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 (Cap. 289)
- Power Used: Section 337(1) of the Securities and Futures Act
- Commencement: 26 April 2005
- Enacting Formula Date: Made on 20 April 2005
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Regulatory Status: Current version as at 27 March 2026 (per provided extract)
- Regulation Number: SL 260/2005
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”) creates a targeted regulatory carve-out from certain market conduct restrictions under the Securities and Futures Act (the “SFA”). In plain terms, it allows specified parties to take “stabilising action” in relation to a particular bond issuance without triggering the prohibitions contained in sections 197 and 198 of the SFA.
Stabilising action is a common market practice in securities offerings. It generally refers to limited buying (or offers to buy) by an intermediary to support or maintain the market price of newly issued securities during the early trading period. The rationale is to reduce volatility and support orderly trading immediately after issuance. However, because stabilising activity can resemble market manipulation, the SFA imposes strict controls. These Regulations provide a narrow exemption for a specific bond and a defined stabilisation window.
Importantly, the exemption is not general. It is tied to a particular set of bonds—defined precisely in the Regulations—and to stabilising action taken by a specified market participant (Barclays Bank PLC and related corporations). It also limits the exemption to stabilising actions taken within 30 days from the date of issue of the bonds, and only where the counterparty is a person listed in section 274 of the SFA or a “sophisticated investor” under section 275(2) of the SFA.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and states that the Regulations “shall come into operation on 26th April 2005.” This matters for practitioners because the exemption only becomes legally effective from that commencement date, and stabilising actions must be assessed against the timing requirements in Regulation 3.
2. Definitions (Regulation 2)
Regulation 2 is central because it defines the scope of the exemption through two key terms: “Bonds” and “stabilising action.”
“Bonds” are defined with unusual specificity: they are the “5-year and 1-day fixed rate convertible bonds due April 2010” issued by Mercator Lines Limited, for a principal amount “up to US$60 million,” convertible into new ordinary shares of Rs. 1.00 each of Mercator Lines Limited. This definition is not merely descriptive; it is the legal boundary of what instruments qualify for the exemption. If the instrument is not within this definition (for example, a different maturity, issuer, principal amount, or conversion structure), the exemption will not apply.
“stabilising action” is defined as 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. This definition does two things: (i) it restricts the actors who may rely on the exemption to Barclays Bank PLC and its related corporations; and (ii) it clarifies that stabilisation may occur both in Singapore and abroad, but must be directed at stabilising or maintaining the market price of the Bonds.
3. The exemption from sections 197 and 198 (Regulation 3)
Regulation 3 is the operative provision. It states that “Sections 197 and 198 of the Act shall not apply” to stabilising action taken in respect of any of the Bonds, within 30 days from the date of issue of the Bonds, with either of the following counterparties:
- (a) a person referred to in section 274 of the Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
In practical terms, Regulation 3 creates a time-limited and counterparty-limited safe harbour. The exemption is triggered only if all conditions are met: (i) the activity qualifies as “stabilising action” under Regulation 2; (ii) it concerns the defined “Bonds”; (iii) it occurs within 30 days from the date of issue; and (iv) the stabilising action is taken with the specified categories of persons (section 274 persons or sophisticated investors).
Why the cross-references matter
Because Regulation 3 refers to sections 274 and 275(2) of the SFA, a practitioner must consult those provisions to understand the precise categories of eligible counterparties. The Regulations themselves do not reproduce those definitions. In practice, this means legal review must confirm that the relevant counterparty documentation, investor classification, and transaction counterparties align with the SFA framework.
4. Administrative and formal elements
The Regulations include the making date (“Made this 20th day of April 2005”) and signature by the Acting Managing Director of the Monetary Authority of Singapore (MAS). While these are not substantive requirements for market participants, they are relevant for validating the instrument’s authenticity and effective date.
How Is This Legislation Structured?
Despite being a short instrument, the Regulations are structured in a conventional legislative format:
Regulation 1 (Citation and commencement) sets the short title and commencement date.
Regulation 2 (Definitions) defines the two key concepts that determine the exemption’s scope: “Bonds” and “stabilising action.” These definitions are the gatekeepers for whether any stabilising activity can qualify.
Regulation 3 (Exemption) provides the legal effect: sections 197 and 198 of the SFA do not apply to qualifying stabilising action, but only within a specified time window (30 days from issue) and only when undertaken with specified categories of persons (section 274 persons or sophisticated investors).
There are no additional parts or schedules in the extract provided, reflecting the Regulations’ targeted nature: they are designed to address a particular bond issuance and a particular stabilisation conduct scenario.
Who Does This Legislation Apply To?
The Regulations apply to stabilising action in relation to the defined Mercator Lines Limited convertible bonds, when such action is taken by Barclays Bank PLC or its related corporations. The exemption is therefore primarily relevant to the stabilising dealer/intermediary and its corporate group entities that may conduct stabilisation activities.
However, the exemption also depends on the identity of the counterparty. Regulation 3 limits the exemption to stabilising actions taken “with” either (a) persons referred to in section 274 of the SFA or (b) sophisticated investors under section 275(2) of the SFA. Accordingly, the Regulations indirectly affect other market participants involved in the stabilisation process—such as counterparties, trading desks, and compliance teams—because they must ensure that trades and offers to buy are executed within the permitted counterparty categories.
Why Is This Legislation Important?
This instrument is important because it balances two competing regulatory objectives: (i) allowing legitimate market stabilisation to support orderly trading after issuance; and (ii) preventing conduct that could be characterised as unlawful market manipulation. By exempting stabilising action from sections 197 and 198 of the SFA, the Regulations provide legal certainty to the stabilising dealer, reducing the risk that routine stabilisation activity is treated as a breach of market conduct prohibitions.
For practitioners, the key value lies in the precision of the exemption. The Regulations are not a broad permission to stabilise any security. Instead, they create a narrow safe harbour tied to a specific bond issue, a specific stabiliser (Barclays and related corporations), a specific time period (30 days from issue), and specific counterparty categories (section 274 persons or sophisticated investors). This means compliance analysis must be highly fact-specific: the bond’s identity, the timing of trades, the identity of the stabilising entity, and the classification of counterparties all matter.
From an enforcement and compliance perspective, the cross-references to sections 197, 198, 274, and 275(2) of the SFA indicate that the exemption operates within a broader market conduct regime. Even where the exemption applies, firms should still consider whether other regulatory obligations (for example, disclosure, record-keeping, or general market conduct requirements not displaced by the exemption) may remain relevant. The Regulations remove the application of particular sections, but they do not necessarily immunise all aspects of conduct.
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).
- Stabilising Act — referenced in the provided metadata (note: practitioners should confirm the exact statutory instrument intended by this label in the platform’s taxonomy).
- Futures Act — referenced in the provided metadata (note: practitioners should confirm the exact statutory instrument intended by this label in the platform’s taxonomy).
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.