Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 22) Regulations 2005
- Act Code: SFA2001-S638-2005
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289), section 337(1)
- Citation: S 638/2005
- Commencement: 3 October 2005
- Status: Current version as at 27 March 2026
- Key Provisions: Section 1 (citation and commencement); Section 2 (definitions); Section 3 (exemption)
- Most Recent Amendment Noted in Extract: Amended by S 468/2021 with effect from 1 July 2021 (notably paragraphs (a) and (b) of regulation 3)
- Related Legislation (as indicated): Banking Act, Finance Companies Act, Futures Act, Insurance Act, Stabilising Act
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 22) Regulations 2005 (“Stabilising Exemption Regulations”) creates a targeted exemption from certain market conduct rules under the Securities and Futures Act (SFA) for stabilising activity in relation to a specific bond issue.
In plain terms, the Regulations recognise that, during the initial period after a bond is issued, market participants may take steps to support or maintain the bond’s market price. Such “stabilising action” can be commercially and operationally important for orderly trading and for meeting underwriting or distribution objectives. However, stabilising conduct can also resemble prohibited market manipulation if not properly constrained. The Regulations therefore carve out a narrow safe harbour: stabilising action is exempt from specified SFA provisions when it is carried out in respect of the defined bonds, within a defined time window, and by specified categories of persons.
The scope is deliberately narrow. The definition of “Bonds” is not generic; it refers to a particular bond issue—fixed to floating rate subordinated bonds due September 2025 to be issued by Fukoku Mutual Life Insurance Company, up to EURO 500 million. The definition of “stabilising action” is also specific: it is an action taken in Singapore or elsewhere by J.P. Morgan Securities Ltd. and Merrill Lynch International (and related corporations) to buy, or to offer or agree to buy, the Bonds to stabilise or maintain their market price.
What Are the Key Provisions?
1. Citation and commencement (regulation 1)
Regulation 1 provides the short title and states that the Regulations came into operation on 3 October 2005. For practitioners, this matters mainly for historical compliance analysis and for understanding which version of the market conduct framework applied at the time stabilising activity would have occurred.
2. Definitions (regulation 2)
The Regulations define two core terms:
- “Bonds”: fixed to floating rate subordinated bonds due September 2025, issued by Fukoku Mutual Life Insurance Company, up to EURO 500 million.
- “stabilising action”: an action taken in Singapore or elsewhere by J.P. Morgan Securities Ltd. and Merrill Lynch International (or their 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.
These definitions are crucial because the exemption in regulation 3 only applies when both the instrument and the conduct match the defined terms. If the stabilising activity relates to a different bond, or is undertaken by a different entity not within the defined stabilising actors, the exemption would not be available.
3. The exemption from sections 197 and 198 of the SFA (regulation 3)
The heart of the Regulations is regulation 3. It states 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 of the Bonds, with stabilising action being carried out with (or involving) specified categories of counterparties or participants.
Although the extract does not reproduce sections 197 and 198, the practical effect is clear: the Regulations remove the risk that stabilising activity—otherwise potentially caught by market conduct prohibitions—will be treated as unlawful conduct, provided the conditions are satisfied.
4. Who may be involved: the detailed counterparty list (regulation 3(a)–(m))
Regulation 3 then enumerates a list of persons with whom the stabilising action may be taken. The list is extensive and includes regulated financial institutions, institutional investors, and certain high-net-worth or asset-qualified investors. Key categories include:
- Banks licensed under the Banking Act (including merchant banks treated as having been granted merchant bank licences) (regulations 3(a) and 3(b)). These paragraphs were amended by S 468/2021 with effect from 1 July 2021.
- Finance companies licensed under the Finance Companies Act (regulation 3(c)).
- Insurers registered under the Insurance Act (regulation 3(d)).
- Trust companies registered under the Trust Companies Act (regulation 3(e)).
- The Government or a statutory body (regulation 3(f)).
- Pension funds or collective investment schemes (regulation 3(g)).
