Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 5) Regulations 2005
- Act Code: SFA2001-S252-2005
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Power Used: Section 337(1) of the Securities and Futures Act
- Commencement: 18 April 2005
- Enacting Date: Made on 31 March 2005
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Exemption)
- Regulatory Status: Current version as at 27 Mar 2026 (per the legislation portal)
- Regulation Number: SL 252/2005
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 5) Regulations 2005 (“Stabilising Action Exemption Regulations”) is a targeted exemption instrument issued under the Securities and Futures Act (the “SFA”). In plain language, it creates a narrow carve-out from certain market conduct provisions that would otherwise restrict or regulate stabilising activities in connection with a specific bond issue.
Stabilising action is a common feature of certain capital markets transactions. During the early trading period after issuance, market participants may take steps to support or maintain the market price of a bond. Such conduct can be legitimate and market-stabilising, but it also carries the risk of misleading the market if not properly controlled. The SFA’s market conduct framework therefore generally regulates stabilising activities. This subsidiary legislation modifies that framework for a particular set of bonds and a defined stabilising actor.
Importantly, this is not a general stabilisation regime. It is an exemption “for stabilising action in respect of dealings in bonds” that applies only to (i) a specified bond series, (ii) stabilising action taken within a specified time window, and (iii) stabilising action carried out by specified persons (or persons within specified categories). The exemption is also limited to stabilising action undertaken with certain investor categories, namely persons referred to in section 274 of the SFA or “sophisticated investors” as defined in section 275(2) of the SFA.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and the date the Regulations came into operation. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 5) Regulations 2005” and commenced on 18 April 2005. For practitioners, commencement matters because exemptions and regulatory obligations typically attach from the effective date; conduct before commencement may not benefit from the exemption.
Section 2 (Definitions) is the heart of the instrument because it precisely defines the scope of the exemption. Two defined terms are critical:
“Bonds” are defined very specifically as the 5-year and 1-day convertible bonds due April 2010 issued by Strides Arcolab Limited for a principal amount of up to US$40 million. The bonds are convertible into new ordinary shares of Strides Arcolab Limited, with a par value of 10 Indian Rupees each. This specificity means the exemption is not available for other bond issues, even if they are similar in structure or issuer.
“stabilising action” is defined as an action taken in Singapore or elsewhere by Deutsche Bank AG, Hong Kong Branch or any of its related corporations. The action must involve buying, or offering or agreeing to buy, any of the Bonds in order to stabilise or maintain the market price of the Bonds in Singapore or elsewhere. This definition is both actor-specific and purpose-specific: the exemption is tied to the stabilising entity and to the stabilisation objective.
Section 3 (Exemption) sets out the legal effect. It states that sections 197 and 198 of the SFA shall not apply to stabilising action taken in respect of any of the Bonds. In other words, the SFA’s general market conduct restrictions contained in those sections are suspended for the defined stabilising action, but only if the conditions in section 3 are satisfied.
The exemption is conditional in three main ways:
- Time window: stabilising action must be taken within 30 days from the date of issue of the Bonds. This is a strict temporal limitation. If stabilising purchases or offers occur outside the 30-day period, the exemption would not apply, and the SFA provisions would likely resume.
- Investor category: the stabilising action must be taken with a person referred to in section 274 of the SFA or with a sophisticated investor as defined in section 275(2) of the SFA. This ties the exemption to transactions involving certain types of counterparties. Practically, this requires careful documentation of the counterparty’s status and ensuring the stabilising activity is conducted in compliance with the SFA’s investor classification framework.
- Subject matter and actor: the stabilising action must relate to the defined “Bonds” and fall within the defined meaning of “stabilising action” (i.e., carried out by Deutsche Bank AG, Hong Kong Branch or its related corporations, and for the stabilisation purpose).
For a practitioner, the most important interpretive point is that the exemption is not “automatic” simply because stabilisation is being attempted. The exemption is a legal carve-out that depends on satisfying each element: the bond identification, the stabilising actor and purpose, the 30-day period, and the counterparty category (section 274 persons or sophisticated investors).
How Is This Legislation Structured?
The Regulations are structured as a short, three-section instrument:
- Section 1 contains the citation and commencement provision.
- Section 2 provides definitions that delimit the scope of the exemption—particularly the definition of the specific bond issue and the definition of stabilising action.
- Section 3 sets out the exemption from specified SFA provisions (sections 197 and 198) and states the conditions under which the exemption applies.
There are no additional parts or complex schedules in the extract provided. The legislative design is therefore “precision by definition”: the instrument is short because it relies on tightly drafted definitions and a narrowly tailored exemption clause.
Who Does This Legislation Apply To?
Although the exemption is framed as an exemption from provisions of the SFA, it effectively applies to the parties conducting stabilising action in relation to the specified bonds. The defined stabilising action is limited to actions taken by Deutsche Bank AG, Hong Kong Branch or its related corporations. Therefore, the exemption is primarily relevant to that stabilising group and any entities within its corporate group that may execute stabilising trades or related offers.
In addition, the exemption is conditioned on the stabilising action being taken with counterparties in the categories specified by the SFA: persons referred to in section 274 or sophisticated investors under section 275(2). This means that even where the stabilising actor is within the defined group, the exemption may not apply if the stabilising activity is conducted with counterparties outside those categories.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore’s market conduct rules can accommodate legitimate market practices—such as stabilisation—while still preserving regulatory control. By exempting stabilising action from sections 197 and 198 of the SFA, the Regulations allow the stabilising entity to perform certain trades or offers without triggering the general restrictions that would otherwise apply.
From a compliance and transaction-execution perspective, the instrument is highly practical. It provides a clear legal basis for stabilisation in a specific bond issue, but it also imposes clear boundaries: a 30-day post-issuance window, a defined bond series, a defined stabilising actor, and a defined counterparty/investor category. These boundaries are the difference between lawful stabilisation and potentially unlawful market conduct.
For practitioners advising issuers, lead managers, or stabilising agents, the Regulations should be treated as a checklist document. Counsel should verify: (i) the bond terms match the statutory definition (including issuer, maturity, convertibility, and principal amount), (ii) the stabilising entity is within the defined group, (iii) the stabilising activity occurs within the 30-day period from the bond issue date, and (iv) the counterparties meet the section 274 or sophisticated investor criteria. Failure on any element could mean the exemption does not apply, exposing the parties to regulatory risk under the underlying SFA provisions.
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 (referenced in the legislation metadata timeline context).
- Stabilising Act (referenced in the legislation metadata timeline context).
- Timeline / 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. 5) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.