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
- Citation: SL 702/2005
- Commencement: 8 November 2005
- Status: Current version as at 27 March 2026 (per provided extract)
- Key provisions: Section 1 (citation and commencement); Section 2 (definitions); Section 3 (exemption)
- Relevant Act provisions referenced: Sections 197 and 198 of the Securities and Futures Act; Section 239(1) (definition of “securities”); Section 275(2) (definition of “relevant person”)
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 Exemption Regulations”) is a targeted set of subsidiary rules made under the Securities and Futures Act (SFA). In plain language, it creates a narrow exemption from certain market conduct restrictions in the SFA for stabilising activity relating to a specific bond issue.
Market conduct rules in the SFA are designed to prevent manipulative or misleading conduct that could distort the price or trading of securities. However, in certain capital market transactions—particularly bond issuances—market participants may undertake “stabilising” actions to support orderly trading and reduce volatility immediately after issuance. The Regulations recognise that such stabilising conduct, if tightly bounded, can be legitimate and should not automatically be treated as prohibited market manipulation.
Importantly, this is not a general stabilisation regime. It is an exemption tailored to a particular set of bonds (the “Bonds” defined in the Regulations) and to stabilising actions taken by a specific stabiliser group (Barclays Bank plc and its related corporations). It also limits the exemption to a defined time window after issuance and to specified categories of counterparties and minimum consideration thresholds.
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. For practitioners, this matters when assessing whether stabilising activity occurred within the legal framework applicable at the time.
Section 2 (Definitions) sets the scope by defining three critical terms: “Bonds”, “securities”, and “stabilising action”. The definition of “Bonds” is highly specific: it refers to 5-year fixed rate convertible bonds due October 2010 issued by Graphite India Limited for a principal amount of up to US$50 million. These bonds are convertible into ordinary shares of Graphite India Limited with a par value of 10 Indian Rupees per share. This specificity means the exemption does not automatically extend to other bond issues, even if they are similar in structure.
The definition of “stabilising action” is equally constrained. It means 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. This indicates that the exemption is designed for stabilisation through purchase commitments and related offers/agreements, rather than other forms of trading or conduct.
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 certain counterparties and meets specified consideration requirements.
Section 3 then lists the permitted counterparties:
- (a) an institutional investor;
- (b) a relevant person as defined in section 275(2) of the SFA; or
- (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, the structure of Section 3 is significant. The exemption is conditional on both time (within 30 days from issuance) and counterparty/transaction characteristics (institutional investor, relevant person, or principal acquirer meeting the minimum consideration threshold). This means that even if stabilising trades are undertaken by the permitted stabiliser (Barclays and related corporations), the exemption may not apply if the trades fall outside the defined counterpart categories or fail the consideration threshold.
Practitioners should also note the practical effect of the exemption: by carving out stabilising action from Sections 197 and 198, the Regulations reduce the risk that stabilising purchases could be treated as prohibited market conduct under those sections. However, the exemption is not a blanket immunity from all market conduct provisions. It is specifically tied to Sections 197 and 198 and to the defined stabilising action and conditions.
How Is This Legislation Structured?
The Regulations are concise and consist of three sections:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions that determine the scope of the exemption, including the precise bond issue and the stabiliser.
- Section 3 contains the exemption itself, specifying the SFA provisions excluded (Sections 197 and 198), the time limit (30 days from issue), and the permitted categories of counterparties and minimum consideration threshold.
There are no additional parts or schedules in the provided extract. The Regulations operate as a targeted carve-out rather than a comprehensive market conduct framework.
Who Does This Legislation Apply To?
In substance, the Regulations apply to stabilising activity involving the defined Graphite India Limited convertible bonds, when undertaken by Barclays Bank plc or its related corporations. The exemption is therefore most relevant to the stabilising manager/lead underwriter or other entities acting within the Barclays group for the relevant issuance.
However, the exemption’s practical reach also depends on the counterparty to the stabilising transactions. Section 3 permits stabilising action only when the stabilising trades are conducted with (i) institutional investors, (ii) relevant persons (as defined in the SFA), or (iii) principal acquirers meeting the $200,000 minimum consideration per transaction threshold. Accordingly, the Regulations indirectly affect counterparties and transaction structuring: counterparties must fall within the defined categories, and transaction documentation should support that classification and the consideration amount.
Why Is This Legislation Important?
For practitioners advising issuers, underwriters, stabilising agents, and trading desks, the key value of these Regulations is legal certainty. Stabilising activity can be commercially important in the immediate post-issuance period, but it also carries regulatory risk if it resembles manipulative conduct. By expressly exempting stabilising actions from specified SFA provisions, the Regulations provide a controlled pathway for legitimate stabilisation.
The Regulations also illustrate how Singapore’s market conduct framework balances investor protection with market functioning. The exemption is narrow: it is limited to a particular bond issue, a particular stabiliser group, a defined stabilisation mechanism (buying or offering to buy), and a strict time window (30 days from issuance). This narrow tailoring helps ensure that the exemption is not used to justify broader trading strategies that could undermine market integrity.
From an enforcement and compliance standpoint, the conditional nature of Section 3 means that recordkeeping and transaction analysis are critical. Lawyers should expect that compliance teams will need to demonstrate: (1) that the instruments traded are indeed the “Bonds” as defined; (2) that the stabilising actions were taken by Barclays or its related corporations; (3) that the trades occurred within the 30-day period; and (4) that the counterparties and consideration thresholds satisfy the statutory conditions. Failure on any of these elements could expose the conduct to the underlying market conduct provisions that the exemption otherwise excludes.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly Sections 197, 198, 239(1), 275(2), and the enabling provision in Section 337(1)
- Futures Act (as referenced in provided metadata)
- Stabilising Act (as referenced in provided metadata)
- Timeline (legislation versioning reference)
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.