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Futures Trading (Amendment) Bill

Bill No. 39/1999

Read the first time on 23rd November 1999.

An Act to amend the Futures Trading Act (Chapter 116 of the 1996 Revised Edition).

Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows:

Short title and commencement

1.—(1) This Act may be cited as the Futures Trading (Amendment) Act 1999 and shall come into operation on such date as the Minister may, by notification in the Gazette, appoint.

(2) The Minister may appoint different dates for the coming into operation of the different provisions of this Act.

Amendment of section 2

2. Section 2 of the Futures Trading Act (referred to in this Act as the principal Act) is amended —

(a)

by inserting, immediately after the word “means” in the definition of “member”, the words “, except for the purposes of Part VII,”; and

(b)

by renumbering that section as subsection (1) of that section, and by inserting immediately thereafter the following subsection:

“(2) Where the name of the body corporate known in this Act as the Singapore International Monetary Exchange Limited is changed pursuant to the Companies Act (Cap. 50), the change of name shall not affect the identity of that body corporate or the application of the relevant provisions of this Act or any other written law to that body corporate.”.

New section 21A

3. The principal Act is amended by inserting, immediately after section 21, the following section:

“Authority may issue written notices

21A.—(1) The Authority may, where it appears to the Authority to be necessary or expedient in the public interest or in the interest of the futures industry to do so, by notice in writing direct any holder or class of holders of a licence granted under this Part to comply with such requirements as the Authority may specify in the notice.

(2) For the avoidance of doubt, a notice issued under subsection (1) shall be deemed not to be subsidiary legislation.

(3) Without prejudice to the generality of subsection (1), any requirement specified in a notice issued under that subsection may relate to —

(a)	the standards to be maintained by the person concerned in the conduct of his business; and
(b)	the type and frequency of financial returns and other information to be submitted to the Authority.

(4) A holder of a licence granted under this Part who contravenes or fails to comply with any of the requirements specified in a notice issued to him under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $20,000 and, in the case of a continuing offence, to a further fine of $5,000 for every day or part thereof during which the offence continues after conviction.”.

Amendment of section 46

4. Section 46 of the principal Act is amended —

(a)	by inserting, immediately after the words “a Futures Exchange” in subsections (1), (2) and (3), the words “or a clearing house”;
(b)	by inserting, immediately after the words “the Exchange” wherever they appear in subsections (1), (2) and (3), the words “or the clearing house”;
(c)	by inserting, immediately after the words “a Futures Exchange” in subsection (4), the words “, a clearing house”; and
(d)	by inserting, immediately after the words “Futures Exchanges’” in the marginal note, the words “or clearing houses’”.

Amendment of section 49

5. Section 49 of the principal Act is amended by inserting, immediately after subsection (1), the following subsection:

“(1A) For the avoidance of doubt, a direction issued under subsection (1) shall be deemed not to be subsidiary legislation.”.

Repeal and re-enactment of section 49A and new section 49AA

6. Section 49A of the principal Act is repealed and the following sections substituted therefor:

“Interpretation of this Part

49A. In this Part, “member”, in relation to a Futures Exchange, means a person who —

(a)	holds membership of any class or description of a Futures Exchange whether or not he holds any share in the share capital of the Exchange; and
(b)	is licensed by the Authority to carry on the business of a futures broker.

Establishment of fidelity fund

49AA.—(1) A Futures Exchange shall establish and keep a fidelity fund (referred to in this Part as a fidelity fund or fund) which shall be administered by the Exchange.

(2) The assets of the fidelity fund of a Futures Exchange shall be the property of the Exchange but shall be kept separate from all other property of the Exchange and shall be held in trust for the purposes set out in this Part.”.

Repeal and re-enactment of section 49F

7. Section 49F of the principal Act is repealed and the following section substituted therefor:

“Fidelity fund to consist of amount of $20 million, etc.

49F. The fidelity fund of a Futures Exchange shall consist of an amount of not less than —

(a)	$20 million; or
(b)	such other amount as the Minister may, by order published in the Gazette, specify in substitution of the amount specified under paragraph (a),

to be paid to the credit of the fund on the establishment of the Exchange under this Act or any time after its establishment as determined by the Minister.”.

Amendment of section 49G

8. Section 49G of the principal Act is amended —

(a)	by deleting the words “the sum of $5 million or such other sum as the Minister may, by order, prescribe” in the 1st, 2nd and 3rd lines and substituting the words “the minimum amount referred to in section 49F”; and
(b)	by deleting the words “$5 million” in the marginal note and substituting the words “minimum amount”.

