Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 7) Regulations 2004
- Act Code: SFA2001-S277-2004
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Power to Make Regulations: Section 337(1) of the Securities and Futures Act
- Citation: SL 277/2004
- Commencement: 14 May 2004
- Enacting Formula (Maker): Monetary Authority of Singapore (MAS)
- Key Provisions: Section 1 (Citation and commencement), Section 2 (Definitions), Section 3 (Exemption)
- Relevant Market Conduct Provisions Exempted: Sections 197 and 198 of the Securities and Futures Act
- Most Relevant Investor Categories Referenced: Persons under section 274 of the Act; “sophisticated investors” under section 275(2) of the Act
- Stabilising Action Provider (Defined): ABN AMRO Bank N.V., Singapore branch, or related corporations
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 7) Regulations 2004 is a targeted regulatory instrument that creates a limited exemption from certain “market conduct” restrictions in the Securities and Futures Act. In plain terms, it allows specified parties to take certain stabilising steps in relation to a particular bond issuance without breaching the general prohibitions that would otherwise apply.
The Regulations are not a general framework for all bond stabilisation. Instead, they are narrowly drafted around a specific set of bonds: the “5-year fixed rate convertible bonds due May 2009” issued by Jubilant Organosys Limited (up to a stated principal amount, including bonds issued under an option). The exemption is designed to facilitate orderly trading and price stability during the early period after issuance—an activity commonly associated with underwriting and stabilisation practices in capital markets.
At the same time, the Regulations impose important guardrails. The exemption is conditional on (i) the identity of the counterparty (linked to categories in the Securities and Futures Act), and (ii) the timing of the stabilising action (limited to within 30 calendar days from the issuance date). These conditions reflect the policy balance typical in market conduct regulation: enabling legitimate stabilisation while reducing the risk of manipulation or unfair market practices.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal citation and states that the Regulations come into operation on 14 May 2004. For practitioners, this matters mainly for determining whether stabilising activities were conducted within the legal regime applicable at the time.
Section 2 (Definitions) is central because it precisely identifies the scope of the exemption. Two definitions drive the analysis:
(a) “Bonds” are defined as the 5-year fixed rate convertible bonds due May 2009 issued by Jubilant Organosys Limited, with a principal amount “up to US$40 million” and an additional amount “including any bonds issued pursuant to an option in connection therewith of up to US$5 million.” The bonds are convertible into either (i) fully paid equity shares of Jubilant Organosys Limited (par value of 5 Indian Rupees each), or (ii) global depositary shares, where each share represents one fully paid equity share.
(b) “stabilising action” is defined as an action taken in Singapore or elsewhere by ABN AMRO Bank N.V., Singapore branch (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 is practitioner-relevant in two ways. First, it clarifies that the exemption is not for general trading or liquidity provision; it is specifically for stabilising or maintaining market price. Second, it includes not only actual purchases but also offers or agreements to buy—meaning contractual steps and pre-trade arrangements may fall within the definition.
Section 3 (Exemption) is the operative provision. It states that, subject to paragraph (2), sections 197 and 198 of the Securities and Futures Act shall not apply to any stabilising action carried out in respect of any of the Bonds with specified counterparties.
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 Act; or
- (b) a sophisticated investor as defined in section 275(2) of the Act.
Although the text provided does not reproduce sections 274 and 275(2), the structure indicates that the exemption is limited to dealings with counterparties that meet statutory criteria—typically reflecting higher thresholds of sophistication or specified categories of persons. For legal practice, this means the exemption is not “open” to any market participant; it is conditional on counterparty classification. A stabilising arrangement with a counterparty outside these categories would risk falling outside the exemption and therefore attracting the prohibitions in sections 197 and 198.
Section 3(2) adds a further temporal limitation: the exemption does not apply to stabilising action carried out at any time after the expiry of the period of 30 calendar days from the date of the issuance of the Bonds. This is a hard stop. Even if the counterparty is within the permitted categories, stabilisation conducted beyond the 30-day window would not benefit from the exemption.
From a compliance perspective, the “date of issuance” and the calculation of “30 calendar days” are key. Practitioners should ensure that internal compliance logs, trade records, and any underwriting/stabilisation documentation align with the issuance date and that stabilisation activity ceases by the relevant deadline.
How Is This Legislation Structured?
The Regulations are structured in a straightforward three-part format:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions that determine the exact scope of “Bonds” and “stabilising action.”
- Section 3 contains the exemption, including both counterparty conditions (linking to sections 274 and 275(2) of the Securities and Futures Act) and a time limit (30 calendar days from issuance).
There are no additional parts or schedules in the extract provided. The Regulations therefore function as a narrowly tailored carve-out rather than a comprehensive stabilisation regime.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to stabilising activity in relation to the defined “Bonds” undertaken by the defined stabilisation actors—namely ABN AMRO Bank N.V., Singapore branch or its related corporations. The exemption is tied to “stabilising action” as defined, meaning the conduct must be directed at stabilising or maintaining the market price of the Bonds.
However, the exemption also depends on who the stabilising trades are with. Section 3(1) restricts the exemption to stabilising actions carried out with persons referred to in section 274 of the Act or with sophisticated investors under section 275(2). Accordingly, even where the stabiliser is the correct entity, the exemption will only apply if the counterparty meets the statutory category requirements.
For lawyers advising issuers, arrangers, or financial institutions, this means the compliance analysis must cover both (i) the stabilisation programme and the role of the stabilising party, and (ii) the identity and classification of counterparties in each relevant transaction.
Why Is This Legislation Important?
This Regulations is important because it provides a legally sanctioned pathway for a specific type of market activity—stabilising or maintaining bond prices—while carving out that activity from certain market conduct prohibitions. In capital markets practice, stabilisation can be a legitimate mechanism to reduce volatility immediately after issuance. Without an exemption, stabilisation trades might be scrutinised as potentially falling within prohibited conduct under the Securities and Futures Act.
At the same time, the Regulations demonstrate how Singapore’s market conduct framework can be both enabling and restrictive. The exemption is conditional: it is limited to particular bonds, particular stabilising actors, particular counterparty categories, and a defined time window. This reflects a regulatory approach that aims to prevent abuse while allowing controlled market support measures.
For practitioners, the key practical impact is that legal risk can be managed through careful structuring of stabilisation programmes. If the stabiliser and the trades are within the defined scope, and if stabilisation is conducted within 30 calendar days from issuance and with permitted counterparties, sections 197 and 198 of the Act will not apply. Conversely, any deviation—wrong counterparty category, stabilisation outside the time window, or stabilisation not falling within the definition—can expose the parties to enforcement risk under the underlying market conduct 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 (as referenced in the provided metadata)
- Stabilising Act (as referenced in the provided metadata)
- Timeline / Legislation timeline (for version control and ensuring the correct SL 277/2004 version is consulted)
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. 7) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.