Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 7) Regulations 2005
- Act Code: SFA2001-S261-2005
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) (specifically, section 337(1))
- Commencement: 26 April 2005
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Regulation Number: SL 261/2005
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (Bonds; stabilising action)
- Section 3: Exemption from sections 197 and 198 of the Securities and Futures Act
- Current Version Status: Current version as at 27 Mar 2026 (per the legislation portal display)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 7) Regulations 2005 is a targeted regulatory instrument made by MAS under the Securities and Futures Act (“SFA”). In plain language, it creates a narrow exemption from certain “market conduct” rules when specific parties take stabilising actions in relation to a specific bond issue.
Stabilising actions are common in capital markets. They are typically undertaken shortly after issuance to help manage short-term price volatility and to support orderly trading. However, market conduct regimes in securities law often restrict trading practices that could otherwise be viewed as manipulative or misleading. This Regulations bridges that tension by carving out an exemption—so that stabilising activity can occur without breaching the relevant statutory prohibitions—provided the conditions are met.
Importantly, this is not a general stabilisation framework for all bonds. The Regulations define “Bonds” very specifically and limit “stabilising action” to actions taken by named financial institutions (and their related corporations). The exemption is also time-bound (within 30 days from the date of issue) and person-bound (limited to certain categories of counterparties under the SFA, including “sophisticated investors”).
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the citation and states that the Regulations come into operation on 26 April 2005. For practitioners, this matters because the exemption only becomes available from the commencement date, and the stabilising period is measured from the date of issue of the Bonds (not from the date of the Regulations). Still, the commencement date is relevant for compliance planning and for determining the applicable regulatory instrument.
2. Definitions: the Bonds and the stabilising action (Regulation 2)
Regulation 2 is the heart of the instrument’s narrow scope. It defines two key terms:
(a) “Bonds”
The Regulations define “Bonds” as the 5-year zero coupon convertible bonds due April 2010 issued by LG.Philips LCD Co., Ltd. for a principal amount of up to US$575 million. The bonds are convertible into shares of common stock of LG.Philips LCD Co., Ltd., with a par value of Won 5,000 per share.
(b) “stabilising action”
The Regulations define “stabilising action” as an action taken in Singapore or elsewhere by Citigroup Global Markets Limited, Morgan Stanley Dean Witter Asia Limited, UBS AG, or any of their related corporations. The action must involve buying, or offering or agreeing to buy, any of the Bonds in order to stabilise or maintain the market price of the Bonds in Singapore or elsewhere.
From a compliance perspective, these definitions are critical. If a different institution conducts stabilising trades, or if the trades are not aimed at stabilising/maintaining the market price, the exemption may not apply. Similarly, if the instrument is not the specified LG.Philips LCD convertible bond issue, the exemption is unavailable.
3. The exemption from sections 197 and 198 of the SFA (Regulation 3)
Regulation 3 provides the operative legal effect. 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, provided 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.
While the extract does not reproduce sections 197, 198, 274, or 275(2), the structure signals that the exemption is conditional on both time and counterparty category. Practitioners should treat this as a “permission with guardrails”: the stabilising trades are exempt from the market conduct prohibitions only when conducted within the permitted window and only with permitted classes of counterparties.
Practical implications of the 30-day window
The phrase “within 30 days from the date of issue of the Bonds” requires careful date tracking. Lawyers and compliance teams should ensure that trade dates, settlement dates, and any relevant corporate action timelines are mapped to the “date of issue” concept used for the bond offering. Where there is ambiguity (for example, multiple tranches or differing issuance dates), counsel should seek clarification from the issuer/arranger and document the basis for the compliance timeline.
Practical implications of the counterparty limitation
The exemption is not open-ended. It is limited to stabilising action taken with persons falling within section 274 or with sophisticated investors under section 275(2). This means that stabilising activity with retail investors (or other persons outside those categories) may remain subject to the prohibitions in sections 197 and 198. Accordingly, firms should implement counterparties’ eligibility checks and maintain records demonstrating that each stabilising trade was executed with an eligible counterparty category.
How Is This Legislation Structured?
This Regulations is structured as a short, three-regulation instrument:
- Regulation 1 (Citation and commencement): identifies the instrument and when it takes effect.
- Regulation 2 (Definitions): sets the scope-defining terms—“Bonds” and “stabilising action”—including the specific issuer, bond characteristics, and the named stabilising institutions.
- Regulation 3 (Exemption): provides the legal exemption from specified SFA provisions (sections 197 and 198) subject to time and counterparty conditions.
Because the Regulations are concise, the legal “work” is done through definitions and conditions. For practitioners, the key interpretive task is not navigating multiple parts, but rather applying the definitions precisely and ensuring compliance with the exemption’s conditions.
Who Does This Legislation Apply To?
The Regulations apply to stabilising actions in relation to the defined LG.Philips LCD convertible bond issue. In practice, the exemption is relevant primarily to the named stabilising institutions—Citigroup Global Markets Limited, Morgan Stanley Dean Witter Asia Limited, UBS AG—and their related corporations, because the definition of “stabilising action” is limited to actions by those entities.
However, the exemption also depends on who the stabilising trades are conducted with. The stabilising action must be taken within 30 days from the bond issue date and must be taken with persons referred to in section 274 of the SFA or with sophisticated investors under section 275(2). Therefore, even where a named institution conducts stabilising trades, the exemption may not apply if the counterparty is outside the permitted categories.
Why Is This Legislation Important?
This Regulations is important because it provides a legally sanctioned pathway for market stabilisation in a specific transaction context. Without such an exemption, stabilising trades could potentially fall within the scope of market conduct prohibitions in the SFA—creating legal risk for underwriters, dealers, and their trading desks. By carving out stabilising activity from sections 197 and 198 (subject to conditions), MAS enables orderly market functioning while preserving the overall integrity of Singapore’s securities markets.
For practitioners, the value lies in its precision. The Regulations demonstrates how Singapore’s market conduct regime can accommodate legitimate stabilisation practices through targeted exemptions rather than broad deregulation. It also illustrates a common regulatory technique: define the instrument narrowly (specific bonds), define the actors narrowly (named institutions), and define the circumstances narrowly (time window and counterparty categories). This approach reduces uncertainty and focuses compliance efforts on the exact conditions that trigger the exemption.
From an enforcement and risk-management perspective, the conditional nature of the exemption means that documentation and controls are essential. Firms should ensure that:
- stabilising trades are executed only by the defined entities (or their related corporations);
- the trades are undertaken for the purpose of stabilising or maintaining market price;
- the trades occur within the 30-day period from the bond issue date; and
- each counterparty is eligible under section 274 or is a sophisticated investor under section 275(2).
In short, the Regulations is a compliance-critical instrument for any party involved in stabilising dealings in the specified bond issue.
Related Legislation
- Securities and Futures Act (Cap. 289) — particularly sections 197, 198, 274, 275(2), and the regulation-making power in section 337(1)
- Futures Act (as referenced in the legislation metadata)
- Stabilising Act (as referenced in the legislation metadata)
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 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.