Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 26) Regulations 2005
- Act Code: SFA2001-S702-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 8 November 2005
- Legislative Status: Current version as at 27 March 2026 (per the provided extract)
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Regulatory Authority: Monetary Authority of Singapore (MAS)
- Regulation Number: SL 702/2005
- Relevant Market Conduct Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 26) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it carves out a limited exemption from certain “market conduct” rules in the Securities and Futures Act (the “SFA”) for stabilising activities carried out in relation to a specific bond issue.
Market conduct rules in the SFA are designed to prevent manipulative or misleading trading practices and to promote fair and orderly markets. However, in some capital market transactions—particularly during issuance—market stabilisation practices may be permitted under carefully defined conditions. This legislation reflects that policy balance: it recognises that stabilising trades can be legitimate for price support and liquidity during the initial trading period, but only when the stabilisation is constrained to defined persons, defined instruments, and a defined time window.
Importantly, the exemption is not general. The Regulations define “Bonds” very specifically: they refer to a particular 5-year fixed rate convertible bond issue by Graphite India Limited (up to US$50 million), convertible into ordinary shares. The exemption also defines “stabilising action” by reference to the specific stabilising actor—Barclays Bank plc (and related corporations)—and the purpose of stabilisation (maintaining or stabilising the market price of the Bonds). The Regulations therefore operate as a bespoke legal permission for a particular transaction structure.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and states that the Regulations come into operation on 8 November 2005. This matters for practitioners because the exemption only applies to stabilising action taken within the statutory time window that is measured from the “date of issue of the Bonds”. The commencement date confirms the Regulations were in force at the time of the relevant issuance and trading period.
Section 2 (Definitions) is central to understanding the scope of the exemption. It defines three key terms:
- “Bonds”: The Regulations specify the exact instrument—“the 5-year fixed rate convertible bonds due October 2010” issued by Graphite India Limited, convertible into ordinary shares (par value of 10 Indian Rupees per share), with a principal amount of up to US$50 million.
- “securities”: It adopts the meaning in section 239(1) of the SFA, ensuring the exemption is interpreted consistently with the Act’s definitions.
- “stabilising action”: It is defined as an action taken in Singapore or elsewhere by Barclays Bank plc (or any related corporation) 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.
From a practitioner’s perspective, the definition is both actor-specific and conduct-specific. The exemption is limited to stabilising actions by Barclays Bank plc and its related corporations, and only to actions that involve buying (or offering/agreement to buy) the Bonds for stabilisation purposes. If another entity conducts similar trades, or if the trades are not aimed at stabilisation/price maintenance, the exemption may not apply.
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 of the Bonds, provided the stabilising action is taken with one of the following categories of counterparties or participants:
- (a) an institutional investor;
- (b) a relevant person as defined in section 275(2) of the SFA;
- (c) a person who acquires the Bonds as principal, provided the consideration for the acquisition is not less than $200,000 (or its equivalent in foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets.
Practically, Section 3 does two things. First, it limits the exemption to a time-limited window (30 days from the date of issue). Second, it limits the exemption to stabilising trades that involve specified categories of counterparties and, for principal acquisitions, imposes a minimum consideration threshold of $200,000 per transaction. This structure is typical of market conduct exemptions: it reduces the risk that stabilisation becomes a vehicle for improper trading with retail or low-value participants.
For counsel advising issuers, arrangers, or stabilising agents, the key compliance questions are therefore: (1) whether the trades fall within the definition of “stabilising action”; (2) whether the trades are within the 30-day period; and (3) whether the counterparty fits one of the exempted categories (institutional investor, relevant person, or principal acquirer meeting the consideration threshold). If any element fails, the underlying SFA provisions (Sections 197 and 198) may apply, potentially exposing the stabilising party to regulatory breach risk.
How Is This Legislation Structured?
The Regulations are short and structured as follows:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions, including the precise identification of the “Bonds” and the definition of “stabilising action”.
- Section 3 provides the exemption from specified SFA market conduct provisions, subject to time and counterparty conditions.
There are no additional parts or complex schedules in the provided extract. The legislative technique is to embed the transaction-specific details directly into the definitions and then apply the exemption in a single operative section.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to “stabilising action”, their practical application is directed at the persons conducting stabilising trades in relation to the defined Bonds. Because “stabilising action” is defined as actions taken by Barclays Bank plc (or related corporations), the exemption is effectively aimed at Barclays and its group entities when they engage in stabilisation activities.
However, the exemption also depends on the counterparty category involved in the stabilising trades. Section 3 requires that the stabilising action be taken “with” an institutional investor, a relevant person, or a principal acquirer meeting the $200,000 minimum consideration threshold. Therefore, the Regulations affect not only the stabilising agent but also the trading counterparties and the transaction structuring around who is on the other side of the stabilising trades.
Why Is This Legislation Important?
This legislation is important because it demonstrates how Singapore’s market conduct framework can accommodate legitimate market stabilisation while maintaining safeguards. Without an exemption, stabilising trades might fall within the scope of prohibitions or restrictions in Sections 197 and 198 of the SFA. By expressly disapplying those provisions for a defined period and defined counterparties, the Regulations provide legal certainty for stabilisation strategies used during bond issuance.
For practitioners, the value lies in the precision of the exemption. The Regulations do not provide a broad “stabilisation licence”. Instead, they are transaction-specific (Graphite India Limited’s convertible bonds) and actor-specific (Barclays Bank plc and related corporations). This precision reduces ambiguity and helps compliance teams implement controls: trade monitoring systems can be configured to check instrument identifiers, dates, and counterparty classifications.
From an enforcement and risk perspective, the exemption’s conditions are the compliance fulcrum. If stabilising action occurs outside the 30-day window, or if trades are conducted with counterparties that do not fall within the defined categories, the exemption may not apply. In that scenario, the stabilising party could face regulatory consequences under the underlying SFA provisions that were intended to be disapplied only within the permitted parameters.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, Sections 197 and 198 (market conduct provisions), and Section 337(1) (power to make these Regulations); also Section 239(1) (definition of “securities”) and Section 275(2) (definition of “relevant person”).
- Futures Act — referenced in the provided metadata as related legislation (contextual linkage in the platform’s taxonomy).
- Stabilising Act — referenced in the provided metadata (contextual linkage in the platform’s taxonomy).
- Timeline — referenced in the provided metadata (platform navigation/taxonomy item).
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.