- Holders of a capital markets services licence for specified activities, including dealing in securities, fund management, providing custodial services, securities financing, and trading in futures contracts (regulation 3(h)).
- Persons dealing in Bonds with accredited investors or with persons whose business involves acquisition/disposal/holding of securities (regulation 3(i)).
- Institutional investors falling within regulation 3(1) of the Securities and Futures (Prescribed Specific Classes of Investors) Regulations 2005 (regulation 3(j)).
- Principal acquirers meeting a minimum consideration threshold of $200,000 (or equivalent) per transaction (regulation 3(k)).
- Principal acquirers meeting net asset or income thresholds (individuals) or net assets thresholds (corporations) (regulation 3(l)).
- Close family/officer-related persons of an officer making an offer/invitation, including spouse, parent, siblings, and children (regulation 3(m)).
For legal practitioners, the counterparty list is often the compliance battleground. Stabilising action must be “taken in respect of” the Bonds with persons falling within these categories. In practice, this means documentation, trade confirmations, and investor qualification checks should be aligned to the specific regulatory category relied upon.
5. Time limitation: “within 30 days from the date of issue”
The exemption is expressly limited to stabilising action conducted within 30 days from the date of issue of the Bonds. This is a hard temporal boundary. If stabilising activity continues beyond the 30-day period, the exemption would cease to apply, and the stabilising conduct could again be assessed under the ordinary market conduct prohibitions in the SFA.
How Is This Legislation Structured?
The Regulations are short and structured as follows:
- Regulation 1 sets out the citation and commencement date.
- Regulation 2 provides definitions of “Bonds” and “stabilising action”.
- Regulation 3 creates the exemption, specifying (i) the SFA sections excluded, (ii) the 30-day time window, and (iii) the categories of persons with whom stabilising action may be taken.
There are no additional parts or complex procedural requirements in the extract; the legal architecture is essentially a tailored exemption instrument.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in relation to the defined Bonds, when such action is taken by the defined stabilising actors (J.P. Morgan Securities Ltd. and Merrill Lynch International, and their related corporations) and when the stabilising trades are conducted within the 30-day post-issue period.
However, the exemption is not only about who performs the stabilising action; it also depends on who the stabilising action is taken with. Accordingly, the categories in regulation 3(a)–(m) effectively define the eligible counterparties. Banks, licensed capital markets services providers, institutional investors, and certain principal investors meeting specified thresholds may fall within the exemption framework.
Why Is This Legislation Important?
This Regulations matters because it provides a legally recognised safe harbour for stabilising conduct in a specific bond issuance context. Without such an exemption, stabilising activity could be scrutinised as potentially falling within market manipulation or improper trading conduct rules under the SFA—particularly where stabilising activity involves offers to buy or actual purchases intended to influence price.
For practitioners advising issuers, arrangers, underwriters, or trading desks, the key value is certainty: the Regulations identify when stabilising action is permitted (or at least exempted from certain prohibitions) and the precise conditions that must be met. The combination of (i) a defined bond issue, (ii) a defined stabilising actor, (iii) a strict 30-day window, and (iv) a detailed counterparty eligibility list creates a compliance checklist that can be operationalised.
From an enforcement perspective, the narrow tailoring also limits regulatory discretion. If stabilising activity deviates from the defined scope—wrong bond, wrong actor, wrong time period, or trades with ineligible counterparties—the exemption should not apply, and the conduct would revert to the general market conduct regime under the SFA.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197 and 198 (as referenced by the exemption)
- Banking Act (Cap. 19)
- Finance Companies Act (Cap. 108)
- Insurance Act (Cap. 142)
- Futures Act
- Stabilising Act (as indicated in the metadata)
- Securities and Futures (Prescribed Specific Classes of Investors) Regulations 2005 — regulation 3(1) (as referenced in regulation 3(j))
- Trust Companies Act (Cap. 336)
- Capital Markets Services licensing framework under the SFA regime (as reflected in regulation 3(h))
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. 22) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.