Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 27) Regulations 2005
- Act Code: SFA2001-S739-2005
- Legislation 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 739/2005
- Commencement: 28 November 2005
- Status: Current version as at 27 March 2026
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Focus: Exemption from market conduct provisions for stabilising actions in relation to specified convertible bonds
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 27) Regulations 2005 (“Stabilising Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain market conduct rules in the Securities and Futures Act (“SFA”) for stabilising activities carried out in connection with a particular bond issue.
Stabilising action is a practice commonly associated with securities offerings. During the early period after issuance, market participants may buy (or offer to buy) securities to help support liquidity and reduce volatility, with the aim of maintaining an orderly market. However, stabilising conduct can also raise concerns about market manipulation or misleading price formation. Singapore’s market conduct framework therefore restricts or regulates stabilising activities, typically requiring strict conditions.
This legislation does not broadly legalise stabilising conduct. Instead, it carves out a narrow exemption for stabilising actions taken in respect of a specific class of bonds—namely, 5-year zero coupon convertible bonds issued by Welspun Gujarat Stahl Rohren Limited—provided that the stabilising activity is carried out within a defined time window and by specified categories of persons, and that certain minimum consideration thresholds are met.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 sets the legal identity and timing of the instrument. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 27) Regulations 2005” and come into operation on 28 November 2005. For practitioners, this matters because the exemption is time-bound and tied to the bond issuance period; the commencement date confirms when the exemption became available under Singapore law.
2. Definitions (Regulation 2)
Regulation 2 is crucial because the exemption is only as broad as its definitions. The Regulations define three key terms:
- “Bonds”: The exemption is limited to a very specific bond issue: 5-year zero coupon convertible bonds due November 2010 issued by Welspun Gujarat Stahl Rohren Limited, for a principal amount of up to US$100 million. These bonds are convertible into new ordinary shares of the issuer, with a par value of 5 Indian Rupees each.
- “securities”: This adopts the meaning in section 239(1) of the SFA, ensuring that the exemption operates within the SFA’s defined universe of “securities”.
- “stabilising action”: This is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets Limited (or any of its related corporations) to buy, or to offer or agree to buy, any of the Bonds to stabilise or maintain the market price of the Bonds in Singapore or elsewhere.
Practically, this means the exemption is not available to every dealer or issuer. It is tied to Citigroup Global Markets Limited and its related corporations, and it is tied to the specific bond issue described.
3. The exemption from SFA sections 197 and 198 (Regulation 3)
The operative provision is Regulation 3. 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 of the Bonds, subject to the identity of the person taking the stabilising action and (for one category) a minimum consideration requirement.
In plain language, the Regulations temporarily remove certain statutory constraints on stabilising conduct for this particular bond issue, but only during the first 30 days after issuance and only when the stabilising action is undertaken by one of the permitted categories:
- (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, provided that the consideration for each transaction is not less than $200,000 (or its equivalent in foreign currency), whether paid in cash or by exchange of securities or other assets.
Why these categories matter: The exemption is structured to ensure that stabilising activity is performed by market participants that are either institutionally sophisticated (institutional investors), within a regulated/defined class (relevant persons), or—if acting as principal—only when the transaction size is sufficiently large (minimum consideration threshold). This reduces the risk that small-scale or retail-like trading could be used to distort market prices under the guise of stabilisation.
4. The geographic and conduct scope
Although the exemption is framed around stabilising action “in respect of” the Bonds, the definition of stabilising action expressly includes actions taken in Singapore or elsewhere to stabilise or maintain the market price of the Bonds in Singapore or elsewhere. This is significant for cross-border offerings and trading: the exemption anticipates that stabilising activity may occur in multiple jurisdictions, while still being relevant to Singapore’s market conduct regime.
How Is This Legislation Structured?
The Regulations are concise and consist of:
- Regulation 1: Citation and commencement (28 November 2005).
- Regulation 2: Definitions, including the precise bond issue and the stabilising actor (Citigroup Global Markets Limited and related corporations).
- Regulation 3: The exemption, specifying that SFA sections 197 and 198 do not apply to stabilising action within 30 days from bond issuance, subject to permitted categories of persons and (for principal acquisitions) a minimum consideration threshold.
There are no additional parts or complex schedules in the extract provided. The structure reflects the Regulations’ purpose: to grant a narrow, transaction-specific exemption rather than to establish a general regulatory regime.
Who Does This Legislation Apply To?
The exemption applies to stabilising action taken in respect of the specified Bonds, but only when the stabilising action meets the defined criteria. The stabilising action must be taken by Citigroup Global Markets Limited or its related corporations, as defined in Regulation 2. Therefore, other market intermediaries cannot rely on this exemption unless they fall within the defined stabilising actor group.
Additionally, Regulation 3 limits the persons who may take advantage of the exemption. Stabilising action must be taken within 30 days from the date of issue and must be carried out by one of the following: an institutional investor, a relevant person (under section 275(2) of the SFA), or a principal acquirer meeting the $200,000 minimum consideration threshold per transaction.
For practitioners, the key compliance task is mapping the actual trading/participation arrangements onto these categories. In many bond offerings, multiple entities may participate in bookbuilding, market making, or trading. The exemption’s narrow drafting means counsel should verify which entity is actually conducting the stabilising trades and whether it qualifies under the relevant category.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore balances two competing objectives: enabling orderly market functioning during securities issuance, while maintaining safeguards against market abuse. Stabilising action can be legitimate and beneficial—particularly in the immediate post-issuance period—but it can also be misused. By exempting stabilising action from specific SFA provisions only for a limited time and only for specified actors and transaction sizes, the Regulations calibrate regulatory flexibility without abandoning market integrity.
From an enforcement and compliance perspective, the exemption is also a reminder that market conduct rules are not automatically displaced by general market practice. A stabilising strategy must be legally grounded. If the stabilising trades fall outside the 30-day window, involve a different bond issue, are undertaken by a non-qualifying person, or fail to meet the minimum consideration threshold for principal acquisitions, the exemption would not apply and the underlying SFA provisions (sections 197 and 198) would remain relevant.
For deal counsel, this instrument is particularly useful in structuring and documenting offering mechanics. It supports the legal rationale for stabilisation activities in the first month after issuance of the specified convertible bonds, and it provides a clear checklist for eligibility. Practitioners should therefore treat it as a reference point when drafting offering documents, stabilisation notices (where applicable), internal compliance procedures, and trade capture/monitoring policies.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 239(1), 275(2), and the authorising power in 337(1).
- Futures Act (as referenced in the metadata timeline context).
- Stabilising Act (as referenced in the 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. 27) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.