Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 26) Regulations 2004
- Act Code: SFA2001-S765-2004
- Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 23 December 2004
- Legislation status: Current version as at 27 March 2026 (per provided extract)
- Key provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Regulation number: SL 765/2004
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 26) Regulations 2004 (“Stabilising Exemption Regulations”) is a narrowly tailored set of regulations made under the Securities and Futures Act (“SFA”). In plain terms, it creates a specific exemption from certain market conduct rules that would otherwise restrict or regulate stabilising activities in connection with a particular bond issue.
Stabilising action is a common feature of capital markets transactions. When a new bond is issued, market participants may take steps to support or maintain the bond’s trading price in the initial period after issuance. This can reduce volatility and help ensure orderly trading. However, stabilising conduct can also raise concerns about market manipulation or unfair price support. Singapore’s market conduct framework therefore generally regulates such activities.
These Regulations carve out an exemption for stabilising action relating to a defined set of bonds—specifically, 5-year convertible bonds issued by Jindal Stainless Limited (the “Bonds”)—when stabilising is carried out by a specified stabiliser (Morgan Stanley & Co. International Limited and related corporations) within a defined time window and for specified categories of counterparties/investors.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and states that the Regulations come into operation on 23 December 2004. For practitioners, this matters because the exemption is time-sensitive: compliance analysis will typically require confirming that the stabilising action occurred within the statutory period measured from the bond issue date.
Section 2 (Definitions) is central because the exemption is only available if the activity fits precisely within the defined terms. Two definitions are provided:
(1) “Bonds” are defined with specificity: they are the 5-year convertible bonds due December 2009 issued by Jindal Stainless Limited for a principal amount of up to US$75 million. The bonds are convertible into fully paid ordinary shares of Jindal Stainless Limited with a par value of 2 Indian Rupees each, or into global depositary shares of Jindal Stainless Limited (if such global depositary shares have been issued at the time of conversion). This definition is not generic; it is transaction-specific and therefore limits the exemption to that particular instrument and issue.
(2) “stabilising action” is defined as an action taken in Singapore or elsewhere by Morgan Stanley & Co. International 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. The definition is also activity-specific: it focuses on buying (including offers or agreements to buy) for stabilisation purposes.
Section 3 (Exemption) is the operative provision. It states that Sections 197 and 198 of the Act 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 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.
From a practitioner’s perspective, Section 3 contains three key compliance filters:
- Time limit: stabilising action must occur within 30 days from the bond issue date. Any stabilising conduct outside this window would not be covered by the exemption and could trigger the underlying prohibitions or restrictions in Sections 197 and 198.
- Counterparty/investor category: the stabilising action must be taken with a counterparty falling within the categories in Section 274 of the SFA or with a sophisticated investor under Section 275(2). This means the exemption is not a blanket permission to stabilise with any market participant; it is conditional on dealing with eligible counterparties.
- Instrument and stabiliser linkage: the stabilising action must be “in respect of” the defined Bonds and must fall within the defined concept of stabilising action (i.e., carried out by Morgan Stanley & Co. International Limited or its related corporations, and involving buying/offer-to-buy conduct for stabilisation purposes).
Although the extract does not reproduce Sections 197 and 198 of the SFA, the structure indicates that those sections impose market conduct constraints that would otherwise apply to stabilising activity. The Regulations therefore operate as a targeted statutory override: they remove the application of those provisions for the specified stabilising conduct, within the specified time and with specified counterparties.
How Is This Legislation Structured?
The Regulations are extremely concise and consist of an enacting formula and three substantive sections:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that tightly delimit the scope of the exemption (the Bonds and stabilising action).
- Section 3 contains the exemption from Sections 197 and 198 of the SFA, subject to the 30-day period and eligible counterparty categories.
There are no additional parts, schedules, or procedural requirements in the provided extract. This is typical of transaction-specific exemptions: the legal effect is achieved through precise definitions and a single operative exemption clause.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to parties involved in stabilising action for the defined Jindal Stainless convertible bond issue. The definition of “stabilising action” identifies the stabiliser: Morgan Stanley & Co. International Limited and its related corporations. Therefore, the exemption is designed to benefit that stabilising group when they conduct qualifying stabilising purchases (or offers/agreements to buy) of the Bonds.
However, the exemption is also conditional on the counterparty with whom the stabilising action is taken. Section 3 restricts the exemption to stabilising action taken within 30 days of issuance with either a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). Accordingly, even if the stabiliser is the correct entity and the activity is within the defined stabilising purpose, the exemption may fail if trades are executed with ineligible counterparties.
Why Is This Legislation Important?
This legislation is important because it demonstrates how Singapore’s market conduct regime balances two competing objectives: (1) allowing legitimate market stabilisation in connection with new bond issues, and (2) preventing stabilisation from becoming a mechanism for improper price influence or unfair dealing. By exempting stabilising action from specific SFA provisions, the Regulations provide legal certainty for transaction participants—particularly underwriters and stabilising agents—during the early trading period after issuance.
For practitioners, the Regulations are also a reminder that stabilisation is not automatically permitted. The exemption is narrow and conditional. A compliance review should therefore focus on at least four questions:
- Instrument match: Are the trades actually “in respect of” the defined Bonds (including the conversion features and issue parameters)?
- Actor match: Is the stabilising action taken by Morgan Stanley & Co. International Limited or its related corporations?
- Purpose and conduct: Are the actions purchases (or offers/agreements to buy) intended to stabilise or maintain the market price?
- Eligibility and timing: Were the trades executed within 30 days from the bond issue date, and were counterparties within Section 274 or sophisticated investor categories?
From an enforcement perspective, if stabilising action falls outside the exemption, the underlying SFA provisions (Sections 197 and 198) may apply. That can expose firms and individuals to regulatory action, civil consequences, or other compliance risks. Conversely, where the exemption conditions are met, the Regulations reduce uncertainty and help ensure that stabilisation activities remain within a legally recognised framework.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly Sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act (as referenced in the provided metadata context)
- Stabilising Act (as referenced in the provided metadata context)
- Timeline / Legislation timeline (for version verification, as indicated in the 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. 26) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.