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)
- Authorising Provision: Section 337(1) of the Securities and Futures Act
- Commencement: 8 November 2005
- Legislation Number: SL 702/2005
- Status: Current version as at 27 March 2026
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
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”) create a targeted exemption from certain market conduct prohibitions under the Securities and Futures Act (the “SFA”). In plain terms, the Regulations allow specified parties to take “stabilising action” in relation to a particular bond issue without being treated as breaching the SFA’s restrictions on market manipulation or improper dealing.
The Regulations are narrow in scope. They do not provide a general exemption for all bonds or all stabilisation activities. Instead, they are tied to a defined set of “Bonds” (a specific 5-year fixed rate convertible bond issue by Graphite India Limited) and a defined set of stabilising conduct (actions taken by Barclays Bank plc or its related corporations to buy, or offer to buy, the Bonds to stabilise or maintain their market price). The exemption is also time-limited: it applies only within 30 days from the date of issue of the Bonds.
For practitioners, the key value of these Regulations is compliance clarity. Stabilisation activity can sit close to the boundary between legitimate market support and prohibited conduct. These Regulations carve out a lawful pathway for stabilisation in the specified circumstances, reducing regulatory uncertainty for issuers, banks, and investors involved in the bond offering and post-issuance trading.
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 8 November 2005. This is important for determining whether stabilising activity falls within the legal framework at the relevant time.
Section 2 (Definitions) is central because the exemption turns on precise definitions. Three terms are defined:
- “Bonds” are defined very specifically as the “5-year fixed rate convertible bonds due October 2010” issued by Graphite India Limited, for a principal amount up to US$50 million, convertible into ordinary shares of Graphite India Limited (par value of 10 Indian Rupees per share). This specificity means the exemption is not available for other bond issues, even if they are similar in structure.
- “securities” has the same meaning as in section 239(1) of the SFA. This cross-reference ensures the SFA’s definitional framework governs the interpretation of “securities” in the Regulations.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by Barclays Bank plc (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 (Barclays Bank plc and related corporations) and purpose-specific (stabilising or maintaining market price).
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 one of the following categories of counterparties:
- (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, but only if the consideration for the acquisition is not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets.
From a compliance perspective, Section 3 does three things at once:
- It identifies the prohibited provisions being disapplied (SFA sections 197 and 198). While the extract does not reproduce those sections, the legislative technique indicates that those provisions are the ones that would otherwise capture stabilisation activity.
- It imposes a temporal limitation (within 30 days from the date of issue). Any stabilising activity outside that window would not benefit from the exemption, even if it otherwise matches the definition of “stabilising action”.
- It imposes counterparty and transaction-value conditions. For institutional investors and “relevant persons”, the exemption is available without the $200,000 threshold. For principal acquirers, the transaction must meet the minimum consideration threshold per transaction.
Practitioners should also note the practical drafting consequence: the exemption is not triggered merely by the intention to stabilise. It is triggered by the combination of (i) stabilising action as defined, (ii) in respect of the defined Bonds, (iii) within the 30-day period, and (iv) involving the specified categories of counterparties (including the minimum consideration condition for principal acquirers).
How Is This Legislation Structured?
The Regulations are structured as a short instrument with three numbered provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that control the scope of the exemption.
- Section 3 contains the exemption, specifying which SFA provisions are disapplied and under what conditions (time window, Bonds, stabilising action, and permitted counterparties/transaction thresholds).
There are no additional parts, schedules, or complex procedural requirements in the extract provided. The legislative design is therefore straightforward: define the relevant instruments and conduct, then carve out a narrow exemption from specified SFA prohibitions.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and disapply SFA provisions, their practical effect is directed at participants in the stabilisation of the defined bond issue. The definition of “stabilising action” is limited to actions taken in Singapore or elsewhere by Barclays Bank plc or its related corporations. Accordingly, the exemption is most relevant to Barclays and its group entities that may engage in stabilisation trading.
However, Section 3 also conditions the exemption on the counterparty to the stabilising transactions. The exemption applies when stabilising action is taken with (i) an institutional investor, (ii) a relevant person under section 275(2) of the SFA, or (iii) a principal acquirer meeting the minimum consideration threshold of $200,000 per transaction (or equivalent). Therefore, issuers, arrangers, and trading desks should assess not only whether the stabilisation activity is within the defined conduct, but also whether the counterparties and deal sizes fit within the statutory categories.
Why Is This Legislation Important?
Stabilisation activity is a common feature of certain bond and securities offerings, particularly where market price discovery may be volatile immediately after issuance. Regulators typically scrutinise stabilisation because it can resemble market support that may, in some circumstances, mislead investors or distort price formation. The legal importance of these Regulations lies in their calibrated approach: they permit stabilisation in a controlled manner while disapplying specific SFA prohibitions for a limited period and within defined boundaries.
For legal practitioners advising on bond offerings, the Regulations provide a compliance “safe harbour” (in effect, though not expressly labelled as such) for stabilising actions that meet the statutory criteria. This can be crucial for:
- Deal documentation and offering compliance (ensuring that stabilisation language and trading plans align with the exemption conditions);
- Trading and execution controls (ensuring stabilisation trades occur within the 30-day window and with permitted counterparty categories);
- Counterparty onboarding and classification (confirming whether counterparties qualify as institutional investors or “relevant persons” under the SFA framework); and
- Transaction value monitoring for principal acquirers (ensuring the $200,000 minimum consideration threshold is met per transaction where the exemption depends on it).
From an enforcement perspective, the exemption’s narrow drafting reduces the risk that stabilisation activity will be treated as unlawful market conduct. At the same time, the narrowness increases the need for careful factual alignment. If any element fails—wrong bond issue, wrong actor, wrong purpose, wrong time period, or wrong counterparty category—the exemption would not apply, and the underlying SFA prohibitions in sections 197 and 198 could become relevant.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 239(1), 275(2), and the regulation-making power in section 337(1)
- Stabilising Act (as referenced in the provided metadata/timeline context)
- Futures Act (as referenced in the provided metadata/timeline 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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.