Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 4) Regulations 2004
- Act Code: SFA2001-S197-2004
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Commencement: 15 April 2004
- Primary Purpose: Provides a targeted exemption from certain market conduct provisions for stabilising actions relating to a specific bond issue
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “Bonds” and “stabilising action”)
- Section 3: Exemption from sections 197 and 198 of the Securities and Futures Act
- Section 4: Revocation of an earlier set of stabilising exemption regulations
- Regulatory Status: Current version as at 27 Mar 2026 (per the legislation record)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 4) Regulations 2004 (“Stabilising Action (Bonds) (No. 4) Regulations”) is a narrow, issue-specific regulatory instrument. In plain language, it allows certain market participants—acting in a defined way—to take stabilising steps in relation to a particular bond issuance, without being in breach of specified market conduct rules under the Securities and Futures Act (the “SFA”).
Stabilisation is a common feature of securities offerings. During and shortly after issuance, the market price of newly issued instruments may be volatile. Stabilising actions are intended to support orderly trading and reduce extreme price swings. However, stabilisation can also resemble conduct that market conduct laws seek to prevent—such as manipulation or misleading trading. Accordingly, the SFA contains prohibitions and restrictions, and exemptions are sometimes granted to permit stabilisation where it is carried out in a controlled and legitimate manner.
This particular set of Regulations does not create a general stabilisation regime for all bonds. Instead, it defines a specific category of “Bonds” and a specific category of “stabilising action” (carried out by UBS AG or its related corporations). It then grants an exemption from the application of sections 197 and 198 of the SFA, but only for stabilising actions carried out within a limited time window and only with certain counterparties.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title and states that the Regulations come into operation on 15 April 2004. For practitioners, this matters because the exemption is available only for stabilising actions occurring after commencement (and, in any event, subject to the time limit in section 3(2)).
Section 2 (Definitions) is the heart of the instrument because it tightly constrains what the exemption covers. Two definitions are particularly important:
- “Bonds” are defined as the 5-year fixed rate convertible bonds due 2009 issued by Zee Telefilms Limited for a principal amount of up to US$100 million, including bonds issued pursuant to an over-allotment option of up to US$15 million.
- “stabilising action” means an action taken in Singapore or elsewhere by UBS AG (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.
These definitions are critical for compliance. If the instrument is not the specified Zee Telefilms bonds, or if the stabilising activity is not carried out by UBS AG or its related corporations, the exemption will not apply. Likewise, the definition focuses on buying (or offering/agreeing to buy) for stabilisation purposes; it does not expressly cover other forms of market support or hedging strategies unless they fall within the defined “stabilising action”.
Section 3 (Exemption) provides the operative relief. The structure is a conditional exemption:
- Section 3(1): 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 person referred to in section 274 of the SFA; or
- a sophisticated investor as defined in section 275(2) of the SFA.
- Section 3(2): The exemption does not apply to stabilising actions carried out at any time after the expiry of the period of 30 calendar days from the date of issuance of the Bonds.
For a practitioner, the two gating conditions in section 3(1) and (2) are the compliance “checkpoints”. First, stabilising trades must be carried out with the permitted counterpart categories (as cross-referenced to the SFA). Second, stabilisation must occur only within a 30-calendar-day period from the bond issuance date. After that, the exemption falls away, and the underlying SFA market conduct provisions would apply.
Although the Regulations do not reproduce the content of sections 197 and 198 of the SFA, the exemption’s effect is clear: it carves out stabilising conduct from the operation of those prohibitions/restrictions, but only to the extent the conduct fits within the defined stabilising action and the permitted counterparties and timing.
Section 4 (Revocation) revokes the earlier regulations titled “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) Regulations 2004 (G.N. No. S 97/2004)”. This indicates that the “No. 4” Regulations replace or supersede an earlier stabilisation exemption instrument, likely to update the scope, definitions, or conditions for the relevant bond issue.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with four sections:
- Section 1 sets the citation and commencement date.
- Section 2 provides definitions that determine the scope of the exemption (notably “Bonds” and “stabilising action”).
- Section 3 contains the exemption clause, including the counterparty limitation and the 30-day time limit.
- Section 4 revokes an earlier stabilisation exemption regulation.
There are no schedules or complex procedural provisions in the extract provided. The legal effect is therefore largely determined by the definitional boundaries and the conditional exemption in section 3.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to stabilising actions in relation to the specified Zee Telefilms bonds, where the stabilising activity is carried out by UBS AG or its related corporations. The exemption is not framed as a general permission for any market participant; it is tied to the defined stabilising actor and the defined bond issue.
Additionally, the exemption is limited by the identity of the counterparties. Stabilising actions must be carried out with either (i) persons referenced in section 274 of the SFA or (ii) sophisticated investors under section 275(2) of the SFA. This means that even where UBS (or a related corporation) performs buying activity intended to stabilise price, the exemption may not apply if the trades are executed with counterparties outside those categories.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework balances two competing objectives: (1) preventing manipulative or improper trading practices, and (2) permitting legitimate market stabilisation during securities offerings. By granting a targeted exemption from sections 197 and 198 of the SFA, MAS enables stabilisation to occur without automatically triggering market conduct prohibitions—provided the stabilisation is tightly bounded.
For practitioners advising issuers, lead managers, or trading desks, the compliance value lies in the precision of the conditions. The exemption is constrained by: (a) the specific bond instrument (Zee Telefilms 5-year fixed rate convertible bonds due 2009, including over-allotment), (b) the specific stabilising actor (UBS AG and related corporations), (c) the counterparty categories (section 274 persons or sophisticated investors), and (d) a strict 30-calendar-day post-issuance limit. These constraints are the difference between lawful stabilisation and conduct that could expose parties to regulatory action under the underlying SFA provisions.
From an enforcement and risk perspective, the time limit is particularly significant. Stabilisation is often most active immediately after issuance, but market activity can continue beyond the initial period. Once the 30-day window expires, the exemption no longer applies, meaning that continued buying (or offers/agreements to buy) intended to stabilise price could fall back within the prohibitions of sections 197 and 198 of the SFA. Lawyers should therefore ensure that internal compliance controls track the issuance date and the expiry of the exemption period.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions from which the exemption applies)
- Section 274 (counterparty category referenced for the exemption)
- Section 275(2) (definition of “sophisticated investor” referenced for the exemption)
- Section 337(1) (power under which MAS makes the Regulations)
- Futures Act (referenced in the legislation metadata timeline context)
- Stabilising Act (referenced in the legislation metadata timeline context)
- Timeline / Legislation history materials (for version control and amendment tracking)
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. 4) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.