Amendment of section 49I

9. Section 49I of the principal Act is amended by deleting subsection (2) and substituting the following subsections:

“(2) Subject to this Part, the fidelity fund shall be applied for the purpose of paying to the Official Assignee or a trustee in bankruptcy within the meaning of the Bankruptcy Act (Cap. 20) an amount not greater than the amount that the Official Assignee or the trustee in bankruptcy, as the case may be, certifies is required in order to make up or reduce the total deficiency arising because the available assets of a bankrupt who is a member of a Futures Exchange are insufficient to satisfy any debts arising from dealings in futures contracts that have been proved in the bankruptcy by creditors of the bankrupt member.

(2A) Subsection (2) shall apply in the case of a member of a Futures Exchange who has made a voluntary arrangement with his creditors under Part V of the Bankruptcy Act in like manner as that subsection applies in the case of a member who has become bankrupt.

(2B) For the purposes of subsection (2A) —

(a)	a reference to a trustee in bankruptcy in subsection (2) shall be deemed to be a reference to a nominee within the meaning of Part V of the Bankruptcy Act;
(b)	a reference to debts proved in bankruptcy in subsection (2) shall be deemed to be a reference to debts provable in relation to a voluntary arrangement within the meaning of Part V of the Bankruptcy Act; and
(c)	a reference to the bankrupt in subsection (2) shall be deemed to be a reference to the person who made the voluntary arrangement under Part V of the Bankruptcy Act.

(2C) Subject to this Part, the fidelity fund shall be applied for the purpose of paying to a liquidator of a member that is being wound up an amount not greater than the amount that the liquidator certifies is required to make up or reduce the total deficiency arising because the available assets of the member are insufficient to satisfy any debts arising from dealings in futures contracts that have been proved in the liquidation of the member.

(2D) Where a claim has been made for compensation in respect of a pecuniary loss under subsection (1), no claim for a payment under subsection (2) or (2C) shall be made in respect of the same pecuniary loss.

(2E) Where a claim has been made for a payment in respect of a deficiency referred to in subsection (2), no claim for compensation under subsection (1) or for a payment under subsection (2C) shall be made in respect of the same deficiency.

(2F) Where a claim has been made for a payment in respect of a deficiency referred to in subsection (2C), no claim for compensation under subsection (1) or for a payment under subsection (2) shall be made in respect of the same deficiency.

(2G) Moneys paid under subsection (2) or (2C) may only be applied by the Official Assignee, trustee in bankruptcy, nominee or liquidator, as the case may be, for the purpose of satisfying debts arising from dealings in futures contracts, and for no other purpose.

(2H) Subject to the provisions of this section, the amount or the sum of the amounts that may be paid out of the fidelity fund under this Part for the purpose of —

(a)	compensating pecuniary loss under subsection (1); or
(b)	making a payment under subsection (2) or (2C),

shall not, in respect of each member, exceed the prescribed amount.

(2I) Subject to the provisions of this section —

(a)	the amount that may be paid out of the fidelity fund to each claimant under subsection (1); or
(b)	the amount that the Official Assignee, a trustee in bankruptcy, a nominee or a liquidator may pay to each creditor of a member from any amount paid to the Official Assignee, trustee in bankruptcy, nominee or liquidator, as the case may be, under subsection (2) or (2C),

shall not exceed the prescribed amount.

(2J) For the purposes of subsections (2H) and (2I), any amount paid from the fidelity fund shall, to the extent to which the fund is subsequently reimbursed therefor, be disregarded.”.

Amendment of section 49J

10. Section 49J of the principal Act is amended —

(a)	by deleting the words “Subject to subsection (3), a” in the 1st line of subsection (2) and substituting the word “A”; and
(b)	by deleting subsection (3).

