Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 29) Regulations 2005
- Act Code: SFA2001-S811-2005
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Legal Power Used: Section 337(1) of the Securities and Futures Act
- Commencement: 15 December 2005
- Current Version Status: Current version as at 27 March 2026 (per provided extract)
- Key Provisions: Section 1 (Citation and commencement), Section 2 (Definitions), Section 3 (Exemption)
- Primary Exempted Conduct: “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. 29) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument that creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (“SFA”). In plain terms, it allows specific market participants to take stabilising steps during the early period after a bond issuance without breaching the general prohibitions that would otherwise apply to “dealing” and related conduct.
Stabilisation is a common feature of capital markets transactions. When bonds are newly issued, market liquidity and investor confidence can cause price volatility. Under stabilisation arrangements, a designated financial institution may buy (or offer to buy) the bonds to help maintain an orderly market price. However, stabilisation can resemble prohibited market manipulation if not carefully bounded. Singapore’s market conduct framework therefore generally restricts dealing practices that could distort prices, unless an exemption applies.
This particular set of Regulations is highly specific: it defines a particular bond issue (the “Bonds”) and a particular stabilising actor (Morgan Stanley Services Limited and related corporations). It also limits the exemption to a defined time window (within 30 days from the date of issue) and to specified categories of persons and minimum transaction consideration thresholds. As such, the Regulations are best understood as a transaction-specific carve-out designed to facilitate stabilisation for a particular issuance, while preserving the integrity of Singapore’s market conduct regime.
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 15 December 2005. For practitioners, this matters when assessing whether stabilising conduct occurred within the legal framework applicable at the time of the relevant bond issuance and trading period.
Section 2 (Definitions) is central because it determines exactly what conduct is covered. The Regulations define:
- “Bonds”: the Regulations identify a specific bond instrument—“5-year zero coupon convertible bonds due December 2010” issued by Shin Kong Financial Holding Co., Ltd. for up to US$250 million. The bonds are convertible into fully paid ordinary shares of the issuer (or global depository shares if issued at conversion), with a specified par value.
- “securities”: this adopts the meaning in section 239(1) of the SFA, ensuring the exemption is anchored to the SFA’s definitional scope.
- “stabilising action”: an action taken in Singapore or elsewhere by Morgan Stanley Services Limited (or its related corporations) to buy, or to offer or agree to buy, any of the Bonds in order to stabilise or maintain the market price of the Bonds in Singapore or elsewhere.
From a compliance perspective, the definitions are doing heavy lifting. If the instrument is not the specified “Bonds”, or if the stabilising actor is not Morgan Stanley Services Limited (or a related corporation), the exemption will not apply. Similarly, the conduct must be directed at stabilising or maintaining market price—mere trading for other commercial reasons would not fit the definition.
Section 3 (Exemption) is the operative provision. It states 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, with respect to stabilising action undertaken by or involving specified categories of persons.
The exemption is limited to stabilising action taken with one of the following counterparties/participants:
- (a) an institutional investor
- (b) a “relevant person” as defined in section 275(2) of the SFA
- (c) a person who acquires the Bonds as principal, but only where 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.
Practitioners should note the structure: the exemption is not a blanket permission to stabilise. It is a permission that removes the application of specific SFA provisions (sections 197 and 198) only in the defined circumstances. The time limit (30 days from issue) and the participant/consideration thresholds are key compliance guardrails.
Although the extract does not reproduce sections 197 and 198 of the SFA, the practical effect is that the stabilising conduct—if it meets the definitions and conditions in these Regulations—will not be treated as contravening those market conduct prohibitions. This is typically crucial for underwriting syndicates and stabilisation agents, because stabilisation activities can otherwise trigger regulatory scrutiny for potentially misleading or manipulative dealing.
How Is This Legislation Structured?
The Regulations are short and transaction-specific. They consist of:
- Section 1: Citation and commencement (15 December 2005).
- Section 2: Definitions of “Bonds”, “securities”, and “stabilising action”.
- Section 3: The exemption from the application of SFA sections 197 and 198, subject to timing and eligibility conditions.
There are no additional parts or complex schedules in the provided extract. The legislative design is therefore “definition-driven”: by precisely defining the bond issue and the stabilising actor, and by tightly specifying the persons and minimum transaction consideration, the Regulations create a controlled carve-out rather than a broad regulatory relaxation.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the specified “Bonds” undertaken by Morgan Stanley Services Limited (or its related corporations). In practice, this will concern the stabilisation agent and any related entities that execute or coordinate stabilisation trading, including operational teams managing orders and settlement.
However, the exemption’s availability also depends on the counterparty category and, in one category, the minimum consideration threshold. Stabilising action must be taken with (i) an institutional investor, (ii) a relevant person under the SFA, or (iii) a principal acquirer meeting the $200,000 per transaction minimum (or equivalent). Therefore, the Regulations indirectly affect how stabilisation trades are structured and documented—particularly the identity of counterparties and the economics of each transaction.
Why Is This Legislation Important?
This legislation is important because it reconciles two competing market objectives: (1) allowing legitimate stabilisation to support orderly markets during issuance, and (2) preventing stabilisation from becoming a vehicle for market manipulation. By exempting stabilising action from the application of specified SFA provisions, MAS provides legal certainty to market participants engaged in the stabilisation of the particular bond issue.
For practitioners, the key value lies in certainty and boundaries. The exemption is not discretionary; it is conditional. Lawyers advising issuers, underwriters, stabilisation agents, or counterparties must ensure that stabilisation activities fall within the defined scope—especially the identity of the bonds, the stabilising actor, the 30-day period, and the eligibility of counterparties (including the $200,000 minimum consideration where applicable).
From an enforcement and risk-management perspective, the Regulations also signal MAS’s approach: exemptions are narrowly tailored and tied to specific transaction facts. This means that compliance teams should not assume that stabilisation in other bond issues will be covered. Instead, each issuance may require its own exemption or a different regulatory pathway.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 239(1), 275(2), and the exemption-making power in section 337(1).
- Futures Act (as referenced in the provided metadata context)
- Stabilising Act (as referenced in the provided metadata context)
- Timeline (legislation versioning and amendment timeline reference)
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. 29) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.