Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 3) Regulations 2004
- Act Code: SFA2001-S180-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) (specifically, powers under section 337(1))
- Enacting authority: Monetary Authority of Singapore (MAS)
- Commencement: 6 April 2004
- Legislation status: Current version as at 27 March 2026 (per the provided extract)
- Legislative instrument number: SL 180/2004
- Key provisions:
- Section 1: Citation and commencement
- Section 2: Definitions of “Bonds” and “stabilising action”
- Section 3: Exemption from sections 197 and 198 of the Securities and Futures Act for specified stabilising action, subject to conditions
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 3) Regulations 2004 is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain market conduct rules in the Securities and Futures Act for a specific type of trading activity—“stabilising action”—carried out in relation to a defined bond issue.
Stabilising action is a practice commonly used in capital markets. During and shortly after the issuance of certain securities, an arranger or related party may buy (or offer to buy) the securities to help maintain an orderly market and reduce excessive price volatility. However, stabilisation can resemble prohibited conduct if it is not properly authorised or if it falls within statutory market manipulation prohibitions. This Regulations addresses that tension by carving out an exemption, but only for a narrow set of circumstances.
Importantly, this is not a general stabilisation regime for all bonds. The definitions and the exemption are issue-specific: the “Bonds” are precisely identified, and the “stabilising action” is defined by reference to a particular stabilising entity (Deutsche Bank AG London) and its related corporations. The exemption is also time-limited, and it is subject to conditions linked to the identity of counterparties and the investor category involved.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal legal entry point. The Regulations may be cited by their full name and come into operation on 6 April 2004. For practitioners, this matters for determining whether stabilising conduct undertaken around the issuance period falls within the regulatory framework.
Section 2 (Definitions) is central because it controls the scope of the exemption. Two defined terms are used in Section 3:
- “Bonds” are defined as the zero coupon convertible bonds due 2009 issued by Reliance Energy Limited for a principal amount up to US$178,058,000. The bonds are convertible into either:
- fully paid equity shares of Reliance Energy Limited (par value of 10 Indian Rupees each), or
- global depositary receipts, where each receipt represents three fully paid equity shares of Reliance Energy Limited (par value of 10 Indian Rupees each).
- “stabilising action” means an action taken in Singapore or elsewhere by Deutsche Bank AG London (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.
From a compliance perspective, the definitions are deliberately narrow. If the stabilisation is carried out by a different entity, or if the action is not directed at stabilising or maintaining the market price of the defined Bonds, the exemption may not apply. Likewise, if the bonds are not the specified Reliance Energy zero coupon convertible bonds, the exemption is unlikely to be available.
Section 3 (Exemption) is the operative provision. It states that, subject to paragraph (2), sections 197 and 198 of the Securities and Futures Act shall not apply to stabilising action carried out in respect of any of the Bonds with specified counterparties.
While the extract does not reproduce sections 197 and 198, the legal effect is clear: those provisions would otherwise restrict or prohibit certain market conduct (commonly, rules relating to market manipulation, false or misleading conduct, or improper trading practices). The Regulations therefore provides a statutory “safe harbour” for stabilisation activity, but only when the stabilising action is conducted with the right counterparties and within the right time window.
Under Section 3(1), the exemption applies to stabilising action carried out with either:
- a person referred to in section 274 of the Act, or
- a sophisticated investor as defined in section 275(2) of the Act.
This structure signals that the exemption is designed to be compatible with investor protection and market integrity. Counterparties are limited to persons who fall within the statutory categories of section 274 or who qualify as sophisticated investors. Practitioners should therefore verify the counterparty’s classification under the Securities and Futures Act framework, as misclassification could expose the stabilising activity to the underlying prohibitions in sections 197 and 198.
Section 3(2) imposes a further and very significant limitation: the exemption does not apply to stabilising action carried out at any time after the expiry of 30 calendar days from the date of the issuance of the Bonds. This is a classic stabilisation constraint—stabilisation is permitted only for a short period after issuance, after which the rationale for price support diminishes and the risk of improper market influence increases.
For legal and compliance teams, the practical implication is that the stabilisation programme must be time-bounded and auditable. The “date of issuance” should be identified precisely (for example, the issue date stated in the offering documentation or the date on which the bonds are deemed issued under the relevant transaction documents). Any stabilising trades after the 30-day period could fall outside the exemption and potentially trigger enforcement risk under the underlying Act provisions.
How Is This Legislation Structured?
This Regulations is structured in a straightforward, short form typical of targeted exemptions:
- Enacting Formula: MAS makes the Regulations under the powers conferred by section 337(1) of the Securities and Futures Act.
- Section 1 (Citation and commencement): sets the legal name and commencement date.
- Section 2 (Definitions): defines the specific “Bonds” and the specific “stabilising action” that can qualify for the exemption.
- Section 3 (Exemption): provides the exemption from sections 197 and 198 of the Act, subject to counterparty categories and a 30-day time limit.
There are no additional parts or complex schedules in the extract provided. The entire regulatory effect is concentrated in Section 3, supported by the issue-specific definitions in Section 2.
Who Does This Legislation Apply To?
Although the Regulations is an exemption from provisions of the Securities and Futures Act, it is not directed at “the public” generally. Instead, it applies to stabilising action in relation to the defined Bonds, when carried out by the defined stabilising entity (Deutsche Bank AG London or its related corporations) and when the stabilising trades are conducted with counterparties falling within the statutory categories.
In practical terms, the Regulations is most relevant to:
- the stabilising manager/arranger and its related corporations that may conduct stabilisation trades;
- the deal team and compliance function responsible for ensuring that stabilisation is conducted within the exemption boundaries; and
- the counterparties (or their intermediaries) that must be within the categories referenced by sections 274 and 275(2) of the Act.
Because the exemption is counterparty- and time-dependent, parties cannot assume that stabilisation is automatically lawful. They must ensure that both the identity of the counterparty and the timing of the stabilising trades satisfy the Regulations.
Why Is This Legislation Important?
This Regulations is important because it operationalises a balance between two regulatory objectives: (1) allowing legitimate market stabilisation to support orderly trading around a bond issuance, and (2) preventing stabilisation from becoming a vehicle for market manipulation or improper conduct.
By exempting stabilising action from sections 197 and 198 of the Securities and Futures Act, MAS provides legal certainty to market participants involved in the specified bond issue. Without such an exemption, stabilisation activity could be argued to fall within the scope of market conduct prohibitions, creating uncertainty for arrangers and potentially discouraging stabilisation practices that help maintain liquidity and reduce volatility.
At the same time, the Regulations is tightly controlled. The exemption is limited to:
- a specific bond issue (Reliance Energy zero coupon convertible bonds due 2009, up to a specified principal amount);
- a specific stabilising entity (Deutsche Bank AG London and related corporations);
- transactions with specified counterparty categories (persons under section 274 or sophisticated investors under section 275(2)); and
- a strict 30-calendar-day window from the date of issuance.
For practitioners, the key takeaway is that this is not a broad “permission to stabilise.” It is a carefully bounded exemption that must be matched to the transaction facts. Compliance teams should therefore maintain documentation demonstrating: (i) the bonds are the defined Bonds; (ii) the stabilising trades were carried out by the defined entity; (iii) counterparties qualify under the relevant statutory categories; and (iv) stabilisation ceased within the 30-day period.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 274, 275(2), and the enabling 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 timeline reference as provided in the metadata)
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. 3) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.