Provisions?
Regulation 1 (Citation and commencement) provides the short title and states that the Regulations come into operation on 1 November 2004. This is relevant for practitioners because the stabilising conduct must be assessed against the law in force at the time the stabilisation occurred.
Regulation 2 (Definitions) is the heart of the instrument because it defines both the securities and the conduct that may benefit from the exemption.
“Bonds” are defined with unusual specificity: they are 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 Air Water Inc.’s common stock. This definition means the exemption is effectively transaction-specific: it does not automatically extend to other Air Water issues, other convertible bonds, or other maturities.
“stabilising action” is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets Limited (or 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 broad enough to include not only actual purchases but also offers or agreements to buy—so long as the purpose is stabilisation/price maintenance.
Regulation 3 (Exemption) sets out the legal effect. It provides that sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of the Bonds, within 30 days from the date of issue, provided the stabilising action is taken with either:
- (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.
From a practitioner’s perspective, the key elements to verify in any compliance review are:
- Time window: stabilising action must occur within 30 days from the date of issue of the Bonds. Conduct outside this window would not qualify for the exemption.
- Instrument scope: the conduct must relate to the defined “Bonds” (the Air Water Inc. zero coupon convertible bonds due October 2009 issued in November 2004).
- Actor scope: the stabilising action must be taken by Citigroup Global Markets Limited or its related corporations (as per the definition).
- Counterparty scope: the stabilising action must be with persons in section 274 of the SFA or with sophisticated investors under section 275(2).
- Purpose: the action must be taken to stabilise or maintain the market price of the Bonds. This is a purpose-based requirement; evidence of intent and documentation may matter.
Although the extract does not reproduce sections 197 and 198 of the SFA, the exemption’s structure indicates that those sections contain market conduct restrictions that would otherwise apply to the relevant trading activity. The Regulations therefore operate as a targeted “safe harbour” (or rather, a narrow exemption) from those restrictions for qualifying stabilisation activity.
Finally, the enacting signature (“Made this 18th day of October 2004”) and the reference to the Monetary Authority of Singapore (MAS) underscore that the exemption is an official regulatory instrument. For legal practice, this matters because exemptions under the SFA are typically not assumed; they must be grounded in the correct statutory or regulatory authority.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with three regulations:
- Regulation 1 sets out the citation and commencement.
- Regulation 2 provides definitions that precisely identify the Bonds and the stabilising action.
- Regulation 3 contains the substantive exemption, specifying which SFA provisions are disapplied, the time limit, and the permitted counterparties.
There are no additional parts or schedules in the provided extract, reflecting the Regulations’ narrow, transaction-specific character.
Who Does This Legislation Apply To?
The exemption is relevant primarily to market participants involved in the issuance and trading of the defined Bonds—particularly Citigroup Global Markets Limited and its related corporations, because the definition of “stabilising action” is limited to them. In practice, this includes stabilisation desks, dealing entities, and related corporate entities that may execute trades or enter into arrangements to buy the Bonds for stabilisation purposes.
However, the exemption also depends on who the stabilising trades are with. The Regulations require that stabilising action be taken with either (i) persons referred to in section 274 of the SFA or (ii) sophisticated investors under section 275(2). Therefore, counterparties—such as institutional investors or other eligible categories—must be assessed against the SFA’s definitions. If the counterparty does not fall within those categories, the exemption would not apply even if the stabilisation is otherwise within time and instrument scope.
Why Is This Legislation Important?
For practitioners, the significance of these Regulations lies in how they balance two competing regulatory objectives: (1) preventing market misconduct and (2) allowing legitimate stabilisation practices in connection with securities offerings. Without an exemption, stabilisation activity could be scrutinised under general market conduct rules that are designed to deter manipulation, misleading signals, or improper trading.
This instrument provides a controlled pathway for stabilisation by disapplying specific SFA provisions (sections 197 and 198) for a limited period and for a defined set of circumstances. The narrowness of the exemption is itself an important compliance message: stabilisation is permitted only when it fits the regulatory “box” precisely—right security, right actor, right timeframe, and right counterparty category.
From an enforcement and risk perspective, lawyers advising issuers, underwriters, or dealing firms should treat these Regulations as a checklist. If any element is missing—such as trading outside the 30-day window, stabilising a different bond series, or dealing with ineligible counterparties—the exemption would likely fail, leaving the conduct exposed to the underlying SFA market conduct provisions.
Additionally, because “stabilising action” includes offers or agreements to buy (not only completed purchases), compliance teams should ensure that communications, trade confirmations, and contractual arrangements are structured and documented to reflect stabilisation intent and eligibility. This is especially relevant where stabilisation may be executed across jurisdictions (“in Singapore or elsewhere”), requiring careful coordination of local regulatory requirements and internal governance.
Related Legislation
- Securities and Futures Act (Cap. 289) — including sections 197, 198, 274, 275(2), and the exemption-making power in section 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Legislation Timeline (MAS/legislation portal timeline reference, per provided extract)
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.