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)
- Authorising Provision: Section 337(1) of the Securities and Futures Act
- Commencement: 15 December 2005
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “Bonds” and “stabilising action”)
- Section 3: Exemption from Sections 197 and 198 of the Securities and Futures Act for specified stabilising action
- Regulatory Status: Current version as at 27 March 2026 (per provided extract)
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 Exemption Regulations”) is a targeted regulatory instrument made by MAS under the Securities and Futures Act. In plain language, it creates a narrow exemption from certain market conduct restrictions when specified parties undertake “stabilising action” in relation to a particular bond issue.
Stabilising action is a practice commonly used in capital markets to support the trading price of newly issued securities during the immediate post-issuance period. Without an exemption, stabilising trades could be treated as potentially prohibited conduct under the Securities and Futures Act—particularly where such trades might otherwise fall within rules against market manipulation or improper dealing. This legislation therefore permits stabilisation, but only if strict conditions are met.
Importantly, the Regulations are not a general “stabilisation regime” for all bonds. Instead, they are bond-specific and action-specific: they define the exact bonds covered, the exact type of stabilising activity, the relevant timeframe, and the categories of persons who may benefit from the exemption. This makes the Regulations highly relevant for practitioners advising issuers, arrangers, dealers, and compliance teams involved in bond issuance and post-issuance market support.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title and states that the Regulations come into operation on 15 December 2005. For practitioners, this matters mainly for determining whether any stabilising activity undertaken around the issuance period falls within the regulatory framework.
Section 2 (Definitions) is the core interpretive section. It defines three key terms: “Bonds”, “securities”, and “stabilising action”. The definition of “Bonds” is particularly detailed and identifies a specific instrument: 5-year zero coupon convertible bonds due December 2010 issued by Shin Kong Financial Holding Co., Ltd. for a principal amount of up to US$250 million. The bonds are convertible into fully paid ordinary shares of Shin Kong Financial Holding Co., Ltd. with a specified par value, or into global depository shares if those have been issued at the time of conversion.
This level of specificity is a compliance safeguard and a limitation. It means that stabilising trades in other bonds—even if issued by the same issuer, or of similar structure—would not automatically qualify for the exemption. A lawyer advising on stabilisation must therefore verify that the instrument being traded is exactly the “Bonds” described in the Regulations.
Section 2 also defines “stabilising action” as an action taken in Singapore or elsewhere by Morgan Stanley Services Limited (or any of 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. This definition is crucial for two reasons. First, it restricts the permitted stabilisation activity to buy-side actions (buying or offering/agreeing to buy). Second, it restricts the authorised actor to Morgan Stanley Services Limited and its related corporations.
Accordingly, if stabilising activity is undertaken by a different entity (even within the same broader group) or by an unauthorised intermediary, the exemption may not apply. Practitioners should therefore confirm corporate relationships and ensure that the relevant trading desk and legal entity are within the defined scope.
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 any of the Bonds within 30 days from the date of issue of the 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 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 a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets.
In practical terms, Section 3 creates a conditional “safe harbour” for stabilisation during a defined window (30 days from issue). The exemption is not unconditional: it depends on (i) the timing, (ii) the identity of the stabilising actor (via the definition of stabilising action), and (iii) the identity and status of the counterparty (institutional investor, relevant person, or principal acquirer meeting the minimum consideration threshold).
The $200,000 threshold in Section 3(c) is particularly important for structuring and documentation. It is designed to ensure that the exemption does not extend to small retail-type transactions that could undermine market integrity. Lawyers advising on trade confirmations, allocation processes, and principal acquisition arrangements should ensure that the consideration threshold is met on a per-transaction basis and that the method of payment (cash or exchange of securities/assets) is properly evidenced.
How Is This Legislation Structured?
The Regulations are structured in a simple, functional format typical of targeted exemptions. They comprise:
- Section 1: sets out the citation and commencement date.
- Section 2: provides definitions that control the scope of the exemption, including the exact bond instrument and the precise meaning of stabilising action.
- Section 3: contains the exemption clause, specifying the Securities and Futures Act provisions excluded (Sections 197 and 198), the timeframe (30 days from issue), and the categories of persons/counterparties eligible for the exemption.
There are no additional parts or complex schedules in the extract provided. The legislative design is therefore “definition-led”: the Regulations rely on careful drafting of terms to ensure that the exemption is narrow and predictable.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the defined “Bonds” undertaken by Morgan Stanley Services Limited or its related corporations. In other words, the exemption is not directed at the issuer or at all market participants generally; it is directed at the specific stabilising activity and the specific stabiliser.
However, the exemption also depends on the counterparty to the stabilising trades. Section 3 limits the exemption to stabilising action carried out with (i) an institutional investor, (ii) a relevant person under Section 275(2) of the Securities and Futures Act, or (iii) a principal acquirer meeting the minimum consideration threshold. Practitioners should therefore treat the Regulations as applying to both the stabiliser and the trading counterparties, because compliance requires that each stabilising transaction falls within one of the specified counterparty categories.
Why Is This Legislation Important?
This legislation is important because it reconciles two competing regulatory objectives: (1) maintaining fair and orderly markets by restricting market conduct that could be construed as manipulation, and (2) allowing legitimate market practices that support liquidity and price discovery in the immediate aftermath of a bond issuance. By exempting stabilising action from Sections 197 and 198 of the Securities and Futures Act, MAS permits a controlled form of price support while still imposing meaningful boundaries.
For practitioners, the key significance lies in the narrow scope and transactional conditions. A compliance failure could lead to the stabilising trades being treated as falling within the prohibited conduct rules that the exemption otherwise displaces. This risk is heightened because the exemption is bond-specific and actor-specific. Lawyers advising on bond issuance should therefore implement a compliance checklist addressing: confirmation of the bond instrument, confirmation of the stabilising entity, confirmation of the 30-day window, and confirmation that each stabilising trade is with an eligible counterparty category.
From an enforcement and litigation perspective, the Regulations also provide interpretive clarity. They show MAS’s view that stabilisation—when conducted by specified parties, within a specified timeframe, and with specified counterparties—can be consistent with market integrity. That clarity can be valuable in regulatory engagement, internal investigations, and in defending the legality of stabilising trades where questions arise after the fact.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly Sections 197 and 198 (market conduct provisions from which the exemption applies), Section 239(1) (definition of “securities”), Section 275(2) (definition of “relevant person”), and Section 337(1) (power to make regulations).
- Futures Act — referenced in the provided metadata as related legislation (contextual linkage may be relevant depending on broader market conduct frameworks).
- Stabilising Act — referenced in the provided metadata (likely a shorthand reference in the platform’s taxonomy; practitioners should rely on the actual statutory citations in the source database).
- Timeline — platform feature indicating versioning and amendments (relevant for confirming the correct version as at the relevant date).
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.