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)
- Enacting authority: Monetary Authority of Singapore (MAS)
- Commencement: 6 April 2004
- Legislative status: Current version as at 27 March 2026 (per provided extract)
- Legislative instrument number: SL 180/2004
- Key provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Relevant Act provisions referenced: Sections 197, 198, 274, 275(2), and the stabilising framework under 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 regulatory instrument made under the Securities and Futures Act (SFA). In plain terms, it creates a specific exemption from certain market conduct rules when a designated party undertakes “stabilising action” in relation to a particular set of bonds.
Stabilising action is a practice commonly used in capital markets transactions, particularly around issuance and early trading of securities. The goal is to reduce excessive price volatility by permitting certain buying (or offers to buy) that would otherwise be treated as potentially manipulative or prohibited. However, regulators typically impose strict boundaries—such as who may be involved, the type of securities, and time limits—to ensure stabilisation does not become a cover for improper market support.
This Regulations instrument is narrow in scope: it defines “Bonds” very specifically (zero coupon convertible bonds due 2009 issued by Reliance Energy Limited, up to a stated principal amount, with specified conversion mechanics), and it defines “stabilising action” as action taken by Deutsche Bank AG London (or its related corporations) to buy or offer to buy those Bonds to stabilise or maintain their market price in Singapore or elsewhere. The exemption then applies only to stabilising actions carried out within defined parameters.
What Are the Key Provisions?
Section 1: Citation and commencement 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 fall within the regulatory regime at the relevant time.
Section 2: Definitions is the heart of the instrument’s precision. It defines two key terms:
- “Bonds”: These are the zero coupon convertible bonds due 2009 issued by Reliance Energy Limited for a principal amount of 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”: This is 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.
The practical effect is that the exemption is not available for other bond issues, other issuers, or stabilisation by other market participants. Even if a party undertakes similar conduct, it will not qualify unless it fits the defined “stabilising action” and relates to the defined “Bonds”.
Section 3: Exemption sets out the exemption from the SFA’s market conduct provisions. The structure is two-step: an exemption subject to conditions, and a hard time limit.
Section 3(1) states that, subject to paragraph (2), sections 197 and 198 of the Act shall not apply to any stabilising action carried out in respect of any of the Bonds 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.
In other words, the exemption is linked to the counterparty category for the stabilising transactions. The Regulations do not reproduce the content of sections 274 and 275(2); instead, they incorporate those definitions by reference. For a practitioner, this means the analysis must extend beyond the Regulations to the SFA provisions governing who qualifies as a relevant person and what constitutes a sophisticated investor.
Section 3(2) imposes a strict temporal limitation: the exemption does not apply to stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of issuance of the Bonds.
This is a critical compliance point. Even if the stabilising action is conducted by the correct entity and with the correct category of counterparties, stabilisation beyond the 30-day window would fall outside the exemption and would therefore be subject to sections 197 and 198 of the SFA (which, in broad terms, are market conduct prohibitions that would otherwise restrict or penalise certain trading behaviour).
Regulatory drafting significance: The Regulations are “exemption regulations”. They do not create a general permission to manipulate markets; rather, they carve out a defined exception from specific statutory prohibitions. The combination of (i) narrow definitions of the Bonds and stabilising actor, (ii) counterparty restrictions via sections 274 and 275(2), and (iii) a hard 30-day limit reflects a typical regulator approach: allow stabilisation only when it is demonstrably part of a controlled issuance process and only within a limited timeframe.
How Is This Legislation Structured?
The Regulations are short and structured around three provisions:
- Section 1 (Citation and commencement) – identifies the instrument and its effective date.
- Section 2 (Definitions) – defines “Bonds” and “stabilising action” with transaction-specific detail, including issuer, maturity, conversion mechanics, and the stabilising actor.
- Section 3 (Exemption) – provides the exemption from SFA sections 197 and 198, conditioned on the counterparty category and limited to stabilising actions within 30 calendar days from issuance.
Notably, there are no additional parts, schedules, reporting requirements, or procedural steps in the extract provided. The compliance analysis therefore turns on the statutory incorporation by reference (sections 274 and 275(2)) and the factual determination of when the stabilising action occurred relative to the issuance date.
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 affects the market participants who may conduct stabilisation in relation to that specific convertible bond issue. The definition of “stabilising action” is limited to actions taken by Deutsche Bank AG London (or its related corporations). Accordingly, the exemption is primarily relevant to that stabilising party and its corporate group.
However, the exemption’s availability also depends on the counterparty to the stabilising trades. Section 3(1) restricts the exemption to stabilising actions carried out with either a person falling within section 274 of the SFA or a sophisticated investor under section 275(2). Therefore, even if the stabilising actor is correct, the trades must be structured so that the relevant counterparties fall within those categories.
Why Is This Legislation Important?
This Regulations instrument is important because it operationalises a controlled exception to market conduct prohibitions in the context of a specific bond issuance. For practitioners advising issuers, arrangers, stabilising agents, or trading desks, the Regulations provide a compliance pathway: stabilisation may be permissible where it fits the defined scope and stays within the exemption conditions.
From an enforcement and risk perspective, the key significance lies in the boundaries. The exemption is not open-ended. It is constrained by:
- Instrument specificity: only the Reliance Energy Limited zero coupon convertible bonds due 2009 (as defined) qualify.
- Actor specificity: stabilising action must be taken by Deutsche Bank AG London or related corporations.
- Counterparty specificity: trades must be with persons under section 274 or sophisticated investors under section 275(2).
- Time limitation: stabilisation must occur within 30 calendar days from the date of issuance.
Practically, these constraints require careful documentation and monitoring. A legal team should ensure that the stabilising programme (including trade confirmations, counterparties, and dates) can be mapped to the statutory definitions. In particular, the 30-day limit can be a common compliance failure point if stabilisation continues beyond the permitted window or if the “date of issuance” is not clearly identified in transaction documentation.
Finally, the Regulations demonstrate how Singapore’s market conduct framework balances investor protection with market functioning. By carving out a limited exemption, MAS allows stabilisation practices that may support orderly trading while still preserving the integrity of the market by restricting the circumstances under which stabilisation is allowed.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, sections 197, 198, 274, and 275(2) (as referenced by the Regulations)
- Futures Act (listed in provided metadata as related legislation)
- Stabilising Act (listed in provided metadata as related legislation)
- 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.