Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 5) Regulations 2004
- Act Code: SFA2001-S235-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (in exercise of powers under section 337(1))
- Regulation Citation: SL 235/2004
- Commencement: 28 April 2004
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Legislative Status: Current version as at 27 March 2026 (per the provided extract)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 5) Regulations 2004 is a targeted regulatory instrument. In plain terms, it creates a limited exemption from certain market conduct rules in the Securities and Futures Act (SFA) for specific “stabilising actions” undertaken in relation to a particular bond issue.
Stabilising action is a regulated concept in capital markets. During or shortly after a bond issuance, market makers or arrangers may take steps to support or stabilise the trading price of the securities. These actions can be legitimate and market-practice driven, but they also raise concerns about market manipulation. The SFA therefore contains prohibitions and restrictions on conduct that could distort market prices. This set of Regulations carves out a narrow exception for stabilising activity, but only if strict conditions are met.
Importantly, the Regulations are not a general stabilisation regime for all bonds. They are issue-specific: they define “Bonds” as a particular series of convertible bonds issued by Bharti Tele-Ventures Limited, and they define “stabilising action” as stabilisation activity carried out by Deutsche Bank AG London (or its related corporations). The exemption is therefore designed to facilitate stabilisation in a specific transaction while preserving the overall integrity of Singapore’s market conduct framework.
What Are the Key Provisions?
1. Definitions (Section 2)
The Regulations begin by defining two central terms: “Bonds” and “stabilising action”. This is crucial because the exemption in Section 3 applies only to stabilising actions that fall within these definitions.
“Bonds” are defined as the “5-year zero coupon convertible bonds due May 2009” issued by Bharti Tele-Ventures Limited, for a principal amount of up to US$115 million. The bonds are convertible into fully paid equity shares of Bharti Tele-Ventures Limited, with a par value of 10 Indian Rupees each. This definition is highly specific: it identifies the issuer, bond type, maturity, due date, currency/size, and the conversion feature.
“Stabilising action” is defined as an action taken in Singapore or elsewhere by Deutsche Bank AG London (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 captures not only actual purchases but also offers or agreements to buy—reflecting that stabilisation may be implemented through arrangements that anticipate or commit to buying activity.
2. The Exemption from SFA market conduct provisions (Section 3(1))
Section 3 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, provided the stabilising action is carried out with a qualifying counterparty.
Under Section 3(1), the exemption applies where the stabilising action is carried out 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.
For practitioners, the practical effect is that stabilising activity is permitted (at least for the purposes of avoiding the application of sections 197 and 198) only when the transactions are undertaken with the types of counterparties contemplated by the SFA. While the extract does not reproduce the text of sections 197, 198, 274, or 275, the structure indicates a policy choice: stabilisation should occur in a controlled manner and not in a way that undermines protections for retail or less sophisticated participants.
3. Time limitation: 30 calendar days after issuance (Section 3(2))
Section 3(2) imposes a strict temporal condition. The exemption in Section 3(1) shall not apply to any stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of issuance of the Bonds.
This is a classic market conduct safeguard. Even where stabilisation is permitted, it is typically limited to a short window around issuance to reduce the risk that stabilisation becomes a continuing mechanism for price distortion. For compliance purposes, counsel should treat the 30-day period as a hard stop and ensure that trading records, instructions, and settlement timelines are aligned with the “date of issuance” and the calendar-day count.
4. Scope of the exemption: conditional and narrow
Although the Regulations exempt stabilising action from the application of specified SFA provisions, the exemption is not blanket. It is conditional on:
- the securities being the defined “Bonds” (Bharti Tele-Ventures Limited, 5-year zero coupon convertible bonds due May 2009, up to US$115 million);
- the stabilising actor being Deutsche Bank AG London or its related corporations (as defined);
- the stabilising transactions being carried out with persons falling within section 274 of the SFA or with sophisticated investors under section 275(2); and
- the stabilising activity occurring within 30 calendar days from the date of issuance.
Accordingly, any stabilisation outside these parameters would likely remain subject to the general SFA market conduct rules, including the provisions that are expressly excluded by the exemption.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, short-form manner typical of transaction-specific exemptions. The document contains:
- Section 1 (Citation and commencement): sets the name of the Regulations and provides that they come into operation on 28 April 2004.
- Section 2 (Definitions): defines “Bonds” and “stabilising action”, which are the gatekeeping concepts for the exemption.
- Section 3 (Exemption): provides the conditional exemption from the application of sections 197 and 198 of the SFA, subject to the counterparty and time limitations.
There are no additional parts or complex schedules in the extract provided. The Regulations therefore function as a targeted legal “switch” that turns off the operation of specified SFA provisions for a narrowly described stabilisation activity.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and refer to market conduct provisions, the exemption is practically relevant to parties involved in the stabilisation of the specified bond issue. The definition of “stabilising action” is anchored to Deutsche Bank AG London (and its related corporations), meaning the exemption is designed with that stabilising party in mind.
In addition, the exemption is conditioned on the identity of the counterparty. Stabilising actions must be carried out with persons referred to in section 274 of the SFA or with sophisticated investors under section 275(2). This means that even if the stabilising actor is within the definition, the exemption may not apply if the stabilising trades are executed with the wrong category of counterparty.
For legal advisers, the scope question often becomes: “Does the stabilisation plan involve counterparties that qualify under the SFA definitions?” and “Are the trades executed within the 30-day window?” These are compliance-critical determinations.
Why Is This Legislation Important?
This Regulations matters because it sits at the intersection of two competing regulatory objectives: enabling orderly market functioning during issuance and preventing market manipulation. Stabilisation can support liquidity and reduce volatility in the immediate post-issuance period. However, without a controlled framework, stabilisation could be misused to create an artificial market or mislead investors.
By exempting stabilising action from the operation of sections 197 and 198 of the SFA—while imposing strict conditions—the Regulations provide legal certainty for a specific transaction. For practitioners, this reduces the risk that legitimate stabilisation activity triggers enforcement exposure under general market conduct prohibitions.
From a practical standpoint, the Regulations also highlight how Singapore’s market conduct framework can be transaction-specific. Rather than adopting a broad exemption applicable to all stabilisation activities, MAS has authorised a narrow carve-out for a particular bond issue and stabilising actor, with a defined counterparty category and a fixed time limit. This approach requires careful documentation and compliance controls: trade confirmations, counterparty classification, and timing evidence become essential.
Finally, the Regulations demonstrate the importance of reading subsidiary legislation alongside the parent SFA. The exemption is drafted by reference to other SFA provisions (sections 197, 198, 274, 275). A lawyer advising on stabilisation must therefore conduct a cross-reference analysis to understand what conduct is being exempted, who qualifies as a sophisticated investor, and what types of persons fall within section 274.
Related Legislation
- Securities and Futures Act (SFA) (Act 2001) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1).
- Futures Act (as referenced in the metadata context)
- Stabilising Act (as referenced in the metadata context)
- Timeline (legislation versioning reference)
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. 5) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.