Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 28) Regulations 2005
- Act Code: SFA2001-S796-2005
- Legislation Type: Subsidiary legislation (Regulations)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Citation: S 796/2005
- Commencement: 12 December 2005
- Status: Current version (as at 27 March 2026)
- Key Provisions: Section 1 (Citation and commencement); 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. 28) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted set of regulations made under the Securities and Futures Act (“SFA”). In plain language, it creates a narrow exemption from certain market conduct rules when stabilising activity is carried out in relation to two specific bond issues.
Stabilising action is a practice commonly used during or shortly after the issuance of securities. Market participants may buy (or offer to buy) securities to help maintain orderly trading conditions and reduce excessive price volatility. However, stabilising activity can also resemble conduct that market conduct rules are designed to prevent—such as manipulative or misleading trading practices. The SFA therefore restricts stabilising conduct, unless an exemption applies.
These Regulations identify two convertible bond tranches issued by Bharati Shipyard Limited—referred to as the “2008 Bonds” and the “2010 Bonds”—and carve out a time-limited exemption for stabilising action taken in respect of those bonds. The exemption is available only to specified categories of persons and only during a defined window after issuance (within 30 days from the date of issue).
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the short title and states that the Regulations come into operation on 12 December 2005. This is important for practitioners assessing whether stabilising conduct occurred within the regulatory framework and whether the exemption was available at the relevant time.
2. Definitions (Section 2)
Section 2 is central because the exemption is highly specific. It defines the instruments and the relevant conduct:
- “2008 Bonds”: 3-year convertible bonds due December 2008 issued by Bharati Shipyard Limited, with a principal amount of up to US$20 million, convertible into fully paid ordinary shares of Bharati Shipyard Limited (par value of 10 Indian Rupees each).
- “2010 Bonds”: 5-year convertible bonds due December 2010 issued by Bharati Shipyard Limited, with a principal amount of up to US$80 million, similarly convertible into ordinary shares.
- “securities”: adopts the meaning in section 239(1) of the SFA.
- “stabilising action”: 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, either:
- the 2008 Bonds to stabilise or maintain their market price; or
- the 2010 Bonds to stabilise or maintain their market price.
Practically, this definition limits the exemption to stabilising activity by the named stabiliser (Citigroup Global Markets Limited) and its related corporations. It also limits the conduct to buying (or offers/agreements to buy) the specified bonds for the purpose of stabilising or maintaining market price.
3. The exemption from Sections 197 and 198 of the SFA (Section 3)
The operative provision is Section 3. It states that Sections 197 and 198 of the SFA shall not apply to stabilising action in respect of the specified bonds, subject to strict conditions.
(a) Exemption for stabilising action in respect of the 2008 Bonds (Section 3(1))
The exemption applies to stabilising action taken in respect of the 2008 Bonds within 30 days from the date of issue, with the stabilising action being undertaken with counterparties falling into one of the following categories:
- (a) an institutional investor
- (b) a relevant person as defined in section 275(2) of the SFA
- (c) a person who acquires the 2008 Bonds as principal, provided that the consideration 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.
(b) Exemption for stabilising action in respect of the 2010 Bonds (Section 3(2))
The structure is the same for the 2010 Bonds: the exemption applies to stabilising action taken in respect of the 2010 Bonds within 30 days from the date of issue, again where the counterparty is one of the specified categories (institutional investor, relevant person, or a principal acquirer meeting the $200,000 per transaction consideration threshold).
Key practical implications of Section 3
Although the Regulations are short, they impose meaningful constraints:
- Time-limited: the stabilising action must occur within 30 days from the bond issue date. Conduct outside that window would not benefit from this exemption.
- Instrument-specific: the exemption is tied to the “2008 Bonds” and “2010 Bonds” as defined. Stabilising other bonds, even if issued by the same issuer, would not automatically qualify.
- Counterparty-specific: the exemption is limited to stabilising transactions with institutional investors, relevant persons, or principal acquirers meeting the minimum consideration threshold.
- Consideration threshold: for principal acquisitions, the minimum consideration of $200,000 per transaction (or equivalent) is a bright-line condition. The Regulations also clarify that payment may be in cash or by exchange of securities or other assets.
- Named stabiliser: the definition of stabilising action restricts the stabiliser to Citigroup Global Markets Limited and its related corporations.
How Is This Legislation Structured?
The Regulations are structured in a straightforward manner with three sections:
- Section 1 (Citation and commencement): sets the legal identity of the Regulations and the date they take effect.
- Section 2 (Definitions): defines the two bond series, the meaning of “securities” by reference to the SFA, and—critically—defines “stabilising action” by reference to the stabiliser (Citigroup Global Markets Limited and related corporations) and the purpose (stabilising or maintaining market price).
- Section 3 (Exemption): provides the exemption from Sections 197 and 198 of the SFA, with conditions on timing, bond type, and counterparty categories.
There are no additional parts or elaborate procedural provisions in the extract provided. The Regulations operate as a targeted carve-out rather than a comprehensive regulatory code.
Who Does This Legislation Apply To?
In terms of persons, the exemption is relevant primarily to the stabilising participant—defined as Citigroup Global Markets Limited or its related corporations—when it undertakes stabilising action in relation to the specified bonds. However, the exemption also depends on the identity and status of the counterparties to the stabilising transactions.
Accordingly, the Regulations apply to stabilising action transactions that involve:
- Institutional investors;
- Relevant persons (as defined in section 275(2) of the SFA); and/or
- Principal acquirers of the bonds, where each transaction involves at least $200,000 (or equivalent) consideration.
Because the exemption is instrument-specific, it does not generally apply to stabilising actions in respect of other securities. Practitioners should therefore verify the bond series against the definitions in Section 2 and confirm the stabilising activity occurred within the 30-day window from the issue date.
Why Is This Legislation Important?
For market participants, these Regulations provide legal certainty for stabilisation activities during a bond issuance period. Without an exemption, stabilising conduct could potentially trigger prohibitions or compliance issues under the SFA’s market conduct framework—particularly where stabilising trades might be alleged to distort price formation.
From a compliance perspective, the Regulations are valuable because they translate what is often a commercially necessary practice (price stabilisation) into a clearly bounded legal permission. The key compliance tasks for counsel and compliance officers include:
- Confirming eligibility: the bonds must match the defined “2008 Bonds” or “2010 Bonds” characteristics.
- Confirming the stabiliser: the stabilising action must be taken by Citigroup Global Markets Limited or its related corporations.
- Confirming the timing: stabilising action must occur within 30 days from issue.
- Confirming counterparties: transactions must be with institutional investors, relevant persons, or principal acquirers meeting the $200,000 per transaction consideration threshold.
Enforcement significance also follows from the narrowness of the exemption. If any condition is not met—wrong bond series, wrong counterparty category, or stabilising trades outside the 30-day period—the exemption would not apply, and the stabilising conduct could fall back within the scope of Sections 197 and 198 of the SFA. This creates a strong incentive for detailed trade documentation and audit trails.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly Sections 197, 198, 239(1), 275(2), and the regulation-making power in 337(1).
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline / legislative timeline resources (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. 28) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.