Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 6) Regulations 2005
- Act Code: SFA2001-S260-2005
- Legislative Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA) (notably section 337(1))
- Commencement: 26 April 2005
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Regulation Number: SL 260/2005
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- 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 2005 (“Stabilising Action Exemption Regulations”) is a targeted regulatory instrument made under the Securities and Futures Act (SFA). In plain terms, it creates a narrow exemption from certain market conduct rules for stabilising activity involving a specific bond issue.
Stabilising action is a concept used in capital markets to describe lawful efforts to support or maintain the market price of newly issued securities for a limited period. Without exemptions, ordinary trading activity undertaken to stabilise a market could potentially fall within prohibitions or restrictions in the SFA relating to market manipulation or improper dealing. These Regulations therefore carve out a permitted pathway for stabilising conduct, but only for a defined set of circumstances.
Importantly, the exemption is not general. It applies to stabilising action in respect of a particular bond—defined precisely by issuer, tenor, and amount—and it applies only within a specific time window after issuance. It also restricts the counterparties to particular categories of persons (as referenced in the SFA) or to sophisticated investors.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the short title and states that the Regulations come into operation on 26 April 2005. This matters for practitioners because the exemption is time-bound and is intended to operate from the date the Regulations are effective.
Section 2 (Definitions) is central to understanding the scope of the exemption. Two defined terms drive the entire regulatory effect:
- “Bonds” are defined as the 5-year and 1-day fixed rate convertible bonds due April 2010 issued by Mercator Lines Limited for a principal amount of up to US$60 million. The bonds are convertible into new ordinary shares of Rs. 1.00 each of Mercator Lines Limited.
- “Stabilising action” means an action taken in Singapore or elsewhere by Barclays Bank PLC (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.
From a legal compliance perspective, these definitions are not merely descriptive—they are gating conditions. If the security is not the specified Mercator Lines convertible bond, or if the stabilising activity is not undertaken by Barclays Bank PLC (or its related corporations), the exemption will not apply. Likewise, the activity must be directed to stabilising or maintaining 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, provided that the stabilising action is taken 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.
In practical terms, Section 3 authorises a limited form of dealing that would otherwise be caught by the SFA’s market conduct provisions. The exemption is conditional on both time (within 30 days from issue) and counterparty category (section 274 persons or sophisticated investors). This dual condition is typical of stabilisation exemptions: regulators seek to permit stabilisation while limiting the risk of abusive trading and ensuring that counterparties are within a controlled and higher-capacity investor framework.
Why Sections 197 and 198 matter (contextual note for practitioners): while the extract does not reproduce the text of Sections 197 and 198, these provisions are part of the SFA’s market conduct regime. They generally address conduct that may distort or improperly influence market prices. The Regulations’ effect is to remove the legal prohibition (or restriction) created by those sections for the specified stabilising conduct, but only within the defined parameters.
Counterparty limitation as a compliance lever: the references to section 274 and section 275(2) are significant. A practitioner should treat these as compliance checkpoints. Even if the stabilising activity is conducted by Barclays and relates to the correct Bonds, the exemption may fail if the stabilising trades are executed with counterparties outside the permitted categories. Accordingly, documentation and trade records should be structured to evidence the counterparty’s status (e.g., whether it qualifies as a sophisticated investor) and the relevant legal basis for the exemption.
How Is This Legislation Structured?
The Regulations are structured in a simple, short form:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that precisely identify the Bonds and define stabilising action.
- Section 3 contains the exemption from specified SFA provisions (Sections 197 and 198), including the time limit and counterparty conditions.
There are no additional parts or complex schedules in the extract provided. The legislative design is therefore “precision by definition”: the Regulations rely on tightly drafted definitions and a narrow exemption rather than broad regulatory discretion.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and are therefore part of the broader market conduct framework, their practical application is limited to parties involved in stabilising activity for the specified bond issue. The definition of “stabilising action” restricts the relevant stabiliser to Barclays Bank PLC or its related corporations. This means that the exemption is not intended for any market participant; it is issue- and arranger-specific.
In addition, the exemption applies only when stabilising action is taken within 30 days from the date of issue and when the stabilising trades are conducted with either section 274 persons or sophisticated investors under section 275(2) of the SFA. Accordingly, the Regulations affect both the stabilising entity and the counterparties, because the counterparty category is a condition of the exemption.
Why Is This Legislation Important?
For practitioners, the significance of these Regulations lies in how they enable a regulated form of market stabilisation while preserving the integrity of the market conduct regime. Stabilisation is often commercially important in bond offerings—particularly for convertible instruments—because initial trading can be volatile. However, stabilisation can resemble conduct that regulators treat as potentially manipulative. The Regulations provide legal certainty by carving out a defined exemption.
From an enforcement and risk perspective, the exemption is narrow and conditional. A lawyer advising on stabilisation programmes should therefore focus on three practical compliance tasks:
- Confirm the instrument: ensure the security is exactly the defined “Bonds” (issuer, type, tenor, conversion feature, and principal amount parameters).
- Confirm the stabiliser: ensure the stabilising action is taken by Barclays Bank PLC or its related corporations, and that the relevant trading activity is within the defined concept of buying (or offering/agreement to buy) for stabilisation purposes.
- Confirm the timing and counterparties: ensure trades occur within the 30-day window from the date of issue and are executed with permitted counterparties (section 274 persons or sophisticated investors).
Finally, the Regulations illustrate a broader regulatory approach in Singapore’s market conduct framework: exemptions are typically granted through subsidiary legislation that is tailored to particular transactions or instruments. This means that practitioners should not assume that stabilisation permissions for one bond issue automatically extend to other issues, even if they appear similar. Each exemption may be instrument-specific and time-specific.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, the market conduct provisions referenced (Sections 197 and 198) and the exemption-making power (Section 337(1)), as well as the counterparty definitions referenced (Sections 274 and 275(2)).
- Stabilising Act — referenced in the provided metadata (contextual cross-reference for stabilisation concepts).
- Futures Act — referenced in the provided metadata (contextual cross-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. 6) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.