Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 6) Regulations 2004
- Act Code: SFA2001-S267-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), in particular section 337(1)
- Enacting Formula: Made by the Monetary Authority of Singapore (MAS) under section 337(1) of the SFA
- Citation and commencement: Comes into operation on 11 May 2004
- Regulation number: SL 267/2004
- Key provisions: Regulation 1 (citation and commencement); Regulation 2 (definitions); Regulation 3 (exemption)
- Regulatory status (as provided): Current version as at 27 Mar 2026
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 6) Regulations 2004 (“Stabilising Action Exemption Regulations”) creates a targeted exemption from certain market conduct prohibitions in the Securities and Futures Act (SFA). In plain terms, it allows specified persons to take “stabilising action” in relation to a particular bond issue without breaching the SFA’s general rules on market manipulation or improper dealing—provided strict conditions are met.
Stabilising action is a familiar feature of capital markets. When a bond is newly issued, market liquidity and pricing can be volatile. Under certain circumstances, an intermediary may buy (or offer to buy) the bonds to help maintain an orderly market and reduce extreme price swings. The policy rationale is to support market functioning during the initial trading period, while still protecting investors from abusive conduct.
This legislation is narrow in scope. It does not create a general stabilisation regime for all bonds or all issuers. Instead, it defines “Bonds” very specifically (the 5-year zero coupon convertible bonds due May 2009 issued by Mahindra & Mahindra Limited) and defines “stabilising action” by reference to a particular stabilising participant (ABN AMRO Bank N.V., Singapore branch, and its related corporations). The exemption is therefore best understood as a bespoke, deal-specific regulatory instrument.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) confirms the legal identity of the instrument and its commencement date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 6) Regulations 2004” and came into operation on 11 May 2004. For practitioners, this matters for determining whether stabilising activities were authorised at the relevant time.
Regulation 2 (Definitions) sets the boundaries of the exemption. Two defined terms are central:
- “Bonds” are defined as the 5-year zero coupon convertible bonds due May 2009 issued by Mahindra & Mahindra Limited for a principal amount of up to US$115 million, including bonds issued pursuant to an option of up to US$15 million. The bonds are convertible into either (a) fully paid equity shares of Mahindra & Mahindra Limited (par value 10 Indian Rupees each), or (b) global depositary receipts where each receipt represents one fully paid equity share.
- “stabilising action” means an action taken in Singapore or elsewhere by ABN AMRO Bank N.V., Singapore branch (or any of its related corporations) to buy, or 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.
These definitions are not merely descriptive—they are the gatekeeping mechanism. If the stabilising activity does not fall within the defined “Bonds” or is not carried out by the defined stabilising participant, the exemption will not apply.
Regulation 3 (Exemption) is the operative provision. It provides that, subject to paragraph (2), sections 197 and 198 of the Act shall not apply to any stabilising action carried out in respect of any of the Bonds with either:
- a person referred to in section 274 of the Act; or
- a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, this means that stabilising trades (or stabilising offers/agreements to buy) involving the relevant counterparties are carved out from the SFA’s prohibitions in sections 197 and 198. While the extract does not reproduce the content of those SFA sections, the structure indicates that those provisions are the market conduct rules that would otherwise restrict or prohibit certain dealing practices. The exemption therefore functions as a “safe harbour” for stabilisation activity, but only for dealings that involve the specified categories of persons.
Regulation 3(2) imposes a critical time limit: the exemption does 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 stabilisation constraint intended to prevent indefinite price support and to ensure that stabilisation is confined to the initial post-issuance period when market formation is most fragile.
For legal practitioners, the time limit is often where compliance risk concentrates. The phrase “30 calendar days from the date of issuance” requires careful factual determination of the “date of issuance” (which may be the issue date stated in the offering documentation, the date of allotment, or another defined date in the transaction documents). Counsel should ensure that internal compliance monitoring aligns with the correct reference date and that any stabilising activity ceases promptly at the end of the permitted window.
How Is This Legislation Structured?
The Regulations are extremely concise and consist of three main regulations:
- Regulation 1: Citation and commencement (11 May 2004).
- Regulation 2: Definitions of “Bonds” and “stabilising action”.
- Regulation 3: The exemption from SFA sections 197 and 198, including the counterparty conditions and the 30-calendar-day limit.
There are no additional parts or schedules in the extract provided. The legislative design is therefore “definition + exemption + conditions”, reflecting the deal-specific nature of the instrument.
Who Does This Legislation Apply To?
The exemption applies to stabilising action carried out by ABN AMRO Bank N.V., Singapore branch or its related corporations, in relation to the defined Mahindra & Mahindra Limited 5-year zero coupon convertible bonds due May 2009 (including the specified option amount). It is not a general authorisation for any market participant or any bond issue.
Even where the stabilising participant and the bond issue match the definitions, the exemption is further limited by the counterparty categories in Regulation 3(1): stabilising action must be carried out with either a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). Accordingly, stabilisation involving other categories of counterparties would not benefit from this exemption and could expose the stabilising participant to the underlying prohibitions in sections 197 and 198.
Why Is This Legislation Important?
This Regulations instrument is important because it illustrates how Singapore’s market conduct framework balances investor protection with market efficiency. Stabilisation can be legitimate and beneficial, but it can also be misused to create artificial price signals. By carving out stabilisation from specific prohibitions only for a defined bond issue, defined stabilising participants, defined counterparties, and a strict time window, the Regulations reduce the risk of overbroad exemptions.
For practitioners advising issuers, arrangers, or stabilising banks, the key value lies in operational certainty. The exemption provides a structured basis to plan stabilisation activities—subject to compliance controls—without triggering the SFA provisions that would otherwise apply. In transactions involving convertible bonds and global depositary receipts, counsel should also be alert to how the definition of “Bonds” captures the conversion mechanics and the scope of the issue (including option tranches).
From an enforcement perspective, the time limit (30 calendar days) and the counterparty limitations are likely to be focal points. MAS and market surveillance authorities typically scrutinise whether stabilisation was conducted within the permitted period and whether trades were executed with eligible counterparties. Practically, this means legal teams should coordinate with trading desks to ensure that (i) stabilisation orders are tracked, (ii) counterparties are verified against the SFA categories, and (iii) cessation occurs at the end of the permitted window.
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)
- Stabilising Act (as referenced in the provided metadata)
- Legislation timeline / MAS legislative timeline (for version verification)
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. 6) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.