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 (SFA), specifically section 337(1)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Commencement: 14 May 2004
- Legislative Instrument Number: SL 277/2004
- Status: Current version as at 27 Mar 2026
- Key Provisions: Section 2 (Definitions); Section 3 (Exemption)
- Primary Exempted Provisions: Sections 197 and 198 of the Securities and Futures Act
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 prohibitions under the Securities and Futures Act (SFA). In plain terms, it addresses a common tension in capital markets: stabilisation activities may be legitimate and intended to reduce volatility after issuance, but they can resemble conduct that the law otherwise treats as improper market manipulation.
This Regulations specifically concerns stabilising action in relation to a defined set of bonds—namely, the 5-year fixed rate convertible bonds due May 2009 issued by Jubilant Organosys Limited (up to US$40 million, with an additional option tranche up to US$5 million). The exemption is designed to permit stabilisation activity by a specified market participant (ABN AMRO Bank N.V., Singapore branch, and its related corporations) without triggering the SFA’s prohibitions on certain dealing practices, provided strict conditions are met.
Practically, the Regulations operate as a “safe harbour” for stabilisation conduct during a defined window after issuance. The exemption is not general: it is narrow in both (i) the type of bonds and (ii) the identity of the stabilising actor, and it is time-limited. This makes it particularly relevant for lawyers advising issuers, underwriters, and financial institutions involved in bond offerings and post-issuance market support.
What Are the Key Provisions?
Section 1 (Citation and commencement) sets the formal name of the Regulations and provides that they come into operation on 14 May 2004. For practitioners, this matters mainly for determining the regulatory position at the time stabilisation activities were carried out, and for aligning internal compliance timelines with the legal commencement date.
Section 2 (Definitions) is central because the exemption turns entirely on the defined scope of “Bonds” and “stabilising action.” The Regulations define “Bonds” with considerable specificity: they are the 5-year fixed rate convertible bonds due May 2009 issued by Jubilant Organosys Limited, for a principal amount up to US$40 million, including bonds issued pursuant to an option of up to US$5 million. The definition also clarifies the conversion mechanics: the bonds are convertible into either (a) fully paid equity shares of Jubilant Organosys Limited (par value of 5 Indian Rupees each) or (b) global depositary shares, where each share represents one fully paid equity share.
The definition of “stabilising action” is equally precise. It 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 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 important for compliance because it limits the exemption to stabilisation-related purchases (or offers/agreements to purchase) by the specified entity and its related corporations. It does not cover stabilisation by other firms, nor does it extend to broader trading strategies that are not directed at stabilising or maintaining market price.
Section 3 (Exemption) is the operative provision. Section 3(1) provides that, subject to paragraph (2), sections 197 and 198 of the SFA shall not apply to any stabilising action carried out in respect of any of the Bonds 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 197, 198, 274, and 275, the structure indicates that the SFA’s market conduct prohibitions are being carved back for stabilisation trades that are conducted with particular counterparties. For a practitioner, the key compliance task is to ensure that any stabilising purchases (or offers/agreements to purchase) are executed with counterparties that fall within the relevant categories—either those identified by section 274 or those qualifying as sophisticated investors under section 275(2). If stabilisation trades are executed with other types of counterparties, the exemption may not apply, and the SFA prohibitions could be engaged.
Section 3(2) imposes a time limitation: 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 hard stop. Lawyers should therefore advise clients to implement robust trade surveillance and recordkeeping to confirm (i) the issuance date used for the countdown and (ii) that all stabilisation activity falls within the 30-day window.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with a conventional layout for subsidiary legislation. They comprise:
(a) Enacting formula (the legal basis for MAS to make the Regulations under section 337(1) of the SFA);
(b) Section 1 on citation and commencement;
(c) Section 2 providing definitions that delimit the scope of “Bonds” and “stabilising action”; and
(d) Section 3 setting out the exemption from the SFA’s market conduct provisions, including the counterparty conditions and the 30-calendar-day limit.
Notably, the Regulations do not contain additional procedural requirements in the extract provided (such as disclosure obligations, reporting to MAS, or specific stabilisation conduct rules). In practice, however, stabilisation regimes often interact with broader offering and market conduct frameworks. Accordingly, counsel should read this exemption alongside the SFA’s general market conduct provisions and any relevant MAS notices or prospectus-related requirements applicable to the bond issuance.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action in relation to the defined Jubilant Organosys Limited convertible bonds. It applies to stabilisation activity carried out by ABN AMRO Bank N.V., Singapore branch or its related corporations. Therefore, the primary regulated parties are the entities that may conduct stabilisation trades and those advising them (underwriters, dealers, compliance officers, and legal counsel).
In addition, the exemption is conditional on the counterparty category for the stabilising trades: stabilising action must be carried out with a person referred to in section 274 of the SFA or with a sophisticated investor under section 275(2). This means that even where the stabilising actor is the right entity, the exemption may fail if trades are executed with counterparties outside those categories. Lawyers should therefore treat counterparty eligibility as a gating issue for the exemption’s availability.
Why Is This Legislation Important?
This Regulations is important because it provides legal certainty for a specific type of market activity—stabilisation of bond prices after issuance—while preserving the integrity of the SFA’s market conduct regime. Without such an exemption, stabilisation trading could be argued to fall within prohibited conduct under sections 197 and 198, creating significant legal risk for dealers and underwriters supporting new issues.
From a practitioner’s perspective, the value lies in the precision of the exemption. It is not a blanket permission to stabilise any bond. Instead, it is limited to (i) a particular bond issue, (ii) a particular stabilising actor (ABN AMRO and related corporations), (iii) particular counterparty categories, and (iv) a strict 30-calendar-day post-issuance period. These constraints are exactly the features that compliance teams need to operationalise: trade eligibility checks, counterparty verification, and time-based controls.
Enforcement risk is also shaped by these constraints. If stabilisation activity occurs outside the 30-day window, or if trades are executed with counterparties not covered by section 274 or the sophisticated investor definition, the exemption will not apply. In that scenario, the SFA prohibitions in sections 197 and 198 could be engaged, potentially exposing the stabilising entity and its advisers to regulatory scrutiny. Accordingly, counsel should ensure that stabilisation documentation, internal approvals, and execution records are capable of demonstrating compliance with each condition.
Related Legislation
- Securities and Futures Act (SFA) (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 statute metadata context)
- Stabilising Act (as referenced in the statute metadata context)
- Timeline / Legislation timeline (for version control and confirming the applicable instrument date)
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.