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 (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Regulation Number: SL 796/2005
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 28) Regulations 2005
- Commencement: 12 December 2005
- Status: Current version as at 27 March 2026 (per the legislation portal status indicator)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “2008 Bonds”, “2010 Bonds”, “securities”, and “stabilising action”)
- Section 3: Exemption from specified SFA market conduct provisions for stabilising action in respect of specified bonds
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 regulatory instrument. In plain terms, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (SFA) for a specific type of trading activity—“stabilising action”—carried out in relation to two identified bond issues.
Stabilising action is a practice commonly used around bond issuance. A stabilising manager (or its related entities) may buy, or offer or agree to buy, the relevant bonds to help maintain or stabilise their market price during the early period after issuance. Without an exemption, such activity could potentially fall within prohibitions or restrictions designed to prevent market manipulation or improper dealing.
This legislation therefore balances two policy objectives: (1) preserving the integrity of securities markets by enforcing market conduct rules, and (2) allowing legitimate stabilisation practices that are consistent with orderly market functioning, but only when tightly defined conditions are met. The exemption is limited to stabilising action in respect of the “2008 Bonds” and “2010 Bonds” issued by Bharati Shipyard Limited, and only within a specified time window after issuance, and only for specified categories of counterparties.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the formal name of the Regulations and states that they come into operation on 12 December 2005. For practitioners, this matters mainly for determining the regulatory framework applicable to stabilising activities conducted around that date.
Section 2 (Definitions) is the heart of the instrument because it defines the scope of the exemption. The Regulations define:
- “2008 Bonds”: 3-year convertible bonds due December 2008 issued by Bharati Shipyard Limited, with a principal amount “up to US$20 million”. These bonds are 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, with a principal amount “up to US$80 million”, also convertible into fully paid ordinary shares of Bharati Shipyard Limited.
- “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 or the 2010 Bonds, specifically “in order to stabilise or maintain the market price” of those bonds in Singapore or elsewhere.
From a compliance perspective, the definition is restrictive in at least three ways. First, it is limited to stabilising action by Citigroup Global Markets Limited (and related corporations). Second, it is limited to the two specified bond issues. Third, it is limited to actions aimed at stabilising or maintaining market price—so the purpose of the dealing is relevant.
Section 3 (Exemption) provides the operative relief. It states that sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of the specified bonds, subject to strict conditions.
Under Section 3(1), the exemption applies to stabilising action in respect of the 2008 Bonds taken within 30 days from the date of issue of the 2008 Bonds, but only when the stabilising action is taken with one of the following counterpart 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 2008 Bonds as principal, provided that 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.
Similarly, Section 3(2) applies the same structure to the 2010 Bonds: stabilising action must be taken within 30 days from the date of issue of the 2010 Bonds, and the counterpart must be an institutional investor, a relevant person, or a principal acquirer meeting the $200,000 per transaction minimum consideration threshold.
For practitioners, the key compliance takeaways are: (1) the exemption is time-bound (30 days from issue); (2) the exemption is counterparty-bound (institutional investors, relevant persons, or qualifying principal acquirers); and (3) the exemption is transaction-value-bound for principal acquirers (minimum consideration of $200,000 or equivalent). These conditions are not merely procedural; they define whether the stabilising activity is legally exempt from the SFA provisions referenced.
How Is This Legislation Structured?
The Regulations are concise and structured into three main provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions, including the precise identification of the bond issues and the definition of “stabilising action” (including the stabilising manager and the purpose of the dealing).
- Section 3 contains the exemption from specified SFA market conduct provisions (sections 197 and 198), with conditions relating to time, counterparties, and transaction value.
Notably, the Regulations do not create a general stabilisation regime. Instead, they operate as a bespoke exemption for a particular issuance and stabilising manager, which is typical of Singapore’s approach to market conduct exemptions where the regulator tailors relief to specific circumstances.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to market conduct provisions, their practical application is narrower than the SFA itself. The exemption is relevant primarily to the entity performing the stabilising action—here, Citigroup Global Markets Limited and its related corporations—and to the counterparties with whom stabilising trades are executed.
In terms of counterparties, the exemption applies only when stabilising action is taken 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. Therefore, even if stabilising action is undertaken within the 30-day window, it will not be exempt if the counterparty category or transaction value condition is not satisfied.
Why Is This Legislation Important?
This Regulations is important because it clarifies when stabilising activity can be conducted without triggering the prohibitions or restrictions contained in sections 197 and 198 of the SFA. For bond issuers, lead managers, and trading desks, the exemption reduces legal uncertainty during the sensitive post-issuance period when market price formation is still developing.
From a market integrity perspective, the exemption is deliberately constrained. The time limit (30 days from issue), the narrow identification of the bond issues, and the specified stabilising manager all serve to prevent the exemption from becoming a general licence for trading that could resemble manipulation. The counterparty restrictions further ensure that stabilising trades occur in contexts where counterparties are sophisticated or meet defined thresholds, reducing the risk of unfair dealing.
For practitioners advising on compliance, the Regulations also provide a checklist approach. Counsel should verify: (1) whether the relevant bonds fall within the defined “2008 Bonds” or “2010 Bonds”; (2) whether the stabilising action is taken by Citigroup Global Markets Limited or a related corporation; (3) whether the stabilising trades are within the 30-day period; and (4) whether each trade is with an institutional investor, a relevant person, or a principal acquirer meeting the $200,000 minimum consideration requirement. Documentation of purpose (stabilising or maintaining market price) and trade counterparties is therefore critical.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, the provisions referenced by the exemption (sections 197 and 198) and the definition framework (including section 275(2) for “relevant person” and section 239(1) for “securities”), as well as the rule-making power in section 337(1).
- Futures Act — referenced in the legislation metadata as part of the broader regulatory landscape (though not directly operative in the extracted provisions).
- Stabilising Act — referenced in the legislation metadata; stabilisation-related concepts typically interact with market conduct rules.
- Timeline / Legislation timeline — for confirming the correct version as at the relevant date (the portal indicates “current version as at 27 Mar 2026”).
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.