Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 4) Regulations 2006
- Act Code: SFA2001-S29-2006
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Commencement: 18 January 2006
- Latest Status (as provided): Current version as at 27 March 2026
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Regulatory Focus: Exemption from market conduct restrictions for “stabilising action” in relation to specified convertible bonds
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 4) Regulations 2006 (“Stabilising Action Regulations”) creates a targeted regulatory exemption within Singapore’s market conduct framework. In essence, it allows certain market participants to take “stabilising action” in connection with a specific bond issue without being caught by particular prohibitions in the Securities and Futures Act (SFA).
Stabilisation is a common feature of certain capital markets transactions. When bonds are newly issued and begin trading, issuers and their arranging banks may seek to support or maintain an orderly market price—typically to reduce volatility immediately after issuance. However, market conduct rules are designed to prevent manipulation and misleading trading practices. This legislation reconciles those competing policy objectives by carving out a narrow exemption for stabilisation activities, but only if strict conditions are met.
Importantly, the Regulations are highly specific: they define “Bonds” as a particular US dollar convertible bond issue by Hongkong Land CB (2005) Limited, and they define “stabilising action” as actions taken by UBS AG (or its related corporations). The exemption is therefore not a general permission for stabilisation in any bond; it is an instrument tailored to one transaction and one stabilising group.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 4) Regulations 2006” and came into operation on 18 January 2006. For practitioners, the commencement date matters because the exemption is time-bound (it applies within a specified period from the date of issue of the bonds). While the Regulations themselves commence on 18 January 2006, the operative window in Regulation 3 is measured from the “date of issue” of the Bonds.
2. Definitions (Regulation 2)
The Regulations contain three key definitions that control the scope of the exemption:
- “Bonds” are defined with precision: US$ fixed rate 2.75% guaranteed convertible bonds due December 2015 by Hongkong Land CB (2005) Limited, convertible into fully paid ordinary shares of Hongkong Land Holdings Limited (par value US$0.10). The definition also limits the principal amount “up to US$400 million.” This specificity is central to the exemption’s narrowness.
- “securities” has the same meaning as in section 239(1) of the SFA. This cross-reference ensures that the stabilisation context is anchored to the SFA’s general definitional framework.
- “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 to stabilise or maintain the market price of the Bonds in Singapore or elsewhere. This definition matters in two ways: (i) it restricts the actor to UBS AG and its related corporations; and (ii) it covers not only actual purchases but also offers or agreements to buy—reflecting that stabilisation may involve conditional or planned trading activity.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
The heart of the Regulations is Regulation 3. It provides that sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of the specified Bonds within 30 days from the date of issue, provided the stabilising action is carried out in relation to one of three categories of counterparties/participants:
- (a) an institutional investor;
- (b) a relevant person as defined in section 275(2) of the SFA; or
- (c) a person who acquires the Bonds as principal, where the consideration for the acquisition is not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets.
In practical terms, Regulation 3 creates a conditional safe harbour. Stabilising action is exempt from the prohibitions in sections 197 and 198 only if (i) it relates to the defined Bonds; (ii) it is taken by UBS AG or its related corporations as “stabilising action”; (iii) it occurs within the 30-day post-issuance window; and (iv) the trades are with permitted categories of counterparties, including a minimum consideration threshold for principal acquisitions.
4. Transaction value threshold and “principal” acquisitions (Regulation 3(c))
The $200,000 minimum consideration requirement is a key compliance point. It is designed to ensure that stabilisation does not involve small-lot retail-style transactions that could increase the risk of unfairness or market distortion. The threshold applies per transaction and is flexible as to payment form: the consideration may be paid in cash or by exchange of securities or other assets, as long as the value requirement is satisfied.
For legal and compliance teams, this means trade documentation and valuation methodology become important. Where consideration is exchanged rather than paid in cash, practitioners should ensure that the “equivalent in a foreign currency” and the valuation of exchanged assets are properly evidenced and consistent with applicable market practice and any relevant MAS guidance.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, short format typical of targeted exemptions:
- Regulation 1 (Citation and commencement) sets the name and the date the Regulations come into operation.
- Regulation 2 (Definitions) defines the operative terms—especially “Bonds” and “stabilising action”—which determine the scope of the exemption.
- Regulation 3 (Exemption) provides the substantive relief by disapplying specified SFA provisions (sections 197 and 198) to stabilising action meeting the conditions.
There are no additional parts or complex schedules in the extract provided. The legal effect is therefore concentrated in Regulation 3, supported by the precise definitions in Regulation 2.
Who Does This Legislation Apply To?
Although the exemption is framed as disapplying provisions of the SFA, the practical beneficiaries are those who conduct stabilising activity that fits the Regulations’ definitions. The definition of “stabilising action” is limited to actions taken in Singapore or elsewhere by UBS AG or its related corporations. Accordingly, the exemption is not available to other banks, issuers, or trading firms unless they act through UBS AG or its related corporations in a manner that fits the definition.
As to counterparties, Regulation 3 restricts the exemption to stabilising action taken with institutional investors, relevant persons (as defined in section 275(2) of the SFA), or principal acquirers meeting the $200,000 minimum consideration threshold. Therefore, even where UBS AG undertakes stabilisation, the exemption may not apply if the stabilisation trades are executed with counterparties outside these categories or below the stated threshold.
Why Is This Legislation Important?
This legislation is important because it provides a legally recognised pathway for market stabilisation in a specific convertible bond transaction while maintaining the integrity of Singapore’s market conduct regime. Without such an exemption, stabilising purchases or related trading conduct could potentially be argued to fall within prohibited conduct under the SFA—creating uncertainty for arrangers, stabilising agents, and their compliance teams.
From a practitioner’s perspective, the Regulations offer a clear compliance checklist: confirm the bond issue matches the statutory definition; confirm the stabilising actor is UBS AG (or related corporations); ensure the stabilisation occurs within 30 days from the date of issue; and ensure counterparties fall within the permitted categories (including the $200,000 minimum consideration for principal acquisitions). These are the points that typically determine whether the exemption is available.
In addition, the Regulations illustrate how Singapore’s market conduct framework balances investor protection with practical capital markets mechanics. Stabilisation can support orderly trading in the immediate post-issuance period, but it must be constrained to prevent manipulation. By limiting the exemption to a defined set of bonds and a defined stabilising group, the Regulations reduce the risk of overbroad reliance and support enforceable boundaries for market participants.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — particularly sections 197, 198, 239(1), 275(2), and the authorising power in section 337(1)
- Futures Act (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Legislation Timeline (for version control and amendment history)
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 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.