Statute Details
- Title: Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) Regulations 2005
- Act Code: SFA2001-S34-2005
- Type: Subsidiary Legislation (SL)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289)
- Power Used: Section 337(1) of the Securities and Futures Act
- Citation: S 34/2005
- Commencement: 14 January 2005
- Status: Current version as at 27 March 2026
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (“Bonds”, “stabilising action”)
- Section 3: Exemption from SFA sections 197 and 198 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) Regulations 2005 (“Stabilising Action Exemption Regulations”) create a narrow, transaction-specific exemption from certain market conduct prohibitions in the Securities and Futures Act (SFA). In plain terms, the Regulations permit a particular kind of market activity—“stabilising action”—in relation to a specified bond issuance, even though the general law would otherwise restrict such conduct.
The Regulations respond to a common feature of bond issuance: after new bonds are issued, market liquidity and price discovery may be volatile. Under a stabilisation framework, an arranger or dealer may take limited steps to support orderly trading and reduce extreme price fluctuations. However, stabilisation can resemble prohibited market manipulation if it is not carefully bounded. The Regulations therefore carve out a controlled exception, allowing stabilisation within defined parameters.
Importantly, the exemption is not general. It is limited to stabilising action taken in respect of a particular bond series (defined with precision) and undertaken by a specified entity (Deutsche Bank AG London, or related corporations). It also applies only within a defined time window—30 days from the date of issue of the bonds—and only in relation to dealings with specified counterparties (persons under section 274 of the SFA, or “sophisticated investors” under section 275(2)).
What Are the Key Provisions?
Section 1 (Citation and commencement) is straightforward. It provides the short title and confirms that the Regulations came into operation on 14 January 2005. For practitioners, this matters when assessing whether stabilising activity occurred within the legal regime applicable at the time of the bond issuance.
Section 2 (Definitions) is the heart of the Regulations because it tightly constrains the scope of the exemption. Two definitions are critical:
- “Bonds” are defined as the 9-year and 9-month fixed rate bonds due September 2014 issued by Lopro Corporation for a principal amount of up to ¥10,000,000,000. This definition is highly specific: it identifies the issuer, the maturity profile, the coupon type (fixed rate), the due date, and the maximum principal amount.
- “stabilising action” means an action taken in Singapore or elsewhere by Deutsche Bank AG London (or any related corporation) 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 compliance perspective, the definition requires both who acts and what is done. The exemption is limited to stabilisation activities involving offers to buy or actual purchases, and only by the specified Deutsche Bank group entity (including related corporations). If a different dealer undertakes similar conduct, the exemption would not automatically apply.
Section 3 (Exemption) provides the operative relief. It states 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 dealings involving 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 the text of SFA sections 197 and 198, the legal effect is clear: the general prohibitions in those sections are suspended for the specified stabilising action, but only if all conditions are satisfied. The conditions operate like “gates”:
- Time gate: stabilising action must occur within 30 days from the date of issue of the Bonds.
- Instrument gate: the action must relate to the defined Lopro Corporation bonds (9 years 9 months, due September 2014, fixed rate, up to ¥10 billion).
- Actor gate: the action must fall within the definition of “stabilising action” (Deutsche Bank AG London or related corporations).
- Counterparty gate: the stabilising action must involve dealings with persons under s 274 or with sophisticated investors under s 275(2).
For legal practitioners, the counterparty limitation is particularly important. Even if stabilisation is otherwise time- and instrument-compliant, the exemption may fail if the stabilising trades are executed with retail investors or other categories not captured by sections 274 or 275(2). In practice, this requires careful mapping of investor classification and trade counterparties.
How Is This Legislation Structured?
The Regulations are structured as a short, three-section instrument:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions that define the exact bonds and the exact stabilisation activity covered.
- Section 3 contains the exemption from specified SFA provisions, subject to time, counterparty, and definitional constraints.
There are no separate Parts or schedules in the extract. The legislative technique is “precision drafting”: rather than creating a broad stabilisation regime, the Regulations create a targeted exemption for a particular transaction and stabilisation actor.
Who Does This Legislation Apply To?
The exemption is relevant primarily to parties involved in the issuance and trading of the specified bonds—especially the stabilising dealer. However, the Regulations do not apply to “everyone” who might stabilise. Instead, the exemption is triggered only when the stabilising activity meets the definition in section 2, which is limited to Deutsche Bank AG London (or related corporations) acting to buy or offer/agree to buy the defined bonds for stabilisation purposes.
Additionally, the exemption applies only when stabilising dealings are undertaken with counterparties falling within section 274 of the SFA or sophisticated investors under section 275(2). Therefore, the practical applicability depends on both (i) the identity of the stabilising actor and (ii) the classification of the counterparty. Lawyers advising issuers, arrangers, and dealers should treat these as essential compliance facts to document.
Why Is This Legislation Important?
Although the Regulations are brief, they are significant because they demonstrate how Singapore’s market conduct framework balances two competing objectives: (1) preventing market manipulation and improper conduct, and (2) allowing legitimate market practices that support orderly trading during issuance. By exempting stabilising action from specific SFA prohibitions, the Regulations enable bond market functioning while still imposing strict boundaries.
From an enforcement and risk perspective, the Regulations also highlight that stabilisation is not a blanket permission. The exemption is conditional and narrow. If stabilising activity exceeds the defined time period, involves different instruments, is undertaken by a different entity, or is executed with counterparties outside the permitted categories, the exemption would likely not apply—leaving the conduct exposed to the underlying prohibitions in sections 197 and 198 of the SFA.
For practitioners, the most practical impact is evidentiary and operational. Advising on stabilisation requires ensuring that:
- the trades relate to the correct bond series and issuance;
- the stabilisation period is tracked from the correct “date of issue” and does not exceed 30 days;
- the stabilising dealer is within the defined Deutsche Bank AG London (or related corporation) scope;
- trade counterparties are correctly classified as persons under section 274 or as sophisticated investors under section 275(2); and
- the purpose of the trades aligns with “stabilise or maintain the market price” as contemplated by the definition.
In short, the Regulations provide a compliance pathway for stabilisation, but only when the factual matrix fits the statutory definitions and conditions.
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 metadata context)
- Stabilising Act (as referenced in the metadata context)
- Timeline (legislation timeline reference for version control)
Source Documents
This article provides an overview of the Securities and Futures (Market Conduct) (Exemption for Stabilising Action in respect of Dealings in Bonds) Regulations 2005 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.