New Part VIIA

11. The principal Act is amended by inserting, immediately after section 49P, the following Part:

“PART VIIA

ASSISTANCE TO
FOREIGN REGULATORY AUTHORITIES

Interpretation of this Part

49Q. In this Part, unless the context otherwise requires —

“appointed day” means the date of commencement of the Futures Trading (Amendment) Act 1999;

“enforce” means enforce through criminal, civil or administrative proceedings;

“enforcement” means the taking of any action to enforce a law or regulatory requirement against a specified person, being a law or regulatory requirement that relates to the futures industry of the foreign country of the regulatory authority concerned;

“financial institution” means —

(a)	a bank licensed under the Banking Act (Cap. 19);
(b)	a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act (Cap. 186);
(c)	a finance company licensed under the Finance Companies Act (Cap. 108);
(d)	a dealer, or investment adviser, licensed under the Securities Industry Act (Cap. 289);
(e)	a person providing or maintaining an exempt stock market within the meaning of the Securities Industry Act;
(f)	a body corporate approved as a stock exchange or an approved securities organisation under the Securities Industry Act;
(g)	a Depository within the meaning of section 130A of the Companies Act (Cap. 50);
(h)	a futures broker, futures trading adviser, or futures pool operator, licensed under this Act;
(i)	a person providing or maintaining a futures market that is declared under section 3(3) to be exempt from section 3(1);
(j)	a Futures Exchange;
(k)	a clearing house of a futures market;
(l)	a company or society registered under the Insurance Act (Cap. 142) to carry out insurance business in Singapore;
(m)	an insurance intermediary licensed under the Insurance Intermediaries Act 1999;
(n)	a money-changer licensed to conduct money-changing business, or a remitter licensed to conduct remittance business, under the Money-changing and Remittance Businesses Act (Cap. 187); or
(o)	such other person or class of persons as the Minister may by order prescribe;

“foreign country” means a country or territory other than Singapore;

“investigation” means an investigation to determine if a specified person has contravened or is contravening a law or regulatory requirement, being a law or regulatory requirement that relates to the futures industry of the foreign country of the regulatory authority concerned;

“material” includes any information, book, document or other record in any form whatsoever, and any container or article relating thereto;

“prescribed written law” means this Act or any of the following written law and any subsidiary legislation made thereunder —

(a)	Banking Act (Cap. 19);
(b)	Finance Companies Act (Cap. 108);
(c)	Insurance Act (Cap. 142);
(d)	Insurance Intermediaries Act 1999;
(e)	Monetary Authority of Singapore Act (Cap. 186);
(f)	Money-changing and Remittance Businesses Act (Cap. 187);
(g)	Securities Industry Act (Cap. 289); or
(h)	such other written law as the Minister may prescribe;

“regulatory authority”, in relation to a foreign country, means an authority of the foreign country exercising any function that corresponds to a regulatory function of the Authority under this Act;

“supervision” means the taking of any action for or in connection with the supervision of the operations of a futures exchange, intermediary or any other person regulated by the regulatory authority, or the issuance of or trading in futures contracts, in the foreign country of the regulatory authority concerned.

Conditions for provision of assistance

49R.—(1) The Authority, or a person authorised by the Authority, may provide the assistance referred to in section 49T to a regulatory authority of a foreign country if the Authority is satisfied that all of the following conditions are fulfilled:

(a)	the request by the regulatory authority for assistance is received by the Authority on or after the appointed day;
(b)	the assistance is intended to enable the regulatory authority, or any other authority of the foreign country, to carry out supervision, investigation or enforcement;
(c)	the contravention of the law or regulatory requirement to which the request relates took place on or after the appointed day;
(d)	the regulatory authority has given a written undertaking that any material or copy thereof obtained pursuant to its request shall not be used for any purpose other than a purpose that is specified in the request and approved by the Authority;
(e)	the regulatory authority has given a written undertaking not to disclose to a third party (other than a designated third party of the foreign country in accordance with paragraph (f)) any material received pursuant to the request unless the regulatory authority is compelled to do so by the law or a court of the foreign country;
(f)	the regulatory authority has given a written undertaking to obtain the prior consent of the Authority before disclosing any material received pursuant to the request to a designated third party, and to make such disclosure only in accordance with such conditions as may be imposed by the Authority;
(g)	the material requested for is of sufficient importance to the carrying out of the supervision, investigation or enforcement to which the request relates and cannot reasonably be obtained by any other means;
(h)	the matter to which the request relates is of sufficient gravity; and
(i)	the rendering of assistance will not be contrary to the public interest or the interest of the investing public.

(2) For the purposes of subsection (1)(e) and (f), “designated third party”, in relation to a foreign country, means —

(a)	any person or body responsible for supervising the regulatory authority in question;
(b)	any authority of the foreign country responsible for carrying out the supervision, investigation or enforcement in question; or
(c)	any authority of the foreign country exercising a function that corresponds to a regulatory function of the Authority under the Securities Industry Act (Cap. 289).

