Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 9) Regulations 2004
- Act Code: SFA2001-S319-2004
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) (“SFA”)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Commencement: 4 June 2004
- Legislative Instrument No.: SL 319/2004
- Key Provisions: Section 2 (definitions); Section 3 (exemption)
- Relevant SFA Provisions Referenced: Sections 197, 198, 274, 275(2), and the stabilising framework under section 337(1)
What Is This Legislation About?
The Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 9) Regulations 2004 (“Stabilising Exemption Regulations”) is a targeted regulatory instrument. In plain terms, it creates a narrow exemption from certain market conduct rules in the Securities and Futures Act (SFA) for a specific type of market activity—namely, “stabilising action”—carried out in relation to a particular bond issuance.
Stabilising action is a practice commonly used in securities offerings. During the early period after a bond is issued, certain market participants may buy (or offer to buy) the bonds to help maintain an orderly market and reduce excessive price volatility. Without an exemption, such conduct could potentially fall within prohibitions or restrictions designed to prevent market manipulation or misleading trading practices.
This legislation therefore balances two policy objectives: (1) protecting market integrity by regulating market conduct, and (2) allowing legitimate stabilisation activities that are consistent with orderly market functioning—provided the stabilisation is limited in time, scope, and counterparties. The Regulations do this by exempting stabilising action from the operation of SFA sections 197 and 198, but only for stabilising action taken within a defined window after issuance and only in respect of the defined “Bonds”.
What Are the Key Provisions?
Section 1 (Citation and commencement) sets the legal identity and effective date of the Regulations. The Regulations may be cited as the “Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) (No. 9) Regulations 2004” and came into operation on 4 June 2004. For practitioners, this matters for determining whether stabilising conduct occurred within the regulatory regime created by these Regulations.
Section 2 (Definitions) is crucial because the exemption is only as broad as the defined terms. Two definitions drive the entire instrument:
- “Bonds” are defined very specifically as the 5-year US dollar 1% fixed rate convertible bonds due June 2009 issued by Tata Teleservices (Maharashtra) Limited for a principal amount of up to US$150 million, including any bonds issued under an over-allotment option of up to US$25 million. The bonds are convertible into fully paid equity shares of Tata Teleservices (Maharashtra) Limited with a par value of 10 Indian Rupees each.
- “stabilising action” is defined as an action taken in Singapore or elsewhere by Deutsche Bank AG London (or any of its related corporations) to buy, or 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 compliance perspective, this definition is both a permission and a constraint. The exemption is not available for stabilisation by any market participant; it is tied to Deutsche Bank AG London and its related corporations, and it is tied to stabilisation of the defined bond issue. If the stabilising activity is performed by a different entity, or relates to different bonds, the exemption would not apply.
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, with stabilising counterparties falling within one of two categories:
- (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.
Practically, this means the exemption is time-limited (30 days post-issue) and counterparty-limited (only certain persons under section 274, or sophisticated investors under section 275(2)). The Regulations do not expressly set out the detailed mechanics of stabilisation (for example, price caps, volume limits, or reporting obligations). Instead, they operate as a “carve-out” from the SFA’s market conduct provisions for the specified stabilising activity, leaving the rest of the SFA framework to govern what is permissible.
For legal practitioners, the key interpretive steps are: (1) confirm the bond issue matches the definition of “Bonds”; (2) confirm the stabiliser is Deutsche Bank AG London or a related corporation; (3) confirm the stabilisation occurred within 30 days from the bond’s date of issue; and (4) confirm the counterparty is within section 274 or is a sophisticated investor under section 275(2). Failure on any element likely means the exemption is unavailable, and the SFA sections 197 and 198 could apply.
How Is This Legislation Structured?
The Regulations are short and structured around three sections:
- Section 1 provides the citation and commencement date.
- Section 2 sets out definitions for “Bonds” and “stabilising action”. These definitions are highly specific and effectively determine the scope of the exemption.
- Section 3 contains the exemption itself, specifying the SFA provisions excluded (sections 197 and 198), the time window (30 days from issue), and the permitted counterparty categories (section 274 persons or sophisticated investors under section 275(2)).
There are no additional parts or schedules in the extract provided, reflecting the instrument’s purpose as a targeted exemption for a particular bond issuance and stabilisation arrangement.
Who Does This Legislation Apply To?
In terms of persons, the Regulations are aimed at the conduct of Deutsche Bank AG London (and its related corporations) when it undertakes stabilising action in relation to the defined bonds. While the exemption is drafted as a carve-out from the application of SFA sections 197 and 198, the practical beneficiaries are the stabilising participants who would otherwise be exposed to those provisions.
In terms of counterparties, the exemption is limited to stabilising transactions involving either (i) persons referenced in section 274 of the SFA, or (ii) sophisticated investors under section 275(2). This indicates that the Regulations are not intended to facilitate stabilisation against retail or unsophisticated counterparties within the exemption window. Instead, it channels stabilisation into relationships where counterparties are presumed to have greater financial sophistication and where market conduct risks are managed through existing SFA categories.
Why Is This Legislation Important?
This is important legislation for market participants because it clarifies when stabilising conduct can occur without triggering certain SFA market conduct prohibitions. In bond offerings—especially convertible bond offerings—stabilisation can be commercially significant. It can support price discovery and reduce disorderly trading immediately after issuance. However, stabilisation can also resemble prohibited manipulation if not properly constrained. The Regulations provide legal certainty by carving out stabilising action that meets defined conditions.
For practitioners advising issuers, arrangers, and stabilising agents, the Regulations are a reminder that exemptions in Singapore’s market conduct regime are often narrow, instrument-specific, and condition-dependent. The specificity of the “Bonds” definition (including the issuer, maturity, coupon, currency, principal amount, and over-allotment option) suggests that MAS intended the exemption to be used for this particular transaction and not as a general stabilisation permission.
From an enforcement and compliance standpoint, the time limit (30 days from issue) and counterparty limits are likely to be focal points. If stabilising activity continues beyond the 30-day window, or if trades are executed with counterparties outside the section 274 / sophisticated investor categories, the exemption would not protect the conduct. Counsel should therefore ensure that stabilisation programmes are documented, that trade counterparties are correctly classified, and that the “date of issue” is clearly identified for compliance purposes.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular:
- Sections 197 and 198 (market conduct provisions from which the exemption applies)
- Section 337(1) (power enabling MAS to make such regulations)
- Section 274 (persons referenced for permitted counterparties)
- Section 275(2) (definition of “sophisticated investor”)
- Futures Act (referenced in the provided metadata as related legislation)
- Stabilising Act (referenced in the provided metadata as related legislation)
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. 9) Regulations 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.