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
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Commencement: 6 April 2004
- Regulation Number / SL Reference: SL 180/2004
- Status: Current version as at 27 March 2026 (per provided extract)
- Key Provisions:
- Regulation 1: Citation and commencement
- Regulation 2: Definitions (Bonds; stabilising action)
- Regulation 3: Exemption (sections 197 and 198 of the Securities and Futures Act)
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 (“Stabilising Action (Bonds) (No. 3) Regulations 2004”) is a targeted exemption regulation made under the Securities and Futures Act (SFA). In plain terms, it allows certain market participants to take “stabilising action” in relation to a specific bond issue without being constrained by particular market conduct rules in the SFA.
The regulation is narrow in scope. It does not create a general permission for stabilisation in all bond markets. Instead, it defines a particular set of “Bonds” (zero coupon convertible bonds due 2009 issued by Reliance Energy Limited, up to a specified principal amount) and a particular category of stabilising conduct (actions by Deutsche Bank AG London, or its related corporations, to buy or offer to buy the Bonds to stabilise or maintain their market price in Singapore or elsewhere).
At a policy level, the regulation reflects a common market practice: during or around the issuance of securities, stabilisation may be used to reduce volatility and support orderly trading. However, stabilisation can also resemble prohibited market manipulation if not carefully bounded. The SFA therefore contains market conduct provisions that regulate dealings that could affect price. This subsidiary legislation carves out an exemption for stabilising action, but only if the stabilisation is carried out within specified limits (notably, who the counterparties are and when the stabilising activity occurs).
What Are the Key Provisions?
Regulation 1 (Citation and commencement) is straightforward. It provides the short title and states that the Regulations come into operation on 6 April 2004. For practitioners, this matters for determining whether stabilising activities undertaken before that date could fall within the exemption.
Regulation 2 (Definitions) is critical because it determines the boundaries of the exemption. Two defined terms drive the entire instrument:
- “Bonds” are defined very specifically as the zero coupon convertible bonds due 2009 issued by Reliance Energy Limited for a principal amount of up to US$178,058,000. The definition also specifies the conversion mechanics: the bonds are convertible into either (a) fully paid equity shares of Reliance Energy Limited (par value of 10 Indian Rupees each) or (b) global depositary receipts, where each receipt represents three such equity shares.
- “stabilising action” is defined as 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.
This drafting is highly consequential. If the stabilising activity is performed by a different entity (not Deutsche Bank AG London or its related corporations), or if the instrument is not within the defined “Bonds,” the exemption will not apply. Likewise, if the activity is not aimed at stabilising or maintaining the market price, it may fall outside the definition even if it involves buying the Bonds.
Regulation 3 (Exemption) is the operative provision. It provides that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to any stabilising action carried out in respect of any of the Bonds with either:
- (a) a person referred to in section 274 of the SFA; or
- (b) a sophisticated investor as defined in section 275(2) of the SFA.
In practical terms, this means the exemption is conditional on the identity/qualification of the counterparty. The regulation does not exempt stabilising action in general; it exempts stabilising action only when the stabilising trades are conducted with certain categories of persons under the SFA framework. For counsel advising issuers, arrangers, or dealers, this is a key compliance checkpoint: counterparties must be assessed against the relevant SFA definitions (section 274 persons and sophisticated investors under section 275(2)).
Regulation 3(2) adds a further temporal limitation. The exemption does not apply to any stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of the issuance of the Bonds. This is a classic stabilisation “cooling-off” window: stabilisation is permitted only for a limited period after issuance, after which the market conduct prohibitions in sections 197 and 198 resume full effect.
For practitioners, the phrase “date of the issuance of the Bonds” will require careful factual determination. Advisers typically need to confirm the issuance date as reflected in the offering documents, pricing announcement, or the bond terms and conditions. The 30-calendar-day measurement should be tracked precisely, including weekends and public holidays, because the regulation uses “calendar days,” not business days.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with three regulations:
- Regulation 1 sets out the citation and commencement date.
- Regulation 2 provides definitions of the relevant securities (“Bonds”) and the relevant conduct (“stabilising action”).
- Regulation 3 contains the exemption from specified SFA market conduct provisions, subject to conditions on counterparties and a 30-day time limit.
Notably, the extract indicates that the exemption is expressly linked to sections 197 and 198 of the SFA. While the text provided does not reproduce those sections, the structure signals that the Regulations are designed to override or disapply those SFA provisions for the defined stabilising activity, but only within the specified boundaries.
Who Does This Legislation Apply To?
Although the exemption is framed as applying to “stabilising action” in respect of the defined Bonds, in practice it is relevant to the parties who may conduct stabilisation and who may trade in the Bonds during the stabilisation window. The definition of stabilising action restricts the conduct to actions taken by Deutsche Bank AG London or its related corporations. Therefore, the exemption is effectively aimed at that stabilising dealer group.
However, the exemption also depends on the counterparty. Regulation 3(1) requires that stabilising action be carried out with either (i) persons referred to in section 274 of the SFA or (ii) sophisticated investors under section 275(2). Accordingly, even if the stabilising dealer is within the definition, the exemption will not cover stabilising trades with other categories of persons. Counsel should therefore treat the regulation as a combined “who may act” and “who may be traded with” framework.
Why Is This Legislation Important?
This regulation is important because it demonstrates how Singapore’s market conduct regime balances two competing objectives: (1) allowing legitimate stabilisation practices that support orderly markets during issuance, and (2) preventing stabilisation from becoming a vehicle for manipulation or unfair price influence.
From an enforcement and compliance perspective, the exemption is narrow and conditional. It disapplies specified SFA provisions only for stabilising action that fits within the defined scope (the particular bond issue and the particular stabilising actor) and only when conducted with qualifying counterparties and within a strict 30-calendar-day period after issuance. This structure reduces regulatory ambiguity and provides a clear compliance “box” for market participants.
For practitioners, the key practical impacts are:
- Deal documentation and compliance controls: stabilising dealers should ensure that their internal policies track the issuance date, the 30-day limit, and the counterparty eligibility requirements under sections 274 and 275(2) of the SFA.
- Trade capture and auditability: because the exemption is time- and counterparty-dependent, records should be maintained to demonstrate that stabilising trades occurred within the permitted window and with eligible persons.
- Risk management for counterparties: if stabilising activity is contemplated with a counterparty whose status is uncertain, legal review is needed to confirm whether the counterparty falls within the relevant SFA categories.
Finally, the regulation’s specificity (one bond issue, one stabilising actor group) suggests it is part of a broader practice of issuing targeted exemptions for particular transactions. Lawyers should therefore be alert to the possibility that other bond issues may have different exemption instruments, different time windows, or different counterparty conditions.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, and 275(2) (as referenced in the Regulations)
- Futures Act (mentioned in provided metadata)
- Stabilising Act (mentioned in provided metadata)
- Timeline (legislation timeline reference in the provided 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.