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
- Legislative Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Regulation Number: SL 83/2005
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 3) Regulations 2005
- Commencement: 16 February 2005
- Status: Current version as at 27 March 2026
- Key Provisions: Regulation 1 (citation and commencement), Regulation 2 (definitions), Regulation 3 (exemption)
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 Action (Bonds) (No. 3) Regulations”) creates a targeted regulatory exemption from certain market conduct prohibitions under the Securities and Futures Act (the “SFA”). In practical terms, it allows specified market participants to take “stabilising action” in relation to a particular bond issuance during a limited period after the bonds are issued.
In Singapore’s regulatory framework, market conduct rules are designed to prevent manipulation and ensure fair dealing. However, during the initial trading period of a new bond issue, it is common for underwriters or designated financial institutions to support liquidity and reduce volatility. This is often done through stabilisation activities—typically buying (or offering to buy) the relevant securities—to help maintain orderly trading and a reasonable market price.
This legislation does not broadly legalise market manipulation. Instead, it carves out a narrow exemption for stabilising action in respect of a defined set of bonds, taken by a defined stabilising party, within a defined time window, and subject to the categories of persons who may be involved. The exemption is therefore best understood as a carefully bounded exception to the SFA’s general prohibitions on certain conduct.
What Are the Key Provisions?
Regulation 1: Citation and commencement. The Regulations may be cited by their short title and came into operation on 16 February 2005. For practitioners, the commencement date matters because the exemption only becomes available from that date and must be assessed against the timing of any stabilising trades.
Regulation 2: Definitions—“Bonds” and “stabilising action”. The Regulations define the scope of the exemption with precision. The term “Bonds” is not generic; it refers specifically to the 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 specified par value.
The definition of “stabilising action” is equally specific. 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 definition is crucial because it ties the exemption to (i) the identity of the stabilising party (Barclays Bank PLC and related corporations), (ii) the nature of the conduct (buying or offering/agreeing to buy), and (iii) the purpose (stabilising or maintaining market price).
Regulation 3: The exemption from sections 197 and 198 of the SFA. This is the operative provision. It provides 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 of the Bonds, provided the stabilising action is taken with a person falling within one of two categories:
- (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.
From a practitioner’s perspective, Regulation 3 does two things at once: it (1) limits the exemption by time (30 days from the date of issue) and (2) limits it by counterparty category (section 274 persons or sophisticated investors). Even if a stabilising trade is otherwise consistent with the definition of stabilising action, it may fall outside the exemption if the trade is not conducted with the relevant categories of persons.
Although the extract does not reproduce the text of sections 197 and 198, the structure indicates that those provisions contain market conduct prohibitions that would otherwise restrict stabilisation. The Regulations therefore function as a statutory “safe harbour” for stabilisation activities, but only within the defined boundaries.
How Is This Legislation Structured?
The Regulations are short and consist of an enacting formula and three substantive regulations:
- Regulation 1 (Citation and commencement): sets the short title and commencement date.
- Regulation 2 (Definitions): defines “Bonds” and “stabilising action” to determine the exact subject matter and permitted conduct.
- Regulation 3 (Exemption): provides the exemption from specified SFA provisions, subject to timing and counterparty conditions.
There are no additional parts or schedules in the extract. The legislative design is therefore “definition-led”: the exemption’s practical effect depends heavily on the precision of the defined terms and the conditions in Regulation 3.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action in respect of the defined Jaiprakash Associates Limited convertible bonds. While the Regulations do not explicitly list “regulated persons” in the way a licensing regime might, the definition of “stabilising action” effectively identifies the relevant actors: Barclays Bank PLC and its related corporations. Accordingly, the exemption is intended to facilitate stabilisation by that group in connection with the specified bond issue.
However, the exemption is also conditional on the identity of the counterparty or the person with whom stabilising action is taken. Regulation 3 requires that stabilising action be taken “with” either a person referred to in section 274 of the SFA or a sophisticated investor under section 275(2). This means that even where the stabilising party is eligible (Barclays and related corporations), the exemption may not apply if the stabilising trades are executed with counterparties outside those categories.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore balances two regulatory objectives: (i) preventing market misconduct and (ii) allowing legitimate market practices that support orderly trading during issuance. Stabilisation can be commercially beneficial—particularly for new bond issues—by reducing abrupt price swings and improving liquidity. Without an exemption, stabilisation activities could risk falling within broad prohibitions on market conduct.
For legal practitioners, the key value of the Regulations lies in its precision and conditionality. The exemption is not a general authorisation to stabilise any security. It is limited to a specific bond issue, a specific stabilising actor (Barclays Bank PLC and related corporations), a specific conduct (buying or offering/agreeing to buy to stabilise price), and a specific timeframe (within 30 days from issue). It also restricts the exemption to stabilising actions taken with certain categories of persons (section 274 persons or sophisticated investors). These boundaries are exactly the kinds of facts that must be documented in compliance files and transaction records.
From an enforcement and risk-management perspective, the Regulations also provide a structured defence: if stabilising action is undertaken outside the defined parameters—such as beyond the 30-day window, in relation to different bonds, by a different entity, or with counterparties that are not within the specified categories—then the exemption would not apply, and the stabilising conduct could be assessed under the general market conduct prohibitions in the SFA.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act (as referenced in the provided metadata context).
- Stabilising Act (as referenced in the provided metadata context).
- Legislation Timeline (for version control and amendment history, as indicated 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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.