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 (SFA) (notably section 337(1))
- Enacting authority: Monetary Authority of Singapore (MAS)
- Commencement: 23 December 2004
- Legislative instrument: SL 765/2004
- Status: Current version as at 27 March 2026 (per the provided extract)
- Key provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “Bonds” and “stabilising action”)
- Section 3: Exemption from sections 197 and 198 of the SFA for specified stabilising action
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 targeted regulatory instrument. In essence, it creates a narrow exemption from certain market conduct prohibitions in the Securities and Futures Act (SFA) for stabilising activities carried out in relation to a specific bond issue.
In plain language, the Regulations recognise that, in some bond offerings, market makers or underwriters may take steps to stabilise the trading price after issuance. Such actions can help reduce volatility and support orderly trading. However, stabilising conduct can resemble prohibited market manipulation if it is not carefully bounded. This is why the law provides an exemption only when stabilising action meets strict conditions—both as to what is being traded, who is acting, and when the action occurs.
The Regulations therefore operate as a “permission” for a limited set of stabilising transactions involving the defined “Bonds” (a particular convertible bond issue by Jindal Stainless Limited) within a defined time window (30 days from issue), and only when carried out by specified persons (including Morgan Stanley & Co. International Limited and related corporations) and for specified investor categories (persons under section 274 or sophisticated investors under section 275(2) of the SFA).
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the legal name of the Regulations and states that they come into operation on 23 December 2004. For practitioners, this matters when assessing whether stabilising conduct occurred within the regulatory timeframe.
Section 2 (Definitions) is the core of the instrument because it tightly constrains the scope of the exemption. Two definitions are particularly important:
(1) “Bonds” are defined very specifically 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 definition further specifies the conversion mechanics: conversion into fully paid ordinary shares of Jindal Stainless Limited with a par value of 2 Indian Rupees each, or into global depositary shares (if 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 for compliance analysis. It does not cover all trading in the Bonds; it covers stabilising conduct undertaken by the specified entity (Morgan Stanley & Co. International Limited and related corporations) and for the stabilisation purpose. The “buy/offer/agree to buy” language also indicates that the exemption is not limited to completed purchases; it extends to offers and agreements to purchase, which can be relevant in underwriting and market-making arrangements.
Section 3 (Exemption) is the operative provision. It provides 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—but only if the stabilising action is taken with a counterparty that falls within one of two categories:
(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.
For practitioners, the practical effect is that stabilising purchases (or offers/agreements to purchase) by the specified Morgan Stanley entities are carved out from the SFA’s prohibitions in sections 197 and 198, but only when conducted within the 30-day post-issue window and only in dealings with the specified investor categories. The exemption is therefore conditional and does not create a blanket immunity for any stabilising activity.
Although the extract does not reproduce the text of sections 197 and 198 of the SFA, the structure indicates that those provisions likely relate to market conduct restrictions (commonly including prohibitions against market manipulation, false or misleading conduct, or improper trading practices). The exemption is designed to prevent legitimate stabilisation from being treated as unlawful market conduct.
How Is This Legislation Structured?
The Regulations are concise and structured into three sections:
Section 1 sets out the citation and commencement date.
Section 2 provides definitions that determine the scope of the exemption. The definitions are deliberately narrow and transaction-specific, particularly the definition of “Bonds” (a particular convertible bond issue by Jindal Stainless Limited) and “stabilising action” (actions by Morgan Stanley & Co. International Limited or related corporations to buy/offer/agree to buy for price stabilisation).
Section 3 contains the exemption itself. It identifies the SFA provisions excluded (sections 197 and 198), the time limit (within 30 days from issue), and the permitted counterparties (persons under section 274 or sophisticated investors under section 275(2)).
Notably, the instrument does not create additional regulatory reporting duties or procedural steps within the text provided. Instead, it functions as a legal carve-out from specified prohibitions, with scope controlled through definitions and conditions.
Who Does This Legislation Apply To?
In terms of persons, the exemption is relevant primarily to the entities that may undertake stabilising action as defined—namely Morgan Stanley & Co. International Limited and its related corporations. Those entities must be the ones taking the stabilising steps (buying, offering, or agreeing to buy) in relation to the defined Bonds.
In terms of counterparties, the exemption is also limited by the category of the person with whom the stabilising action is taken. Stabilising action must be taken with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor under section 275(2). This means that even if the stabilising activity is otherwise within the time window and undertaken by the correct stabilising entity, it may fall outside the exemption if the counterparty does not meet the statutory categories.
In terms of instruments, the exemption is limited to the defined “Bonds” (the Jindal Stainless Limited convertible bond issue). It does not automatically extend to other bond issues, other issuers, or other maturities or conversion structures.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework balances two competing policy goals: (1) preventing market manipulation and improper trading practices, and (2) allowing legitimate stabilisation activities in connection with securities offerings. Stabilisation can be commercially necessary, but it must be legally distinguishable from conduct that undermines market integrity.
For practitioners advising issuers, underwriters, or financial institutions, the Regulations provide a clear compliance pathway: stabilising action in the defined circumstances can be undertaken without triggering the prohibitions in sections 197 and 198 of the SFA. However, the exemption is narrow. The defined scope requires careful attention to:
- Instrument identity: the stabilised securities must match the defined “Bonds” description.
- Actor identity: stabilising action must be taken by Morgan Stanley & Co. International Limited or related corporations.
- Timing: the action must occur within 30 days from the date of issue.
- Counterparty category: dealings must be with persons under section 274 or sophisticated investors under section 275(2).
From an enforcement perspective, the conditional nature of the exemption means that conduct outside these boundaries could expose the stabilising entity to liability under the SFA provisions that the exemption otherwise excludes. Therefore, legal review should typically include a factual mapping exercise: what trades were executed (or offers/agreements made), when they occurred relative to the issue date, who executed them, and with whom the trades were conducted.
Finally, the Regulations’ narrow, issue-specific drafting style is itself a practical signal. It suggests that stabilisation exemptions in Singapore may be granted through bespoke subsidiary legislation for particular offerings, rather than through a single general stabilisation regime. Counsel should therefore verify whether a given bond issue is covered by an exemption instrument and, if not, whether other regulatory pathways or general exemptions apply.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Stabilising Act — referenced in the provided metadata (contextual)
- Futures Act — referenced in the provided metadata (contextual)
- 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.