4. Parts II and III of the principal Act are repealed and the following Parts substituted therefor:“PART II 5. The objectives of this Part are —(a) | to promote fair, orderly and transparent markets; | (b) | to facilitate efficient markets for the allocation of capital and the transfer of risks; and | (c) | to reduce systemic risk. |
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Division 1 — Establishment of Markets |
Requirement for approval or recognition |
6.—(1) No person shall establish or operate a market, or hold himself out as operating a market, unless the person is —(a) | an approved exchange; or | (b) | a recognised market operator. |
(2) No person shall hold himself out —(a) | as an approved exchange unless he is an approved exchange; or | (b) | as a recognised market operator unless he is a recognised market operator. |
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(3) Except with the written approval of the Authority, no person other than an approved exchange shall take or use, or have attached to or exhibited at any place —(a) | the title or description “securities exchange”, “stock exchange”, “futures exchange” or “derivatives exchange” in any language; or | (b) | any title or description which resembles a title or description referred to in paragraph (a). |
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(4) Any person who contravenes subsection (1) or (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction. |
(5) Any person who contravenes subsection (2) 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 not exceeding $2,000 for every day or part thereof during which the offence continues after conviction. |
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Subdivision (1) — Approved exchange and recognised market operator |
Application for approval or recognition |
7.—(1) A corporation may apply to the Authority to be —(a) | approved as an approved exchange; or | (b) | recognised as a recognised market operator. |
(2) An application made under subsection (1) shall be —(a) | made in such form and manner as the Authority may prescribe; and | (b) | accompanied by a non-refundable prescribed application fee, which shall be paid in the manner specified by the Authority. |
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(3) The Authority may require an applicant to furnish it with such information or documents as the Authority considers necessary in relation to the application. |
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Power of Authority to approve exchanges and recognise market operators |
8.—(1) Where —(a) | a corporation has made an application under section 7(1)(a); | (b) | a corporation which is a recognised market operator has made an application under section 11(1) to change its status to that of an approved exchange; or | (c) | the Authority has conducted a review under section 11(5) and has determined that a corporation would be more appropriately regulated as an approved exchange, |
the Authority may approve the corporation as an approved exchange. |
(2) Where —(a) | a corporation has made an application under section 7(1)(b); | (b) | a corporation which is an approved exchange has made an application under section 11(1) to change its status to that of a recognised market operator; or | (c) | the Authority has conducted a review under section 11(5) and has determined that a corporation would be more appropriately regulated as a recognised market operator, |
the Authority may recognise the corporation as a recognised market operator. |
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(3) Notwithstanding subsections (1) and (2), the Authority may, with the consent of the applicant —(a) | treat an application under section 7(1)(a) as an application under section 7(1)(b) if it is of the opinion that the applicant would be more appropriately regulated as a recognised market operator; or | (b) | treat an application under section 7(1)(b) as an application under section 7(1)(a) if it is of the opinion that the applicant would be more appropriately regulated as an approved exchange. |
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(4) The Authority may approve a corporation as an approved exchange under subsection (1) or recognise a corporation as a recognised market operator under subsection (2) subject to such conditions or restrictions as the Authority may think fit to impose by notice in writing, including conditions or restrictions relating to —(a) | the activities that the corporation may undertake; | (b) | the securities or futures contracts that may be traded on any market established or operated by the corporation; and | (c) | the nature of the investors or participants who may use, invest in or participate in the securities or futures contracts traded on any market established or operated by the corporation. |
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(5) The Authority may, at any time, by notice in writing to the corporation, vary any condition or restriction or impose such further condition or restriction as it may think fit. |
(6) An approved exchange or a recognised market operator shall, for the duration of the approval or recognition, satisfy all conditions and restrictions that may be imposed on it under subsections (4) and (5). |
(7) The Authority may refuse to approve a corporation as an approved exchange or recognise a corporation as a recognised market operator if —(a) | the corporation has not provided the Authority with such information relating to —(i) | the corporation or any person employed by or associated with the corporation for the purposes of the corporation’s business; or | (ii) | any circumstances likely to affect the corporation’s manner of conducting business, |
as the Authority may require; |
| (b) | any information or document provided by the corporation to the Authority is false or misleading; | (c) | the corporation or a substantial shareholder of the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (d) | execution against the corporation or a substantial shareholder of the corporation in respect of a judgment debt has been returned unsatisfied in whole or in part; | (e) | a receiver, a receiver and manager, a judicial manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the corporation or a substantial shareholder of the corporation; | (f) | the corporation or a substantial shareholder of the corporation has, whether in Singapore or elsewhere, entered into a compromise or scheme of arrangement with the creditors of the corporation or shareholder, as the case may be, being a compromise or scheme of arrangement that is still in operation; | (g) | the corporation, a substantial shareholder of the corporation or any officer of the corporation —(i) | has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that the corporation, shareholder or officer, as the case may be, acted fraudulently or dishonestly; or | (ii) | has been convicted of an offence under this Act; |
| (h) | the Authority is not satisfied as to the educational or other qualifications or experience of the officers or employees of the corporation, having regard to the nature of the duties they are to perform in connection with the establishment or operation of any market; | (i) | the corporation fails to satisfy the Authority that the corporation is a fit and proper person or that all of its officers, employees and substantial shareholders are fit and proper persons; | (j) | the Authority has reason to believe that the corporation may not be able to act in the best interests of investors or its members, participants or customers, having regard to the reputation, character, financial integrity and reliability of the corporation or its officers, employees or substantial shareholders; | (k) | the Authority is not satisfied as to —(i) | the financial standing of the corporation or any of its substantial shareholders; or | (ii) | the manner in which the business of the corporation is to be conducted; |
