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
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Power: Powers conferred by section 337(1) of the Securities and Futures Act
- Commencement: 15 April 2004
- Regulation Number: SL 197/2004
- Status: Current version as at 27 Mar 2026 (per the legislation portal)
- Key Provisions: Regulation 1 (Citation and commencement); Regulation 2 (Definitions); Regulation 3 (Exemption); Regulation 4 (Revocation)
- Primary Legal Effect: Exempts specified “stabilising action” in respect of specified bonds from the application of sections 197 and 198 of the Securities and Futures Act, subject to conditions
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) Regulations”) is a targeted regulatory instrument made under the Securities and Futures Act (“SFA”). In plain terms, it creates a narrow exemption that allows certain market participants to take stabilising steps in relation to a particular bond issue—without triggering the prohibitions or restrictions that would otherwise apply under the SFA’s market conduct provisions.
Stabilising action is a common feature of certain bond and securities offerings. During or shortly after issuance, a stabilising manager may buy (or offer to buy) the relevant securities to help maintain orderly trading and reduce excessive price volatility. However, stabilising activity can resemble market manipulation. The SFA therefore contains market conduct rules that restrict conduct that could mislead the market or distort prices. This subsidiary legislation reconciles those competing policy goals by permitting stabilising conduct in defined circumstances.
Importantly, the exemption is not general. It is limited to a specific set of bonds—defined in the Regulations as the 5-year fixed rate convertible bonds due 2009 issued by Zee Telefilms Limited (up to specified principal amounts, including any over-allotment option). It is also limited to stabilising action undertaken by UBS AG (and related corporations) and only for a limited time window after issuance.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) provides the formal citation and states that the Regulations come into operation on 15 April 2004. For practitioners, this matters because the exemption only becomes available from the commencement date (and, in any event, the time limitation in Regulation 3(2) further restricts when stabilising action may be carried out).
Regulation 2 (Definitions) is central because it defines the scope of the exemption. Two defined terms drive the entire instrument:
(a) “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. This definition is highly specific and effectively “locks” the exemption to that particular issuance.
(b) “stabilising action” is defined as 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. The definition is not limited to actual purchases; it also covers offers or agreements to buy, which can be relevant for compliance planning (e.g., communications with counterparties and conditional orders).
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 stabilising action carried out in respect of any of the Bonds 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, this means the stabilising activity must be conducted with the right counterparties. The Regulations do not themselves reproduce the content of sections 274 and 275(2); instead, they incorporate those definitions by reference. For a lawyer advising a stabilising manager or its compliance team, the key task is to map the intended counterparties against the categories in those SFA provisions. If stabilising purchases are made with persons outside those categories, the exemption may not apply, and the SFA’s market conduct restrictions could be engaged.
Regulation 3(2) (Time limitation) imposes an additional and strict condition: 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 the issuance of the Bonds. This is a hard stop. Even if the counterparty is eligible under Regulation 3(1), stabilising action conducted beyond the 30-day window would fall outside the exemption and could expose the stabilising manager to regulatory risk under sections 197 and 198.
Regulation 4 (Revocation) revokes the earlier set of Regulations: “The 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 supersede an earlier version, likely to refine the scope, update the bond issue details, or correct the legal framework. For practitioners, revocation matters because it affects which exemption governs conduct at any given time and prevents reliance on the revoked instrument.
How Is This Legislation Structured?
The Regulations are structured as a short, four-regulation instrument:
Regulation 1 sets out citation and commencement.
Regulation 2 provides definitions for “Bonds” and “stabilising action,” which effectively define the subject matter and the permitted conduct.
Regulation 3 contains the exemption itself, including both (i) the eligible counterparties (by reference to sections 274 and 275(2) of the SFA) and (ii) the 30-calendar-day time limit from issuance.
Regulation 4 revokes the earlier stabilising exemption Regulations (G.N. No. S 97/2004).
Because the instrument is brief and relies on incorporation by reference to the SFA, the most legally significant work for counsel is not only reading the Regulations but also reviewing the referenced SFA provisions (sections 197, 198, 274, and 275(2)) to understand the baseline prohibitions and the precise counterparty categories.
Who Does This Legislation Apply To?
The exemption is directed at stabilising conduct in relation to the defined Bonds. While the Regulations do not explicitly list “regulated persons” in the way some licensing regimes do, the definition of “stabilising action” makes clear that the conduct covered is action taken by UBS AG or its related corporations. Accordingly, the exemption is practically relevant to the stabilising manager (UBS AG) and any related entities that may execute stabilising trades or place orders.
However, the exemption also depends on counterparty identity. Stabilising action must be carried out with either a person falling within section 274 of the SFA or with a sophisticated investor as defined in section 275(2). Therefore, the Regulations indirectly affect other parties involved in the transaction—such as counterparties, brokers, and execution venues—because the stabilising manager must ensure that trades are structured and documented so that the counterparties fall within the permitted categories.
Why Is This Legislation Important?
This Regulations is important because it provides a legally sanctioned pathway for stabilising activity in a specific bond issuance while maintaining the integrity of Singapore’s market conduct framework. Without such an exemption, stabilising purchases could be treated as conduct prohibited under the SFA’s market conduct provisions (sections 197 and 198). The exemption therefore reduces legal uncertainty for the stabilising manager and supports the orderly functioning of the market during the post-issuance period.
From a compliance and enforcement perspective, the two conditions in Regulation 3 are the critical risk controls: (1) eligible counterparties and (2) a strict 30-day limit. For practitioners, these conditions translate into concrete operational requirements—such as counterparty due diligence, trade documentation, and monitoring of the timeline from the date of issuance. If either condition is not met, the exemption may not apply, and the stabilising manager could face regulatory scrutiny or enforcement action under the SFA.
Finally, the revocation in Regulation 4 underscores that exemptions can be updated and superseded. Counsel should therefore verify that the relevant exemption is the current one for the relevant period and bond issuance. Relying on a revoked instrument could lead to an incorrect legal assessment of whether stabilising trades were protected from the SFA’s market conduct restrictions.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, and 275(2)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation metadata)
- Timeline (legislation portal timeline for version verification)
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.