Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 8) Regulations 2004
- Act Code: SFA2001-S317-2004
- Legislative Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Power Used: Section 337(1) of the Securities and Futures Act
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Citation and Commencement: Commenced on 4 June 2004
- Status: Current version as at 27 March 2026
- Key Provisions: Sections 1 (Citation and commencement), 2 (Definitions), 3 (Exemption)
- Amendments Noted in Extract: Definitions of “Bonds” and related effective dates (e.g., S 454/2004 w.e.f. 29/07/2004; S 559/2004 w.e.f. 02/09/2004)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 8) Regulations 2004 is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain market conduct restrictions in the Securities and Futures Act for a specific type of stabilising activity carried out in relation to a particular bond issue.
Market stabilisation is a common feature of capital markets transactions. When new securities are issued, market makers or arrangers may take steps intended to support or maintain orderly trading conditions—often to reduce volatility in the immediate aftermath of issuance. However, stabilisation can also resemble prohibited conduct if it is not carefully bounded. This Regulations addresses that tension by carving out stabilising actions that meet defined criteria.
Importantly, the exemption is not general. It is tied to (i) a defined set of “Bonds” (convertible bonds issued by Orchid Chemicals & Pharmaceuticals Ltd), (ii) a defined “stabilising action” (conduct by Citigroup Global Markets Inc. or its related corporations), and (iii) a strict time window (within 30 days from the date of issue). The exemption also limits the counterparties with whom the stabilising action may be undertaken.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal identity of the Regulations and its effective date. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 8) Regulations 2004” and came into operation on 4 June 2004. For practitioners, this matters when assessing whether stabilising conduct occurred within the legal framework.
Section 2 (Definitions) is the core interpretive gateway. It defines two key terms: “Bonds” and “stabilising action”.
“Bonds” are defined with considerable specificity: they are the convertible bonds due September 2009, with a tenure of 5 years and 1 day, issued by Orchid Chemicals & Pharmaceuticals Ltd for a principal amount of up to US$75 million. The bonds are convertible into fully paid ordinary shares of Orchid Chemicals & Pharmaceuticals Ltd, with a par value of 10 Indian Rupees each. The extract also indicates that this definition was amended by subsequent statutory instruments (e.g., S 454/2004 and S 559/2004 with specified effective dates). In practice, counsel should verify the current consolidated definition when advising on compliance.
“stabilising action” is defined as an action taken in Singapore or elsewhere by Citigroup Global Markets Inc. (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 significant because it captures not only actual purchases but also offers or agreements to purchase—meaning that compliance analysis must consider forward commitments and conditional arrangements, not merely executed trades.
Section 3 (Exemption) 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, provided 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 extract does not reproduce Sections 197, 198, 274, or 275(2), the structure is clear: the exemption is both time-bound and counterparty-bound. The exemption does not permit stabilisation with any market participant. Instead, it restricts stabilising dealings to categories of persons recognised under the Act—either those specified in section 274 or those meeting the “sophisticated investor” threshold.
For legal practice, this means that a stabilising programme must be assessed on multiple axes:
- Instrument specificity: the activity must relate to the defined “Bonds” (not other convertible bonds or other issuers).
- Actor specificity: the stabilising action must be taken by Citigroup Global Markets Inc. or its related corporations.
- Purpose specificity: the action must be taken to stabilise or maintain market price (i.e., it must be demonstrably within the stabilisation rationale).
- Time window: only within 30 days from the date of issue.
- Counterparty limitation: deals must be with persons in section 274 or sophisticated investors under section 275(2).
Failure on any one of these elements may result in the exemption not applying, leaving the stabilising conduct potentially subject to the prohibitions or restrictions in Sections 197 and 198 of the Securities and Futures Act.
How Is This Legislation Structured?
This Regulations is short and highly functional. It contains:
- Section 1: Citation and commencement.
- Section 2: Definitions of “Bonds” and “stabilising action”.
- Section 3: The exemption from Sections 197 and 198 of the Securities and Futures Act, subject to time and counterparty conditions.
From a practitioner’s perspective, the structure indicates that the legal work is largely interpretive: confirming the precise scope of the defined bonds, the permitted stabilising actor, and the compliance conditions (30-day period and eligible counterparties). There are no additional procedural requirements in the extract, so compliance will likely depend on how the stabilisation is documented and executed under the broader framework of the Securities and Futures Act.
Who Does This Legislation Apply To?
The exemption is directed at stabilising actions involving the defined Orchid Chemicals & Pharmaceuticals convertible bonds. While the Regulations is made under MAS’s powers and is therefore a legal constraint on market conduct, its practical effect is to benefit (or permit) stabilising activity by the specified stabilising actor—Citigroup Global Markets Inc. and its related corporations.
However, the exemption is not “for the issuer” or “for the market” generally. It is conditional on the stabilising action being undertaken with eligible counterparties: persons referred to in section 274 of the Securities and Futures Act or sophisticated investors under section 275(2). Accordingly, the scope of application extends to the trading counterparties and the trading arrangements used during the stabilisation period.
Why Is This Legislation Important?
This Regulations is important because it demonstrates how Singapore law balances two competing policy goals: (1) preventing manipulative or improper market conduct, and (2) allowing legitimate market stabilisation in connection with securities offerings. By exempting stabilising actions from specified statutory provisions, MAS enables orderly market functioning while still imposing strict boundaries.
For practitioners advising on capital markets transactions, the Regulations provides a concrete compliance pathway. It is not enough to label trading as “stabilisation”; counsel must ensure that the activity fits within the defined legal parameters. The detailed definition of the bonds and the stabilising actor suggests that MAS expects stabilisation to be tightly linked to the transaction and the designated market participant.
From an enforcement and risk perspective, the exemption’s conditional nature is critical. If stabilising activity occurs outside the 30-day window, involves different instruments, is undertaken by a different entity, or is executed with ineligible counterparties, the exemption may not apply. In that scenario, the stabilising trades could be scrutinised under Sections 197 and 198 of the Securities and Futures Act—provisions that, in market conduct regimes, typically address prohibitions relating to improper trading, misleading conduct, or market manipulation. Even where the intent is benign, the legal test may be formal and fact-sensitive.
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 statute metadata)
- Stabilising Act (as referenced in the statute metadata)
- Legislation Timeline / Amendments — including amendments by S 454/2004 and S 559/2004
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. 8) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.