Other factors to consider for provision of assistance

49S. In deciding whether to grant a request for assistance from a regulatory authority of a foreign country for assistance referred to in section 49T, the Authority may also have regard to the following:

(a)	whether the act or omission that is alleged to constitute the contravention of the law or regulatory requirement to which the request relates would, if it had occurred in Singapore, have constituted an offence under this Act or any regulations made thereunder;
(b)	whether the regulatory authority has given or is willing to give an undertaking to the Authority to comply with a future request by the Authority to the regulatory authority for similar assistance;
(c)	whether the regulatory authority has given or is willing to give an undertaking to the Authority to contribute towards the costs of providing the assistance that the regulatory authority has requested for.

Assistance that may be rendered

49T.—(1) Notwithstanding the provisions of any prescribed written law or any requirement imposed thereunder or any rule of law, the Authority or any person authorised by the Authority may, in relation to a request by a regulatory authority of a foreign country for assistance —

(a)	transmit to the regulatory authority any material in the possession of the Authority that is requested by the regulatory authority or a copy thereof;
(b)	order any person to furnish to the Authority any material that is requested by the regulatory authority or a copy thereof, and transmit the material or copy to the regulatory authority;
(c)	order any person to transmit directly to the regulatory authority any material that is requested by the regulatory authority or a copy thereof;
(d)	order a person to make an oral statement to the Authority on any information requested by the regulatory authority, record such statement, and transmit the recorded statement to the regulatory authority; or
(e)	request any Ministry, Government department or any statutory authority to furnish to the Authority any material that is requested by the regulatory authority or a copy thereof, and transmit the material or copy to the regulatory authority.

(2) The assistance referred to in subsection (1)(c) may only be rendered if the material sought is to enable the regulatory authority to carry out investigation or enforcement.

(3) An order under subsection (1)(b), (c) or (d) shall have effect notwithstanding any obligations as to secrecy or other restrictions upon the disclosure of information imposed by any rule of law, any prescribed written law or any requirement imposed thereunder, any contract or any rule of professional conduct.

(4) Nothing in this section shall compel an advocate and solicitor —

(a)	to furnish or transmit any material or copy thereof that contains; or
(b)	to disclose,

a privileged communication made by or to him in that capacity.

(5) If the advocate and solicitor refuses to furnish or transmit the material or copy or to disclose such privileged communication, he shall nevertheless be obliged to give the name and address (if he knows them) of the person to whom or by or on behalf of whom the communication was made.

(6) A person is not excused from making an oral statement pursuant to an order made under subsection (1)(d) on the ground that the statement might tend to incriminate him but, where the person claims before making the statement that the statement might tend to incriminate him, that statement is not admissible in evidence against him in criminal proceedings other than proceedings for an offence under section 49U.

Offences

49U. Any person who —

(a)	without reasonable excuse refuses or fails to comply with an order under section 49T(1)(b), (c) or (d);
(b)	in purported compliance with an order under section 49T(1)(b) or (c), furnishes to the Authority or transmits to the regulatory authority any material or copy known to the person to be false or misleading in a material particular; or
(c)	in purported compliance with an order made under section 49T(1)(d), makes a statement to the Authority that is false or misleading in a material particular,

shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 2 years or to both.

Immunities

49V.—(1) No civil or criminal proceedings, other than proceedings for an offence under section 49U, shall lie against any person for —

(a)	furnishing to the Authority or transmitting any material or copy thereof to the Authority or a regulatory authority of a foreign country if he had furnished or transmitted that material or copy in good faith in compliance with an order made under section 49T(1)(b) or (c);
(b)	making a statement to the Authority in good faith and in compliance with an order made under section 49T(1)(d); or
(c)	doing or omitting to do any act, if he had done or omitted to do the act in good faith and as a result of complying with such an order.

(2) Any person who complies with an order referred to in subsection (1)(a) or (b) shall not be treated as being in breach of any restriction upon the disclosure of information or thing imposed by any rule of law, any prescribed written law or any requirement imposed thereunder, any contract or any rule of professional conduct.”.

Repeal and re-enactment of section 56

12. Section 56 of the principal Act is repealed and the following section substituted therefor:

“Penalties

56. Any person who contravenes any of the provisions of this Part shall be guilty of an offence and shall be liable on conviction —

(a)	in the case of a person who is not a body corporate, to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 7 years or to both; or
(b)	in the case of a body corporate, to a fine not exceeding $500,000.”.