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
- Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Legislative Status: Current version as at 27 Mar 2026
- Commencement: 12 December 2005
- Legislative Instrument Number: SL 796/2005
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “stabilising action”, and specific “2008 Bonds” and “2010 Bonds”)
- Section 3: Exemption from sections 197 and 198 of the SFA for specified stabilising action in respect of specified bonds, within specified time windows and subject to specified counterparties/consideration thresholds
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 narrow, targeted regulatory instrument. In essence, it creates a specific exemption from certain market conduct prohibitions in the Securities and Futures Act (SFA) for stabilising activities carried out in connection with particular convertible bonds issued by Bharati Shipyard Limited.
In plain language, the Regulations recognise that, during certain periods after the issue of bonds, market participants may engage in “stabilising action” to help maintain orderly trading and reduce excessive volatility. However, stabilisation can overlap with conduct that would otherwise be prohibited under the SFA’s market manipulation and false trading rules. This Regulations therefore carves out a limited safe harbour: stabilising action is permitted (or at least not caught by the specified prohibitions) if it meets the conditions set out in the Regulations.
Importantly, the exemption is not general. It is limited to (i) two identified bond issues (“2008 Bonds” and “2010 Bonds”), (ii) a defined stabiliser (Citigroup Global Markets Limited and its related corporations), (iii) a strict time window (within 30 days from the date of issue), and (iv) specified counterparties and minimum consideration thresholds (including a $200,000 per transaction threshold for certain principal acquisitions). This makes the Regulations highly relevant for lawyers advising issuers, underwriters, and dealing/market-making desks involved in bond issuance programmes.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal commencement date and citation. It states that the Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 28) Regulations 2005” and that they come into operation on 12 December 2005. For practitioners, this matters when assessing whether stabilising conduct occurred within the regulatory framework applicable at the relevant time.
Section 2 (Definitions) is the backbone of the Regulations because it defines the exact instruments and conduct that qualify. The Regulations define:
- “2008 Bonds”: 3-year convertible bonds due December 2008 issued by Bharati Shipyard Limited, up to US$20 million, convertible into fully paid ordinary shares of Bharati Shipyard Limited with a par value of 10 Indian Rupees each.
- “2010 Bonds”: 5-year convertible bonds due December 2010 issued by Bharati Shipyard Limited, up to US$80 million, convertible into fully paid ordinary shares of Bharati Shipyard Limited with a par value of 10 Indian Rupees each.
- “securities”: carries 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:
- the 2008 Bonds to stabilise or maintain the market price of the 2008 Bonds; or
- the 2010 Bonds to stabilise or maintain the market price of the 2010 Bonds.
This definition is crucial. It limits the exemption to stabilising action by a particular stabiliser group (Citigroup Global Markets Limited and related corporations) and to stabilisation of the specified bonds. It also expressly covers not only actual purchases but also offers and agreements to buy, which can be relevant in advising on trading communications, conditional orders, and execution arrangements.
Section 3 (Exemption) provides the operative legal effect. It states that sections 197 and 198 of the SFA shall not apply to stabilising action in respect of the specified bonds, subject to conditions.
Under Section 3(1), the exemption applies to stabilising action in respect of the 2008 Bonds within 30 days from the date of issue of the 2008 Bonds, 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; or
- (c) a person who acquires the 2008 Bonds as principal, where 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.
Section 3(2) mirrors the same structure for the 2010 Bonds: stabilising action within 30 days from the date of issue of the 2010 Bonds is exempt from sections 197 and 198 if undertaken with the same three categories of counterparties, including the same $200,000 per transaction minimum consideration for principal acquisitions.
From a practitioner’s perspective, the key compliance issues are therefore:
- Time window: stabilising action must occur within 30 days from the issue date of the relevant bond series.
- Instrument specificity: the action must relate to the defined “2008 Bonds” or “2010 Bonds” (as described in the definitions).
- Counterparty category: the stabilising purchases must be with institutional investors, relevant persons, or qualifying principal acquirers.
- Minimum consideration threshold: for principal acquisitions, the consideration must be at least $200,000 (or equivalent), per transaction, and can be satisfied through cash or exchange of securities/other assets.
While the text provided does not reproduce sections 197 and 198 of the SFA, the legal effect is clear: the exemption prevents those prohibitions from applying to qualifying stabilising action. In practice, this is typically relevant to market conduct rules that would otherwise treat certain trading patterns as potentially manipulative or otherwise prohibited.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with a conventional layout:
- Part/Section 1: Citation and commencement (administrative).
- Part/Section 2: Definitions (substantive, defining the bonds and the stabilising action).
- Part/Section 3: Exemption (operative clause specifying the scope of the safe harbour and the conditions).
There are no additional parts or complex schedules in the extract. The legal work therefore focuses on interpreting the definitions and ensuring that the factual trading conduct fits squarely within the exemption’s parameters.
Who Does This Legislation Apply To?
The exemption is drafted to benefit stabilising activity carried out by Citigroup Global Markets Limited or its related corporations. Accordingly, the primary practical audience is the stabiliser/underwriter group and the dealing entities executing stabilising trades in connection with the specified bond issues.
However, the exemption also depends on the counterparty to the stabilising action. It applies only when stabilising purchases are made with (i) institutional investors, (ii) relevant persons (as defined in the SFA), or (iii) principal acquirers meeting the $200,000 per transaction minimum consideration threshold. Therefore, issuers, arrangers, and counterparties must also understand whether their status and transaction economics satisfy the exemption conditions.
Why Is This Legislation Important?
This Regulations is important because it operationalises a balance between two regulatory objectives: (1) maintaining fair and orderly markets by prohibiting manipulative or improper trading conduct, and (2) allowing legitimate stabilisation practices that can support price discovery and reduce disorderly trading immediately after issuance.
For practitioners, the value lies in the certainty the exemption provides. Without such an exemption, stabilising trades could be scrutinised under the SFA’s market conduct prohibitions. By specifying the exact bonds, the stabiliser, the time window, and the counterparty/consideration conditions, the Regulations reduces ambiguity and helps market participants design compliant stabilisation programmes.
In practical terms, lawyers advising on bond issuance documentation, underwriting arrangements, and trading compliance should treat this instrument as a checklist-based safe harbour. The exemption is narrow; if any element is missed—wrong bond series, trades outside the 30-day period, trades with non-qualifying counterparties, or failure to meet the $200,000 threshold for principal acquisitions—the exemption may not apply, and the underlying SFA prohibitions could become relevant.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, market conduct provisions in sections 197 and 198, and the definitions referenced (including “relevant person” in section 275(2) and “securities” in section 239(1)), plus the regulation-making power in section 337(1).
- Futures Act (as referenced in the platform’s metadata/timeline context).
- Stabilising Act (as referenced in the platform’s metadata/timeline context).
- Timeline / 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. 28) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.