Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 23) Regulations 2004
- Act Code: SFA2001-S743-2004
- Legislative Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Citation: S 743/2004 (as indicated in the legislation timeline)
- Commencement: 14 December 2004
- Status: Current version as at 27 March 2026
- Key Provisions: Section 1 (Citation and commencement), Section 2 (Definitions), Section 3 (Exemption)
- Relevant Amendments (as shown): Amended by S 22/2005 (w.e.f. 11 January 2005) and S 62/2005 (w.e.f. 1 February 2005)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 23) Regulations 2004 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument made under the Securities and Futures Act. In plain language, it creates a narrow exemption from certain market conduct restrictions for “stabilising action” relating to a specific bond issue.
Stabilisation is a common feature of capital markets transactions. When a new bond is issued, market liquidity and price discovery may be volatile in the early days. Market participants sometimes undertake stabilising purchases (or arrangements to buy) to help maintain orderly trading and reduce extreme price swings. However, stabilisation can also resemble prohibited conduct if it is not carefully constrained. The Singapore market conduct regime therefore generally restricts conduct that could mislead investors or distort prices.
This legislation resolves that tension by carving out an exemption for stabilising action in respect of a defined set of “Bonds” (the Powerchip Semiconductor Corporation 5-year zero coupon convertible bonds due February 2010). The exemption applies only during a limited window—within 30 days from the date of issue—and only when stabilising action is undertaken with specified counterparties (including certain persons under the Act, and “sophisticated investors”).
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the formal citation and states that the Regulations come into operation on 14 December 2004. For practitioners, this matters when assessing whether stabilising conduct falls within the regulatory framework applicable at the time of the bond issue and subsequent dealing activity.
2. Definitions (Section 2)
The Regulations contain two critical definitions that determine the scope of the exemption.
“Bonds” are defined with precision: they are the 5-year zero coupon convertible bonds due February 2010 issued by Powerchip Semiconductor Corporation for a principal amount of up to US$200 million. The bonds are convertible into ordinary shares of Powerchip Semiconductor Corporation with a par value of NT$10 each. The definition is therefore transaction-specific; stabilising action in respect of other bonds would not automatically qualify.
“stabilising action” is defined as an action taken in Singapore or elsewhere by Deutsche Bank AG, Hong Kong Branch (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 also important because it identifies both the actor (Deutsche Bank AG, Hong Kong Branch and related corporations) and the purpose (stabilising or maintaining price), as well as the mechanism (buying or offering/agreeing to buy).
3. The exemption from market conduct provisions (Section 3)
Section 3 is the operative provision. It states that Sections 197 and 198 of the Securities and Futures Act shall not apply to stabilising action taken in respect of the defined Bonds, within 30 days from the date of issue, with specified counterparties.
Although the text provided does not reproduce Sections 197 and 198, the practical effect is clear: those sections impose restrictions on certain market conduct. The Regulations suspend their application for the limited stabilisation scenario described.
The exemption is conditional on the stabilising action being taken with either:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
For practitioners, this means the exemption is not a blanket authorisation to stabilise in any dealing counterparties. Instead, it is tethered to counterpart categories recognised by the Act as appropriate for this kind of transaction activity. In practice, counsel should verify whether the relevant counterparty qualifies under section 274 or meets the statutory definition of “sophisticated investor” under section 275(2).
4. Temporal limitation: “within 30 days from the date of issue”
The Regulations impose a strict time limit. Stabilising action must occur within 30 days from the date of issue of the Bonds. This is a key compliance point: even if the actor and counterparties qualify, stabilisation outside the window would likely fall back into the general prohibition regime under Sections 197 and 198.
5. Making and authority
The Regulations were made on 10 December 2004 by the Monetary Authority of Singapore (MAS), signed by Koh Yong Guan, Managing Director. This confirms MAS’s exercise of statutory power under section 337(1) of the Securities and Futures Act.
How Is This Legislation Structured?
The Regulations are short and structured around three sections:
- Section 1 (Citation and commencement): identifies the instrument and its effective date.
- Section 2 (Definitions): defines the specific “Bonds” and the “stabilising action” concept, including the authorised stabiliser and the purpose of the action.
- Section 3 (Exemption): provides the exemption from Sections 197 and 198 of the Securities and Futures Act, limited by time (30 days), subject matter (the defined Bonds), actor/purpose (as captured by the definition of stabilising action), and counterparty category (section 274 persons or sophisticated investors).
Because the instrument is narrowly drafted, it functions more like a transaction-specific exemption order than a general regulatory framework. Its brevity is itself a compliance signal: the exemption is meant to be applied only within the precise boundaries set out in the definitions and Section 3.
Who Does This Legislation Apply To?
Primary regulated actors are those who might take stabilising action in relation to the defined Bonds. The definition of “stabilising action” points to Deutsche Bank AG, Hong Kong Branch and its related corporations. Therefore, the exemption is designed to benefit that stabilising activity by those entities.
Counterparties matter as well. Section 3 restricts the exemption to stabilising action taken with either (i) persons referred to in section 274 of the Securities and Futures Act, or (ii) sophisticated investors under section 275(2). Accordingly, even where the stabiliser is within the definition, the exemption may not apply if the stabilising trades are executed with counterparties outside those categories.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct regime balances two competing objectives: (1) preventing manipulative or misleading market behaviour, and (2) allowing legitimate market-making and stabilisation practices in connection with new bond issuance. By exempting stabilising action from specific statutory market conduct provisions, MAS provides legal certainty for transactions that are structured to support orderly trading.
From a practitioner’s perspective, the compliance value lies in the precision of the exemption. The Regulations do not merely permit “stabilisation” in general; they require that all elements align: the specific bond issue, the specific stabiliser (Deutsche Bank AG, Hong Kong Branch and related corporations), the stabilising purpose, the geographic scope (action taken in Singapore or elsewhere to stabilise prices in Singapore or elsewhere), the 30-day time window, and the counterparty categories (section 274 persons or sophisticated investors).
In enforcement and risk terms, this precision reduces ambiguity but increases the need for careful documentation. Counsel advising a stabilising bank or its dealing desks should ensure that trade records, counterparties’ eligibility assessments, and timing evidence (date of issue and dates of stabilising trades) are maintained so that the exemption can be credibly relied upon if questioned by regulators or in litigation.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly Sections 197, 198, 274, 275(2), and the authorising power in section 337(1).
- Futures Act (as referenced in the statute metadata timeline context)
- Stabilising Act (as referenced in the statute metadata timeline context)
- Timeline / Legislation history instruments — including amendments S 22/2005 and S 62/2005 (as indicated in the legislation 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. 23) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.