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
- Legislative Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289), specifically section 337(1)
- Commencement: 28 November 2005
- Regulatory Status: Current version as at 27 March 2026 (per the legislation portal status)
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Primary Legal Effect: Exempts specified “stabilising action” in relation to a defined bond issue from the application of 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. 27) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain market conduct prohibitions in the Securities and Futures Act for stabilising trades carried out in connection with a particular bond issuance.
Singapore’s market conduct framework is designed to prevent manipulation and unfair practices that could distort the price or trading of securities. However, in some capital markets transactions—particularly around the initial issuance of bonds—market participants may take limited steps to stabilise the market price. Such stabilisation can be commercially legitimate, but it can also resemble conduct that would otherwise be prohibited. This legislation resolves that tension by carving out a controlled exemption for stabilising action, but only where strict conditions are met.
Importantly, the exemption is not general. It is tied to a specific definition of “Bonds” (the Welspun Gujarat Stahl Rohren Limited 5-year zero coupon convertible bonds due November 2010) and to stabilising action taken by a specified entity (Citigroup Global Markets Limited, and related corporations). The exemption also applies only within a defined time window after issuance and only for certain categories of counterparties or acquisition structures.
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 28 November 2005. This matters for practitioners because the exemption’s availability is time-sensitive and depends on the effective date of the Regulations.
Section 2 (Definitions) sets the boundaries of the exemption. Three definitions are central:
- “Bonds” are precisely identified as the 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. The bonds are convertible into new ordinary shares of the issuer, with a specified par value.
- “securities” adopts the meaning in section 239(1) of the Securities and Futures Act, ensuring that the broader statutory definitions apply consistently.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets Limited (or its related corporations) to buy, or to offer or agree to buy, any of the defined Bonds in order to stabilise or maintain the market price of the Bonds in Singapore or elsewhere.
This definition is crucial for compliance. It limits the exemption to stabilising activity by a particular stabilising manager (Citigroup Global Markets Limited) and its related corporations, and it requires that the purpose of the trades is stabilisation/maintenance of market price. Practitioners should therefore treat the “purpose” element as a compliance-relevant fact: documentation and internal rationale for the trades may be important.
Section 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the Securities and Futures Act shall not apply to stabilising action taken in respect of the defined Bonds, within 30 days from the date of issue, provided the stabilising action is taken with one of the following categories of persons:
- (a) an institutional investor;
- (b) a “relevant person” as defined in section 275(2) of the Act; or
- (c) a person who acquires the Bonds as principal, where 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.
From a practitioner’s standpoint, the exemption is structured around three gating requirements:
- Transaction scope: the trades must be “stabilising action” as defined, involving the specified Bonds.
- Temporal scope: the stabilising action must occur within 30 days from the date of issue.
- Counterparty/consideration scope: the stabilising trades must be with the specified categories of counterparties, including a minimum consideration threshold for principal acquisitions.
While the extract does not reproduce the text of sections 197 and 198 of the Securities and Futures Act, the exemption’s effect is clear: it removes the risk that stabilising trades would be treated as prohibited market conduct under those provisions, but only to the extent the conditions in section 3 are satisfied.
How Is This Legislation Structured?
The Regulations are concise and consist of an enacting formula followed by three substantive provisions:
- Section 1: Citation and commencement.
- Section 2: Definitions that delimit the Bonds, the meaning of stabilising action, and the incorporation of the Act’s definition of “securities”.
- Section 3: The exemption clause, specifying the statutory provisions excluded (sections 197 and 198 of the Securities and Futures Act), the time window (30 days from issue), and the permitted counterparty categories and consideration threshold.
There are no additional parts or schedules in the extract provided. The Regulations operate as a targeted carve-out rather than a comprehensive market conduct code.
Who Does This Legislation Apply To?
Although the Regulations are made under the Securities and Futures Act, their practical application is narrower than the Act itself. The exemption is relevant primarily to:
- Citigroup Global Markets Limited and its related corporations, because only they (and their related corporations) can perform the defined “stabilising action” that benefits from the exemption; and
- Counterparties to stabilising trades, because the exemption depends on whether the stabilising action is taken with an institutional investor, a relevant person, or a principal acquirer meeting the minimum consideration threshold.
In addition, the issuer and other transaction participants may need to understand the exemption because stabilisation activity can affect market perception, disclosure obligations, and compliance processes. However, the exemption is drafted as a legal relief from the application of specified prohibitions to stabilising action, rather than as a direct obligation on issuers.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct regime balances two competing objectives: preventing manipulation and enabling legitimate market stabilisation in connection with securities offerings. Without an exemption, stabilising trades could potentially fall within the ambit of prohibitions in the Securities and Futures Act. By carving out stabilising action for a specific bond issue, the Regulations provide legal certainty to the stabilising manager and counterparties.
For practitioners, the most significant value lies in the precision of the exemption. It is not a blanket permission to stabilise any security. Instead, it is limited by:
- Identity of the Bonds: only the defined Welspun Gujarat Stahl Rohren Limited convertible bonds.
- Identity of the stabiliser: Citigroup Global Markets Limited and its related corporations.
- Time window: within 30 days from the date of issue.
- Counterparty/consideration constraints: institutional investors, relevant persons, or principal acquirers meeting the $200,000 minimum per transaction (or equivalent).
These constraints are the compliance checklist. In practice, legal teams advising stabilising managers should ensure that trading records, counterparty classifications, and transaction documentation can support each element. Where the exemption is relied upon, the stabilising manager should be able to demonstrate that the trades were undertaken for stabilisation/price maintenance and that they were executed within the permitted period and with eligible counterparties.
Finally, the Regulations’ existence underscores a broader regulatory approach: exemptions are often transaction-specific and condition-heavy. This means that counsel should not assume that stabilisation exemptions in one bond issue automatically extend to other issues, even if the market conduct concerns are similar.
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)
- Futures Act (as referenced in the metadata)
- Stabilising Act (as referenced in the metadata)
- Legislation Timeline (for version control and amendment history)
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.