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
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (SFA), in particular section 337(1)
- Citation: S 317/2004 (as indicated in the legislation timeline)
- Commencement: 4 June 2004
- Status: Current version as at 27 March 2026
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “Bonds” and “stabilising action”)
- Section 3: Exemption from specified SFA provisions for stabilising action in respect of specified bonds
- Related Legislation (contextual): Securities and Futures Act; stabilising action framework (including references to the “Stabilising Act” in the metadata); Futures Act (listed in metadata)
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 that creates a narrow exemption from certain market conduct rules under the Securities and Futures Act (SFA). In essence, it allows a specified financial institution to undertake “stabilising action” in relation to a particular bond issue during a defined post-issuance period, without falling foul of the SFA provisions that would otherwise restrict or regulate those dealings.
Stabilisation is a common market practice in capital markets. When bonds are newly issued, market prices can be volatile. Under a stabilisation regime, an authorised intermediary may buy (or offer to buy) the bonds for the purpose of supporting or maintaining the market price. This can help reduce disorderly price movements and facilitate orderly trading. However, because stabilisation can resemble prohibited conduct (such as market manipulation), regulators typically require exemptions that are tightly defined by time, instrument, and participant.
This Regulations set out exactly that: (i) which bonds are covered, (ii) who may take stabilising action, (iii) what conduct counts as stabilising action, and (iv) the time window during which the exemption applies. The exemption is not general; it is limited to stabilising action in respect of the specified bonds within 30 days from the date of issue, and only when the stabilising action is taken by (or in relation to) specified counterparties (including certain persons under the SFA and sophisticated investors).
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal commencement 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 come into operation on 4 June 2004. For practitioners, this matters because the exemption can only be relied upon for stabilising action taken after the Regulations have commenced (subject to any transitional or interpretive considerations, which are not apparent from the extract).
Section 2 (Definitions) is the heart of the instrument because it defines the scope of the exemption. Two defined terms are crucial:
“Bonds” are defined very specifically as 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. This level of specificity indicates that the exemption is designed for a particular transaction and not for any convertible bond generally.
“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. Two practical points follow from this definition:
- First, the exemption is participant-specific: it is tied to Citigroup Global Markets Inc. and its related corporations.
- Second, the conduct is not limited to actual purchases; it includes offers or agreements to buy, which can be relevant for compliance planning around trading instructions, conditional orders, and communications with counterparties.
Section 3 (Exemption) provides the operative relief. It states that sections 197 and 198 of the Act shall not apply to any stabilising action taken in respect of the Bonds within 30 days from the date of issue, provided that the stabilising action is taken with a person falling within one of two categories:
- (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 the text of sections 197, 198, 274, or 275(2) of the SFA, the structure of the exemption is clear. The Regulations carve out stabilisation from the general market conduct prohibitions (or restrictions) contained in sections 197 and 198, but only where the stabilising trades are conducted within the permitted time window and only with counterparties that meet the SFA’s specified categories. For legal practice, this means that compliance is not only about “what” is done (stabilising action) but also “with whom” and “when”.
From a risk-management perspective, the 30-day limit is particularly important. Stabilisation is time-bound; any stabilising purchases or offers outside the 30-day window would fall outside the exemption and could expose the stabilising party to the underlying SFA provisions.
How Is This Legislation Structured?
This Regulations is short and consists of three substantive provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that determine the scope of the exemption, including the precise bond issue and the definition of stabilising action.
- Section 3 contains the exemption from specified SFA provisions, including the time window and the permitted counterparty categories.
There are no additional parts, schedules, or complex procedural requirements shown in the extract. The instrument operates as a transaction-specific carve-out, relying on the SFA’s existing market conduct framework and investor classifications.
Who Does This Legislation Apply To?
The exemption is directed at stabilising action taken by Citigroup Global Markets Inc. (or its related corporations) in relation to the defined Orchid Chemicals & Pharmaceuticals Ltd convertible bonds. In practical terms, the primary regulated party is the stabilising intermediary and its trading/market operations teams, as well as any corporate entities within the “related corporations” scope that may execute or facilitate the stabilising trades.
However, the exemption also conditions the relief on the counterparty to the stabilising action. Section 3 requires that stabilising action be taken with a person referred to in section 274 of the Act or with a sophisticated investor under section 275(2) of the Act. Therefore, the exemption’s practical applicability depends on counterparties meeting the SFA-defined thresholds. For counsel advising on execution strategy, this means counterparties must be assessed against the SFA’s sophisticated investor regime and any other category in section 274.
Why Is This Legislation Important?
This Regulations is important because it illustrates how Singapore’s market conduct regime balances two competing objectives: (i) preventing market manipulation and improper trading practices, and (ii) permitting legitimate stabilisation activities that support orderly markets during bond issuance. By exempting stabilising action from sections 197 and 198 of the SFA, the Regulations provides legal certainty to the stabilising intermediary—so long as the strict conditions are met.
For practitioners, the key value lies in the precision of the exemption. The Regulations does not offer a blanket stabilisation permission. Instead, it is narrowly tailored to a particular bond issue, a particular stabilising institution, and a defined time period. This tailoring reduces regulatory ambiguity and helps ensure that stabilisation is used only for its intended purpose.
In enforcement terms, the exemption framework also signals that stabilisation outside the defined parameters is not protected. If stabilising action is undertaken beyond the 30-day window, or with counterparties that do not fall within the permitted categories, the stabilising intermediary may lose the benefit of the exemption and could face regulatory consequences under the underlying SFA provisions. Accordingly, compliance teams should treat the exemption as a checklist-driven defence requiring careful documentation of (i) the bond issue, (ii) the identity of the stabilising entity, (iii) the timing of trades, and (iv) the counterparty classification.
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 (listed in metadata; relevant for broader market conduct context)
- Stabilising Act (listed in metadata; relevant for broader stabilisation framework context)
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.