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
- Regulatory status: Current version as at 27 March 2026 (per the legislation portal)
- Key provisions: Section 2 (definitions); Section 3 (exemption)
- Regulations 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 Action Exemption Regulations”) is a narrow, targeted set of rules made under the Securities and Futures Act (“SFA”). Its purpose is to create a regulatory exemption that allows certain market participants to take “stabilising action” in relation to a specific bond issue without breaching the general market conduct prohibitions in the SFA.
In plain language, the Regulations recognise that, in some bond offerings, stabilisation activities may be used to support or maintain the trading price of the bonds after issuance. Such activities can reduce volatility and help ensure orderly trading. However, stabilisation can also resemble prohibited conduct if it is not clearly authorised. The Regulations therefore carve out a limited safe harbour: stabilising actions are permitted (and exempted) if they meet the conditions set out in the Regulations.
Importantly, the exemption is not general. It is tied to a defined set of “Bonds” (a particular convertible bond instrument issued by Jindal Stainless Limited) and to a defined set of stabilising actors (Morgan Stanley & Co. International Limited and its related corporations). The exemption is also time-limited (within 30 days from the date of issue). This makes the Regulations highly relevant for lawyers advising on underwriting, distribution, and post-issuance trading conduct in connection with that specific bond programme.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the Regulations and states that they come into operation on 23 December 2004. For practitioners, this matters for determining whether stabilising activities undertaken around the issuance period fall within the legal framework.
Section 2 (Definitions) is the backbone of the Regulations because it precisely defines the scope of the exemption. Two definitions are central:
(1) “Bonds” are defined as 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 either:
- fully paid ordinary shares of Jindal Stainless Limited with a par value of 2 Indian Rupees each; or
- global depositary shares of Jindal Stainless Limited (if such global depositary shares have been issued at the time of conversion).
(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. This definition is significant because it:
- confirms the exemption covers cross-border conduct (not only in Singapore);
- limits the stabilising actor to Morgan Stanley & Co. International Limited and its related corporations; and
- focuses on price stabilisation through buying (or offers/agreements to buy), rather than other forms of market support.
Section 3 (Exemption) is the operative provision. It states 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, provided the stabilising action is taken with respect to either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
From a practitioner’s perspective, Section 3 does three things at once:
- It identifies the legal prohibitions being disapplied: Sections 197 and 198 of the SFA. While the text provided does not reproduce those sections, the structure indicates these are market conduct provisions that would otherwise restrict stabilisation or certain dealing practices.
- It imposes a strict temporal limit: the stabilising action must occur within 30 days from the date of issue of the Bonds. Any stabilising dealing outside that window would fall outside the exemption.
- It imposes a counterparty/participant condition: the stabilising action must be taken with a person falling within section 274 of the SFA or with a sophisticated investor under section 275(2). This is a critical compliance gate. Even if the stabilising actor and the instrument match, the exemption may not apply if the dealing is not with the relevant category of persons.
Finally, the Regulations are “made” on 15 December 2004 by the Monetary Authority of Singapore (MAS), with the signature of Koh Yong Guan, Managing Director. This confirms MAS’s exercise of the statutory power under section 337(1) of the SFA to grant exemptions by subsidiary legislation.
How Is This Legislation Structured?
The Regulations are extremely short and consist of a simple structure:
- Section 1: Citation and commencement (23 December 2004).
- Section 2: Definitions of “Bonds” and “stabilising action”. These definitions are highly specific and effectively determine the scope of the exemption.
- Section 3: The exemption clause disapplying SFA sections 197 and 198 for stabilising action within 30 days from issue, subject to the relevant person categories (section 274 persons or sophisticated investors under section 275(2)).
There are no additional parts, schedules, reporting requirements, or procedural steps in the extract. Practitioners should therefore treat the Regulations as a narrow safe-harbour instrument: compliance depends on meeting the defined conditions rather than on completing additional administrative steps within these Regulations.
Who Does This Legislation Apply To?
In terms of persons, the exemption is directed at stabilising action taken by Morgan Stanley & Co. International Limited and its related corporations. The definition of “stabilising action” limits who can perform the stabilisation activities that benefit from the exemption.
In terms of counterparties, Section 3 further limits the exemption to stabilising action taken with:
- persons referred to in section 274 of the SFA; or
- sophisticated investors as defined in section 275(2) of the SFA.
In terms of instruments, the exemption is limited to the defined Jindal Stainless Limited 5-year convertible bonds due December 2009 (up to US$75 million) with the specified conversion features. It does not extend to other bond issues, other maturities, or other issuers.
In terms of time, the exemption is limited to stabilising action taken within 30 days from the date of issue. This is likely to be the most operationally important constraint for dealing desks and compliance teams.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct framework balances two competing objectives: (1) preventing manipulative or unfair trading practices, and (2) allowing legitimate market support mechanisms in the context of securities offerings. By disapplying specific SFA provisions for a defined stabilisation activity, MAS provides legal certainty to market participants who would otherwise face uncertainty about whether stabilising bids or purchases might be characterised as prohibited conduct.
For practitioners, the Regulations is particularly useful in three ways:
- It provides a targeted safe harbour: If the stabilising actor, the instrument, the counterparty category, and the timing all match the Regulations, then Sections 197 and 198 of the SFA do not apply to that stabilising action.
- It reduces compliance risk: Without an exemption, stabilisation strategies could be challenged as market conduct breaches. The exemption helps compliance teams document the legal basis for stabilising trades.
- It clarifies cross-border scope: The definition of stabilising action expressly includes actions taken “in Singapore or elsewhere,” which is relevant for global bond offerings where stabilisation may occur in multiple jurisdictions.
That said, the Regulations’ narrowness means it should not be treated as a general stabilisation permission. Lawyers should verify, for each transaction, that the bond terms match the defined “Bonds,” that the stabiliser is within the defined actor group, that dealings occur within the 30-day window, and that counterparties fall within the relevant SFA categories. Failure on any of these points could mean the exemption does not apply, leaving the stabilising conduct potentially subject to the SFA prohibitions.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions disapplied by Section 3)
- Section 274 (persons referred to in Section 3)
- Section 275(2) (definition of “sophisticated investor” for Section 3)
- Section 337(1) (power to make exemption regulations)
- Futures Act (referenced in the metadata as related legislation)
- Stabilising Act (referenced in the metadata as related legislation)
- Timeline (legislation portal timeline for version control)
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.