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
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (SFA)
- Enacting Power: Section 337(1) of the Securities and Futures Act
- Commencement: 18 January 2006
- Legislation Number: SL 29/2006
- Status: Current version (as at 27 March 2026)
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Relevant SFA Provisions Referenced: Sections 197 and 198 (market conduct rules); Section 239(1) (definition of “securities”); Section 275(2) (definition of “relevant person”); Section 337(1) (making power)
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 Exemption Regulations”) creates a targeted exemption from certain market conduct provisions in the Securities and Futures Act (SFA). In plain terms, it allows specified parties to take “stabilising action” in relation to a particular bond issue without breaching the SFA’s general prohibitions that would otherwise apply.
Stabilising action is a practice commonly used in capital markets. When new bonds are issued, market prices can fluctuate sharply. Under controlled conditions, a stabilising manager may buy (or offer to buy) the bonds to help maintain orderly trading and reduce extreme price volatility. The policy rationale is to facilitate smoother market functioning during the initial period after issuance, while still preserving investor protection through limits and conditions.
This particular set of regulations is narrow and instrument-specific. It defines “Bonds” by reference to a specific bond issue—US$ fixed rate 2.75% guaranteed convertible bonds due December 2015 issued by Hongkong Land CB (2005) Limited—and it defines “stabilising action” by reference to UBS AG (and its related corporations). The exemption applies only within a short window after the bonds are issued (30 days) and only for stabilising action carried out by specified categories of persons or under specified minimum consideration thresholds.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal title and states that the Regulations come into operation on 18 January 2006. For practitioners, this matters because the exemption is only available for stabilising action taken after commencement and, in any event, within the time window specified in Section 3.
Section 2 (Definitions) is central because it tightly constrains the scope of the exemption. Three definitions are provided:
- “Bonds”: The Regulations define the bonds with precision: US$ fixed rate 2.75% guaranteed convertible bonds due December 2015 by Hongkong Land CB (2005) Limited, for a principal amount of up to US$400 million. The bonds are convertible into fully paid ordinary shares of Hongkong Land Holdings Limited (par value US$0.10 each). This means the exemption is not generic; it applies only to this particular instrument and issue.
- “securities”: This adopts the meaning in section 239(1) of the SFA. While the Regulations do not expand on the term, the cross-reference ensures consistency with the SFA’s definitional framework.
- “stabilising action”: This 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. The definition is both actor-specific (UBS AG and related corporations) and purpose-specific (stabilise or maintain market price).
Section 3 (Exemption) is the operative provision. It states 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, with respect to stabilising action carried out by one of the following categories:
- (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, provided that 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.
From a compliance perspective, Section 3 does two things at once. First, it identifies the conduct that is exempt (stabilising action as defined). Second, it identifies the time and the persons for whom the exemption is available. The “within 30 days from the date of issue” limitation is particularly important: stabilising activity outside that period would not fall within the exemption, even if the same parties and the same bonds are involved.
Practitioners should also note the structure of the exemption. It does not say that stabilising action is generally permitted; rather, it removes the application of specific SFA provisions (Sections 197 and 198) to the exempt conduct. This implies that other SFA requirements may still apply (for example, licensing, disclosure, record-keeping, or other market conduct rules not expressly excluded). Therefore, the exemption should be treated as a targeted carve-out, not a blanket immunity.
How Is This Legislation Structured?
The Regulations are very short and consist of three substantive provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that delimit the scope of the exemption, including the specific bond issue and the specific stabilising actor (UBS AG and related corporations).
- Section 3 contains the exemption from the application of SFA Sections 197 and 198, subject to the 30-day period and the specified categories of persons (institutional investors, relevant persons, or principal acquirers meeting the minimum consideration threshold).
There are no additional parts, schedules, or procedural requirements in the extract provided. In practice, however, the exemption’s effectiveness will depend on how the SFA provisions it carves out are interpreted and applied by the regulator, and on whether any other regulatory instruments or market conduct guidelines impose further conditions.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in respect of the defined “Bonds” when carried out by UBS AG or its related corporations, acting to buy (or offer or agree to buy) the bonds to stabilise or maintain their market price in Singapore or elsewhere. The geographical element (“in Singapore or elsewhere”) is notable: the action may occur outside Singapore, but the purpose is tied to stabilising the market price of the bonds in Singapore or elsewhere.
Even though the stabilising action is actor-defined (UBS AG and related corporations), the exemption in Section 3 is further conditioned by who takes the relevant role in the stabilising activity. The exemption applies where the stabilising action is taken with respect to the bonds by: (i) an institutional investor; (ii) a relevant person (as defined in section 275(2) of the SFA); or (iii) a principal acquirer meeting the minimum consideration threshold of $200,000 (or equivalent) per transaction.
Accordingly, a practitioner advising a stabilising manager, an underwriting syndicate, or a trading desk should map the transaction participants to these categories. If the stabilising activity involves a person outside these categories, the exemption may not be available, and the SFA provisions carved out by Section 3 could apply.
Why Is This Legislation Important?
This legislation is important because it operationalises a balance between market integrity and market efficiency. Stabilising action can support orderly trading during the early phase of a bond issue. Without an exemption, stabilising purchases could be treated as prohibited market conduct under the SFA’s general rules (Sections 197 and 198). By carving out stabilising action for a defined bond issue and a defined period, the Regulations provide legal certainty to market participants.
For lawyers and compliance teams, the key practical value lies in the precision of the exemption. It is not a general authorisation for any stabilisation in any bond. Instead, it is limited by: (1) the identity of the bonds; (2) the identity of the stabilising actor (UBS AG and related corporations); (3) the time window (30 days from issue); and (4) the categories of persons involved (institutional investors, relevant persons, or principal acquirers with minimum consideration).
In enforcement terms, this kind of exemption reduces ambiguity. Regulators can focus on whether stabilising activity stays within the permitted boundaries. For market participants, the compliance challenge is to document and evidence that the stabilising action was taken within the 30-day period and that the relevant participants meet the statutory categories. Where stabilising activity is conducted through multiple entities (for example, affiliates, intermediaries, or trading counterparties), legal advice should ensure that the transaction structure aligns with the exemption’s definitions and conditions.
Finally, because the exemption is carved out from specific SFA provisions, practitioners should not assume that all market conduct obligations are displaced. A robust compliance approach would include reviewing the remaining SFA requirements and any applicable MAS notices or guidelines governing market conduct, disclosures, and trading practices.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — particularly Sections 197, 198, 239(1), 275(2), and the making power in section 337(1).
- Futures Act — referenced in the legislation metadata as part of the broader regulatory framework.
- Stabilising Act — referenced in the legislation metadata (contextual to stabilisation concepts and market conduct exemptions).
- Timeline / Legislation timeline — for confirming the correct version as at the relevant date.
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.