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) (Cap. 289)
- Enacting power: Section 337(1) of the Securities and Futures Act
- Commencement: 23 December 2004
- Legislative status: Current version as at 27 March 2026 (per provided extract)
- Key provisions: Section 2 (Definitions); Section 3 (Exemption)
- Regulatory focus: Exemption from market conduct prohibitions for “stabilising action” in relation to specified bonds
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 is a targeted regulatory instrument. In plain language, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (the “Act”) for a specific type of market activity—namely, stabilising purchases or offers—conducted in relation to a particular bond issue.
Stabilisation is a practice commonly used during or shortly after a securities offering. Market participants (typically underwriters or their affiliates) may buy, or agree to buy, securities to help stabilise the trading price and reduce volatility. While stabilisation can support orderly markets, it also carries a risk of undermining market integrity if it is used to mislead investors or distort price discovery. Accordingly, the Act contains prohibitions and restrictions on certain dealings and market conduct behaviours.
This set of Regulations does not repeal those prohibitions. Instead, it carves out a controlled exception. The exemption is limited to stabilising action taken in respect of defined “Bonds”, within a defined time window, by defined persons, and only for specified investor categories. The Regulations therefore function as a compliance “permission slip” for a particular transaction, rather than a general authorisation for stabilisation in all circumstances.
What Are the Key Provisions?
Section 1 (Citation and commencement) sets the legal identity and effective date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 26) Regulations 2004” and came into operation on 23 December 2004. For practitioners, this matters when assessing whether stabilising activities were conducted within the regulatory framework applicable at the time.
Section 2 (Definitions) is critical because the exemption is only as broad as the defined terms. Two definitions drive the scope:
(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 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 (if such global depositary shares have been issued at the time of conversion). This specificity means the exemption is transaction-specific and does not automatically extend to other bond issues, other issuers, or other maturities.
(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 both actor-specific (Morgan Stanley & Co. International Limited and related corporations) and purpose-specific (stabilise or maintain price). It also covers not only actual purchases but also offers or agreements to buy—important for compliance because conduct may occur through contractual commitments, not merely through executed trades.
Section 3 (Exemption) is the operative provision. It provides 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, with two additional conditions:
(a) the stabilising action must be taken with a person referred to in section 274 of the Act; or
(b) the stabilising action must be taken with a sophisticated investor as defined in section 275(2) of the Act.
From a practitioner’s perspective, the exemption is best understood as a three-part gatekeeping mechanism:
- Subject matter gate: the activity must relate to the defined “Bonds”.
- Time gate: the stabilising action must occur within 30 days from the date of issue.
- Counterparty gate: the stabilising action must be conducted with the specific categories of counterparties permitted under sections 274 and 275(2) (sophisticated investors).
Although the extract does not reproduce the text of Sections 197 and 198 of the Act, the structure indicates that those sections impose prohibitions or restrictions on dealings and market conduct. The Regulations therefore suspend the application of those prohibitions for the specified stabilising activities, but only within the defined boundaries. This is a classic legislative technique: rather than rewriting the Act, the subsidiary legislation temporarily disapplies certain provisions for a narrow set of facts.
How Is This Legislation Structured?
The Regulations are concise and comprise:
- Section 1: Citation and commencement (23 December 2004).
- Section 2: Definitions of “Bonds” and “stabilising action”.
- Section 3: The exemption from Sections 197 and 198 of the Act, subject to timing and counterparty conditions.
There are no additional parts or schedules in the provided extract. The structure reflects the transaction-specific nature of the instrument: it defines the relevant securities and the relevant stabilisation conduct, then grants a limited exemption.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to parties involved in stabilising dealings in the specified convertible bonds. The definition of “stabilising action” identifies the relevant actor: Morgan Stanley & Co. International Limited and its related corporations. Therefore, the exemption is primarily relevant to that group and to any entities acting on their behalf or within their corporate structure for the purpose of stabilisation.
However, the exemption also depends on the counterparty to the stabilising dealings. Section 3 requires that stabilising action be taken with either (i) a person referred to in section 274 of the Act, or (ii) a sophisticated investor under section 275(2). Accordingly, the Regulations indirectly affect issuers, underwriters, and trading counterparties because they must ensure that stabilising transactions are executed with permitted categories of persons and within the 30-day window.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore regulates market integrity while accommodating market practices used in securities offerings. Stabilisation can be beneficial—reducing disorderly trading and supporting price formation—but it must be tightly controlled. By disapplying specific prohibitions in the Act, the Regulations allow stabilising activity to occur without triggering market conduct breaches, provided the activity stays within the defined parameters.
For lawyers advising issuers, underwriters, or financial institutions, the key practical value lies in the precision of the exemption. The “Bonds” definition is tied to a particular issuer, instrument type, maturity, and maximum principal amount. The “stabilising action” definition is tied to a particular stabilising entity (Morgan Stanley & Co. International Limited and related corporations) and a specific purpose (price stabilisation). The exemption is further constrained by a 30-day time limit and by counterparty eligibility (persons under section 274 or sophisticated investors under section 275(2)).
From an enforcement and compliance perspective, these constraints mean that documentation and trade surveillance should be aligned to the exemption’s boundaries. For example, compliance teams should be able to demonstrate: (i) that the instrument traded is indeed the defined “Bonds”; (ii) that the trades or commitments were made within 30 days from the date of issue; and (iii) that the counterparties fall within the permitted categories. Where stabilising action includes “offers or agreements to buy”, firms should also ensure that contractual arrangements are captured in compliance monitoring, not only executed trades.
Finally, the Regulations underscore a broader regulatory principle: exemptions in market conduct law are typically narrow, time-bound, and fact-specific. Practitioners should therefore treat such exemptions as transaction-specific permissions rather than general licences for stabilisation activities.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular Sections 197, 198, 274, 275(2), and the authorising provision in Section 337(1).
- Futures Act (as referenced in the provided metadata context).
- Stabilising Act (as referenced in the provided metadata context).
- Timeline (as referenced in the provided metadata context).
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.