Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 3) Regulations 2005
- Act Code: SFA2001-S83-2005
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 16 February 2005
- Regulation Structure: 3 regulations (including definitions and exemption)
- Key Provisions: Regulation 1 (citation and commencement); Regulation 2 (definitions); Regulation 3 (exemption)
- Relevant Act Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
- Most Relevant Investor Categories Referenced: Persons under section 274 of the Act; “sophisticated investors” under section 275(2) of the 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 2005 (“Stabilising Exemption Regulations”) creates a targeted regulatory carve-out from certain market conduct rules in the Securities and Futures Act (“SFA”). In plain language, it allows specified parties to undertake “stabilising action” in relation to a particular bond issue during a limited period, without being treated as breaching the SFA’s general prohibitions.
Stabilising action is a common feature of capital markets transactions. When a new bond is issued, market liquidity and investor sentiment can cause price volatility. Under a stabilisation framework, a market participant may buy (or offer to buy) the bonds to help maintain or stabilise the market price. This can support orderly trading and reduce the risk of abrupt price falls immediately after issuance.
However, stabilisation can also raise concerns about market manipulation. The SFA therefore contains market conduct provisions (including sections 197 and 198) that restrict certain dealings. These Regulations reconcile the policy tension by permitting stabilisation in a controlled way—limited to a specific bond, a defined stabilisation window, and dealings with specified investor categories.
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 16 February 2005. For practitioners, this matters because the exemption is time-bound and must be applied to stabilising actions taken within the relevant statutory window.
Regulation 2 (Definitions) defines two critical terms: “Bonds” and “stabilising action”. The definition of “Bonds” is highly specific. It refers to 5-year fixed rate convertible bonds due February 2010, issued by Jaiprakash Associates Limited, for a principal amount of up to US$100 million. The bonds are convertible into new ordinary shares of Jaiprakash Associates Limited, with a par value of 10 Indian Rupees each. This specificity is important: the exemption is not general-purpose. It applies only to this bond issue and not to other bonds, even if issued by the same issuer.
The definition of “stabilising action” is also precise. It means an action taken in Singapore or elsewhere by Barclays Bank PLC (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 indicates that the exemption is designed for the stabilising dealer/arranger role (here, Barclays and its related corporations) and covers not only actual purchases but also offers or agreements to purchase.
Regulation 3 (Exemption) is the operative provision. It states that sections 197 and 198 of the SFA shall not apply to any 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 either:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, Regulation 3 creates a conditional exemption: stabilisation is permitted, but only when the stabilising dealings are conducted with the relevant counterparties (persons in section 274 or sophisticated investors) and only within the 30-day post-issuance window. Outside that window, or if the counterparties do not fall within the specified categories, the general market conduct restrictions in sections 197 and 198 would apply.
For a lawyer advising on compliance, the key tasks are therefore (i) confirming the transaction falls within the defined “Bonds” issue, (ii) confirming the stabilising action is taken by Barclays Bank PLC or its related corporations, (iii) confirming the action is taken within 30 days from the bond issue date, and (iv) confirming the counterparty is within the relevant investor category (section 274 person or sophisticated investor under section 275(2)). Each element is a potential “failure point” for the exemption.
How Is This Legislation Structured?
The Regulations are compact and consist of three main provisions:
- Regulation 1: Citation and commencement (16 February 2005).
- Regulation 2: Definitions of “Bonds” and “stabilising action”. The definitions are tailored to a specific bond issue and to stabilisation activities by Barclays.
- Regulation 3: The exemption clause. It exempts stabilising action from the application of SFA sections 197 and 198, but only for stabilising actions within 30 days from issue and only when conducted with specified categories of persons/investors.
There are no additional schedules or procedural requirements in the extract provided. As a result, the Regulations operate primarily as a targeted legal permission rather than a full stabilisation regime.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to market conduct rules, their practical application is narrow. The exemption is relevant to Barclays Bank PLC and its related corporations undertaking stabilising action in relation to the defined Jaiprakash Associates Limited convertible bond issue. It also affects the counterparties with whom stabilising dealings are conducted—specifically persons within section 274 of the SFA and sophisticated investors under section 275(2).
Accordingly, the Regulations do not generally “permit everyone” to stabilise. They operate as a conditional carve-out from the SFA’s prohibitions for a particular stabilising activity, by specified entities, in relation to a particular bond issue, within a defined timeframe, and with defined investor categories. For advisers, this means counterparty due diligence and transaction documentation are central to ensuring the exemption is properly invoked.
Why Is This Legislation Important?
This legislation is important because it illustrates how Singapore’s market conduct framework balances two competing objectives: (1) allowing legitimate market stabilisation to support orderly trading after issuance, and (2) preventing stabilisation from becoming a vehicle for manipulation or misleading market signals. By exempting stabilising action from sections 197 and 198, the Regulations recognise that stabilisation can be lawful and beneficial when constrained.
From an enforcement and compliance perspective, the Regulations also show that exemptions are typically strictly bounded. The exemption is limited to a specific bond issue (Jaiprakash Associates Limited 5-year fixed rate convertible bonds due February 2010), a specific stabiliser (Barclays Bank PLC and related corporations), and a specific period (30 days from issue). It is further limited by counterparty type (section 274 persons or sophisticated investors). These limitations reduce regulatory risk and help the Monetary Authority of Singapore (MAS) maintain oversight of market conduct.
For practitioners, the key practical impact is that counsel must assess whether stabilising purchases, offers, or agreements to purchase fall within the exemption. This includes verifying the bond’s terms and identity, tracking the issue date to calculate the 30-day window, confirming the stabiliser’s corporate status (Barclays or related corporation), and ensuring that the counterparties meet the statutory investor definitions. Failure on any of these points could expose the stabilising activity to the prohibitions in sections 197 and 198, with attendant regulatory and reputational consequences.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the enabling provision 337(1).
- Stabilising Act (as referenced in the statute metadata) — relevant to the broader stabilisation policy context.
- Futures Act (as referenced in the statute metadata) — relevant to the broader legislative framework for market conduct and derivatives regulation.
- Legislation Timeline (as referenced in the statute metadata) — 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. 3) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.