Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 7) Regulations 2006
- Act Code: SFA2001-S72-2006
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), in particular section 337(1)
- Regulation Number: SL 72/2006
- Citation: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 7) Regulations 2006
- Commencement: 7 February 2006
- Status: Current version as at 27 March 2026 (per the provided extract)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “Bonds” and “stabilising action”)
- Section 3: Exemption from sections 197 and 198 of the Securities and Futures Act for specified stabilising action
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 7) Regulations 2006 (“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 that allows certain market participants to take “stabilising action” in relation to a specific bond issue without being caught by particular market conduct prohibitions in the SFA.
Market conduct rules in the SFA are designed to protect investors and market integrity by restricting conduct that could mislead the market or distort prices. However, in certain capital-raising contexts—especially during the initial trading period of newly issued securities—stabilisation practices are sometimes permitted under a controlled framework. The rationale is that stabilisation can reduce excessive volatility and support orderly trading, provided it is carried out within strict limits and for defined purposes.
This particular set of Regulations is not a general stabilisation regime. Instead, it is an “issue-specific” exemption: it defines particular bonds (the Videocon Industries Limited convertible bonds) and specifies who may participate and within what timeframe. This makes the Regulations especially relevant to lawyers advising on underwriting, distribution, and post-issuance trading conduct for that bond issue.
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the legal name of the Regulations and states that they come into operation on 7 February 2006. For practitioners, commencement matters because the exemption is tied to a time window measured from the “date of issue” of the bonds, and the Regulations must be in force for the exemption to be relied upon.
Section 2 (Definitions) is where the scope is carefully controlled. The Regulations define three key terms:
- “Bonds”: The exemption applies only to the 5-year and 1-month US$ fixed rate convertible bonds due March 2011 issued by Videocon Industries Limited, for a principal amount of up to US$120 million. These bonds are convertible into ordinary shares of Videocon Industries Limited with a par value of 10 Indian Rupees each.
- “securities”: This has the same meaning as in section 239(1) of the SFA. This cross-reference ensures the SFA’s definitional framework governs the term.
- “stabilising action”: This is defined as an action taken in Singapore or elsewhere by Lehman Brothers International (Europe) (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 risk perspective, the definition of “stabilising action” is critical. It is not enough that a party buys the bonds for any reason. The action must be taken by the specified Lehman entity (or related corporations), and it must be aimed at stabilising or maintaining the market price. This limits the exemption and reduces the risk of overbroad reliance.
Section 3 (Exemption) is the operative provision. It provides 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 of the Bonds, provided the stabilising action is undertaken with one of the following categories of counterparties:
- (a) an institutional investor;
- (b) a relevant person as defined in section 275(2) of the SFA; or
- (c) a person who acquires the Bonds as principal, where the consideration for the acquisition is not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether paid in cash or by exchange of securities or other assets.
Practically, Section 3 does two things. First, it creates a time-limited safe space: stabilisation is exempt only if carried out within 30 days from issuance. Second, it imposes counterparty constraints: stabilising trades must be with institutional investors, “relevant persons”, or high-value principal acquirers meeting the $200,000 threshold. These conditions are designed to ensure that stabilisation is conducted in a controlled manner and not through retail-style or low-value channels that could increase the risk of unfairness or manipulation.
For counsel, the exemption’s structure suggests a compliance checklist: confirm the bonds match the defined “Bonds”; confirm the stabilising activity is performed by Lehman Brothers International (Europe) or related corporations; confirm the purpose is stabilisation/price maintenance; confirm the trades occur within the 30-day window; and confirm the counterparties fall within one of the permitted categories and, where relevant, meet the $200,000 consideration threshold.
How Is This Legislation Structured?
The Regulations are concise and consist of an enacting formula and three substantive sections:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption, particularly the identity of the bonds and the stabilising actor.
- Section 3 sets out the exemption from specified SFA provisions, including the 30-day limit and the permitted counterparty categories.
There are no additional parts or schedules in the extract provided. The Regulations therefore operate as a focused legal “switch” that turns off the application of certain SFA market conduct provisions for a defined stabilisation scenario.
Who Does This Legislation Apply To?
Although the Regulations are made under the SFA and relate to market conduct rules, their practical application is narrower than the general market conduct regime. The exemption is relevant primarily to the party (and its related corporations) that performs the stabilising action—here, Lehman Brothers International (Europe)—and to the counterparties with whom stabilisation trades may be executed.
In terms of counterparties, Section 3 restricts the exemption to stabilising action undertaken with institutional investors, relevant persons (as defined in the SFA), or principal acquirers meeting the $200,000 per transaction minimum consideration threshold. This means that even if stabilisation is otherwise properly structured, trades with counterparties outside these categories may not benefit from the exemption and could expose the stabilising party to the underlying prohibitions in sections 197 and 198 of the SFA.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct framework balances two competing objectives: (1) preventing market manipulation and unfair trading practices, and (2) allowing limited stabilisation to support orderly markets during the early phase of a bond’s life. By carving out a controlled exemption, the Monetary Authority of Singapore (MAS) enables stabilisation activities while still imposing meaningful boundaries.
For practitioners, the key significance lies in the precision of the exemption. It is not a broad permission to stabilise any bond. It is tied to a specific bond issue, a specific stabilising actor, a specific purpose (price stabilisation/maintenance), a specific timeframe (30 days from issuance), and specific counterparty categories and thresholds. This precision reduces ambiguity and supports enforceable compliance standards.
From an enforcement and litigation perspective, the Regulations also provide a clear defence framework. If a stabilising action falls within the defined parameters, sections 197 and 198 of the SFA do not apply. Conversely, if any element is missing—wrong bond, wrong actor, wrong timeframe, or non-permitted counterparty—the exemption may not be available, and the stabilising conduct could be scrutinised under the underlying SFA provisions.
Related Legislation
- Securities and Futures Act (SFA) (Cap. 289) — in particular:
- Section 197 and Section 198 (market conduct provisions from which the exemption applies)
- Section 275(2) (definition of “relevant person”)
- Section 239(1) (definition of “securities”)
- Section 337(1) (power to make the Regulations)
- Futures Act (not directly operative in the extract, but referenced in the provided metadata context)
- Stabilising Act (referenced in the provided metadata context)
- Timeline / Legislation timeline (for version control and amendment history)
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 2006 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.