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 Power: Section 337(1) of the Securities and Futures Act
- Commencement: 15 December 2005
- Regulation Number: SL 811/2005
- Status: Current version as at 27 March 2026 (per provided extract)
- Key Provisions: 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. 29) Regulations 2005 (“Stabilising Exemption Regulations”) creates a targeted regulatory exemption from certain market conduct rules in the Securities and Futures Act (the “SFA”). In plain terms, it allows specified parties to engage in “stabilising action” in relation to a particular bond issue without breaching the general prohibitions that would otherwise apply.
Stabilisation is a common feature of capital markets transactions. When bonds are newly issued, market participants may take steps—within defined limits—to support or maintain the bond’s trading price in the immediate aftermath of issuance. The policy rationale is to reduce volatility and support orderly trading. However, stabilisation can also raise concerns about market manipulation or improper influence on price formation. Singapore’s market conduct framework therefore generally restricts stabilising conduct, unless an exemption is available.
This particular set of Regulations is highly specific: it defines “Bonds” by reference to a particular bond instrument (including issuer, maturity, currency/amount, and conversion features) and defines “stabilising action” by reference to the stabilising participant (Morgan Stanley Services Limited and related corporations). The exemption is time-limited and applies only to stabilising action taken within 30 days from the date of issue, and only when the stabilising counterparties meet defined categories and minimum consideration thresholds.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations come into operation on 15 December 2005. For practitioners, this matters when assessing whether stabilising activity occurred within the legal window of the exemption.
2. Definitions (Regulation 2)
Regulation 2 is crucial because the exemption turns entirely on whether the activity falls within the defined terms. Three definitions are provided in the extract:
(a) “Bonds”
“Bonds” are defined as the 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 the issuer with a par value of NT$10 each (or, if applicable, global depository shares if such instruments have been issued at the time of conversion). This definition is instrument-specific, meaning the exemption is not a general stabilisation regime for all bonds—only for this defined issue.
(b) “securities”
The term “securities” is imported by reference to section 239(1) of the SFA. This ensures that the broader statutory meaning of “securities” applies consistently.
(c) “stabilising action”
“Stabilising action” is defined as an action taken in Singapore or elsewhere by Morgan Stanley Services Limited (or any of its related corporations) to buy, or 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. The definition is therefore both (i) participant-specific (Morgan Stanley Services Limited and related corporations) and (ii) conduct-specific (buying or offering/agreeing to buy).
3. The exemption (Regulation 3)
Regulation 3 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, provided the stabilising action is taken with certain categories of counterparties.
The exemption is conditional on both time and counterparty/consideration:
(a) Time limit
The stabilising action must be taken within 30 days from the date of issue of the Bonds. This is a hard temporal boundary. For enforcement and compliance, practitioners should ensure transaction records can demonstrate the date of issue and the timing of each stabilisation-related dealing.
(b) Permitted counterparties
The exemption applies where the stabilising action is taken with:
- (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 if 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
Practical implications of the counterparty conditions
The exemption is not a blanket permission to stabilise. It is structured to ensure that stabilising dealings occur with sophisticated or appropriately sized market participants. The inclusion of “institutional investor” and “relevant person” indicates that the SFA’s market conduct restrictions are relaxed only in contexts where counterparties are likely to understand the transaction mechanics and where the stabilisation is less likely to distort retail price discovery.
The principal-acquirer limb (Regulation 3(c)) introduces a minimum consideration threshold of $200,000 per transaction. This threshold is designed to exclude small-lot acquisitions that could otherwise create unfairness or amplify market impact. Importantly, the Regulations expressly allow the consideration to be paid either in cash or by exchange of securities or other assets, meaning the threshold must be assessed on the value of the consideration, not merely the form of payment.
4. Enacting authority and making date
The Regulations were made on 12 December 2005 by the Monetary Authority of Singapore (MAS), signed by Heng Swee Keat, Managing Director. For legal research, this provides context for the regulatory intent and the administrative process under the SFA’s exemption power.
How Is This Legislation Structured?
Although the extract shows only a small number of provisions, the Regulations follow a standard subsidiary legislation structure:
Regulation 1 sets out the citation and commencement date. Regulation 2 provides definitions that control the scope of the exemption. Regulation 3 contains the operative exemption, specifying which SFA sections are disapplied, the time window, and the permitted categories of counterparties (including the $200,000 minimum consideration threshold for principal acquisitions).
There are no “Parts” indicated in the metadata, and the extract suggests a short instrument focused solely on the exemption for stabilising action in relation to a specific bond issue.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action taken in respect of the defined “Bonds” by the defined stabiliser—Morgan Stanley Services Limited or its related corporations. In practice, this means the exemption is relevant to the stabilising dealer’s dealing activities and to any internal compliance framework that governs whether stabilisation trades are permissible under the SFA.
However, the exemption also depends on who the stabilising action is taken with. Therefore, the Regulations indirectly affect counterparties and transaction structuring. If stabilisation is conducted with a counterparty that does not fall within the categories in Regulation 3(a) or 3(b), or if the principal-acquirer threshold in Regulation 3(c) is not met, the exemption would not apply and the underlying SFA provisions (Sections 197 and 198) could remain enforceable.
Why Is This Legislation Important?
This instrument is important because it illustrates how Singapore balances market integrity with the practical needs of capital markets. Stabilisation can support orderly trading, but it must be carefully constrained to avoid manipulation. By disapplying Sections 197 and 198 of the SFA only for a defined bond issue, a defined stabiliser, and a defined period, the Regulations provide legal certainty while preserving the general prohibition framework for other circumstances.
For practitioners, the key value lies in the precision of the exemption. The Regulations are not drafted as a general stabilisation regime; they are an issue-specific and participant-specific exemption. This means that compliance teams must verify, at the transaction level, that:
- the instrument being dealt with is within the definition of “Bonds” (issuer, maturity, conversion features, and issue size);
- the stabilising activity is within the definition of “stabilising action” (buying or offering/agreeing to buy to stabilise or maintain price);
- the dealing occurs within 30 days from the date of issue; and
- the counterparty is an institutional investor, a “relevant person” (per section 275(2) of the SFA), or a principal acquirer meeting the $200,000 per transaction consideration threshold.
From an enforcement perspective, the exemption’s conditions create clear compliance checkpoints. If stabilisation trades fall outside the time window or involve counterparties not covered by the categories, the exemption will not protect the conduct. Accordingly, documentation (trade confirmations, counterparty classification evidence, and valuation of non-cash consideration) becomes critical.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly Sections 197, 198, 239(1), 275(2), and the exemption-making power in section 337(1)
- Futures Act (listed in the provided metadata)
- Stabilising Act (listed in the provided metadata)
- Timeline (legislation timeline reference in the platform interface)
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.