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), specifically powers under section 337(1)
- Enacting authority: Monetary Authority of Singapore (MAS)
- Commencement: 15 April 2004
- Legislative status: Current version as at 27 Mar 2026 (per the provided extract)
- 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-action exemption regulations
- Regulatory focus: Market conduct exemptions for stabilising trades in a specified bond issue
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 targeted regulatory instrument. In plain terms, it allows certain stabilising activities—carried out by a specified financial institution—in relation to a particular bond issuance, without triggering specified market conduct prohibitions in the Securities and Futures Act (“SFA”).
Stabilising action is a practice commonly associated with new bond or securities issues. During and shortly after issuance, a stabilising manager may buy (or offer to buy) the relevant bonds to help maintain orderly trading and reduce excessive price volatility. However, stabilising trades can resemble market manipulation if not carefully bounded. Accordingly, the SFA contains market conduct provisions that restrict certain trading behaviours. This subsidiary legislation creates a narrow exemption so that stabilising trades can occur lawfully, but only within defined limits.
Importantly, this exemption is not general. It is tied to a specific bond issue: the 5-year fixed rate convertible bonds due 2009 issued by Zee Telefilms Limited (up to a stated principal amount, including an over-allotment option). The exemption is also limited by time (a 30-calendar-day window from issuance) and by counterparties (persons specified in the SFA and “sophisticated investors” as defined in the SFA). The regulations also define stabilising action as being undertaken by UBS AG or its related corporations, either in Singapore or elsewhere.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the regulations and states that they come into operation on 15 April 2004. For practitioners, this matters because exemptions from statutory prohibitions only apply once the subsidiary legislation is in force (unless the SFA itself provides for any retrospective effect, which is not indicated in the extract).
Section 2 (Definitions) is central because it determines the scope of the exemption. Two key terms are defined:
(a) “Bonds” are defined narrowly 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.
(b) “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.
From a compliance perspective, these definitions mean that the exemption is unavailable if the stabilising activity is performed by a different entity (unless that entity falls within “UBS AG, or any of its related corporations”). It also means that the exemption is limited to stabilising the market price of the defined bonds, not other securities.
Section 3 (Exemption) is the operative provision. It provides that, subject to the conditions in 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 SFA; or
(b) a sophisticated investor as defined in section 275(2) of the SFA.
In practical terms, this exemption is a counterparty-limited carve-out. Even if a stabilising manager is acting for stabilisation purposes, the exemption only applies when the trades are conducted with the specified categories of counterparties. This is consistent with the regulatory policy that sophisticated or otherwise eligible counterparties may be better able to assess risks and that the market conduct rules should be relaxed only in controlled circumstances.
Section 3(2) adds a further 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 the issuance of the Bonds. Therefore, the stabilising window is strictly bounded. For legal and compliance teams, this creates a clear operational requirement: trading systems and compliance monitoring should be able to determine (i) the issuance date and (ii) whether each stabilising trade occurred within the 30-day period.
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)”. Revocation is significant because it indicates that this “No. 4” instrument supersedes prior stabilising exemption regulations for the same general subject matter. Practitioners should therefore confirm which exemption instrument applies to the relevant trades and time periods, particularly where multiple versions exist.
How Is This Legislation Structured?
The regulations are structured as a short, four-section instrument:
- Section 1 sets out citation and commencement.
- Section 2 provides definitions that determine the scope of “Bonds” and “stabilising action”.
- Section 3 contains the exemption from the SFA’s market conduct provisions (sections 197 and 198), subject to counterparty and time limits.
- Section 4 revokes an earlier stabilising-action exemption regulation (G.N. No. S 97/2004).
Notably, there are no additional schedules or detailed procedural requirements in the extract. The compliance burden therefore largely depends on how sections 197 and 198 of the SFA operate, and on how the definitions in section 2 are applied to actual trading conduct.
Who Does This Legislation Apply To?
Although the regulations are directed at stabilising action in relation to a particular bond issue, their practical effect is on the entities that may conduct stabilising trades. The definition of “stabilising action” restricts the activity to UBS AG and its related corporations. Accordingly, the exemption is effectively available only to those entities (and their related corporations) when they undertake stabilising trades that meet the definition.
In addition, section 3 limits the exemption by counterparty. Stabilising action must be carried out with either (i) a person referred to in section 274 of the SFA or (ii) a sophisticated investor under section 275(2) of the SFA. This means that even if UBS (or a related corporation) conducts stabilising trades, the exemption may not apply if the trades are executed with other counterparties not captured by those SFA categories.
Why Is This Legislation Important?
This subsidiary legislation is important because it reconciles two competing regulatory goals: (1) preventing market abuse and maintaining fair market conduct, and (2) allowing legitimate stabilisation practices that support orderly trading during securities issuance. By carving out stabilising action from the SFA’s market conduct prohibitions, the regulations enable a stabilising manager to perform a common underwriting/market support function without breaching statutory restrictions.
For practitioners, the value lies in the precision of the exemption. The regulations are not a blanket permission to stabilise. They are bounded by:
- Instrument specificity: only the defined Zee Telefilms bonds (including the over-allotment option).
- Actor specificity: only UBS AG and its related corporations.
- Counterparty specificity: only persons in section 274 of the SFA or sophisticated investors under section 275(2).
- Time specificity: only within 30 calendar days from the issuance date.
These limitations are precisely the kinds of details that matter in enforcement and in internal compliance controls. A stabilising manager that exceeds the time window, trades with the wrong counterparty category, or stabilises a different instrument would risk falling outside the exemption and thereby exposing itself to potential contraventions of sections 197 and 198 of the SFA.
Finally, the revocation in section 4 underscores that the regulatory framework evolves through successive “No.” instruments. Practitioners should therefore treat this as a superseding exemption and verify the relevant version for the issuance and trading period. In disputes or regulatory inquiries, version control can be decisive.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular 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)
- Timeline (legislation timeline/versioning reference within the platform)
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.