| (l) | the Authority is not satisfied as to the record of past performance or expertise of the corporation, having regard to the nature of the business which the corporation may carry on in connection with the establishment or operation of any market; | (m) | there are other circumstances which are likely to —(i) | lead to the improper conduct of business by the corporation or any of its officers, employees or substantial shareholders; or | (ii) | reflect discredit on the manner of conducting the business of the corporation or any of its substantial shareholders; |
| (n) | in the case of any market that the corporation operates, the Authority has reason to believe that the corporation, or any of its officers or employees, will not operate a fair, orderly and transparent market; | (o) | the corporation does not satisfy the criteria prescribed under section 9 to be approved as an approved exchange or recognised as a recognised market operator, as the case may be; or | (p) | the Authority is of the opinion that it would be contrary to the interests of the public to approve or recognise the corporation. |
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(8) Subject to subsection (9), the Authority shall not refuse to approve a corporation as an approved exchange or recognise a corporation as a recognised market operator under subsection (7) without giving the corporation an opportunity to be heard. |
(9) The Authority may refuse to approve a corporation as an approved exchange or recognise a corporation as a recognised market operator on any of the following grounds without giving the corporation an opportunity to be heard:(a) | the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (b) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the corporation; | (c) | the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly. |
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(10) The Authority shall give notice in the Gazette of any corporation approved as an approved exchange under subsection (1) or recognised as a recognised market operator under subsection (2), and such notice may include the conditions or restrictions imposed by the Authority on the corporation under subsection (4)(b) in relation to the securities or futures contracts that may be traded on any market established or operated by the corporation. |
(11) Any applicant who is aggrieved by a refusal of the Authority to grant an approval under subsection (1) or a recognition under subsection (2) may, within 30 days after the applicant is notified of the decision, appeal to the Minister whose decision shall be final. |
(12) Any approved exchange or recognised market operator which contravenes subsection (6) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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General criteria to be taken into account by Authority |
9.—(1) The Authority may prescribe the criteria which it may take into account for the purposes of deciding —(a) | whether an applicant referred to in section 7(1) or 11 (1) should be approved as an approved exchange or recognised as a recognised market operator; | (b) | whether an approved exchange or a recognised market operator that is subject to a review by the Authority under section 11(5) should be approved as an approved exchange or recognised as a recognised market operator; and | (c) | the conditions or restrictions that the Authority may impose under section 8(4) or (5). |
(2) Without prejudice to section 8 and subsection (1), the Authority may, for the purposes of recognising an operator of an overseas market as a recognised market operator under section 8(2), have regard, in addition to any criteria prescribed under subsection (1), to —(a) | whether adequate arrangements exist for co-operation between the Authority and the financial services regulatory authority responsible for the supervision of the operator in the country or territory in which the head office or principal place of business of the operator is situated; and | (b) | whether the operator is, in the country or territory in which the head office or principal place of business of the operator is situated, subject to requirements and supervision comparable, in the degree to which the objectives specified in section 5 are achieved, to the requirements and supervision to which approved exchanges and recognised market operators are subject under this Act. |
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(3) In considering whether it is satisfied that the operator of an overseas market has met the requirements mentioned in subsection (2), the Authority may have regard to —(a) | the relevant laws and practices of the country or territory in which the head office or principal place of business of the operator is situated; and | (b) | the rules and practices of the operator. |
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(4) In this section, “operator of an overseas market” means a person whose head office is situated in a country or territory outside Singapore, and who is authorised to operate a market by a financial services regulatory authority of —(a) | that country or territory; or | (b) | the country or territory in which the principal place of business of that person is situated. |
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Annual fees payable by approved exchange and recognised market operator |
10.—(1) Every approved exchange and recognised market operator shall pay to the Authority such annual fees as may be prescribed in such manner as may be specified by the Authority.(2) The Authority may, where it considers appropriate, refund or remit the whole or any part of any annual fee paid or payable to it. |
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11.—(1) A corporation which is an approved exchange or a recognised market operator may apply to the Authority to change its status in the manner referred to in subsection (6).(2) An application under subsection (1) shall be made in such form and manner as the Authority may prescribe. |
(3) An application made under subsection (1) shall be accompanied by a non-refundable prescribed application fee, which shall be paid in the manner specified by the Authority. |
(4) The Authority may require an applicant to furnish it with such information or documents as the Authority considers necessary in relation to the application. |
(5) The Authority may, from time to time, on its own initiative, review the status of a corporation that is an approved exchange or a recognised market operator under this Part in accordance with the criteria prescribed under section 9. |
(6) Where an application is made by a corporation under subsection (1) or where a review of the status of a corporation is conducted by the Authority under subsection (5), the Authority may —(a) | where the corporation is an approved exchange, withdraw the approval as such and recognise the corporation as a recognised market operator under section 8(2); | (b) | where the corporation is a recognised market operator, withdraw the recognition as such and approve the corporation as an approved exchange under section 8(1); or | (c) | make no change to the status of the corporation as an approved exchange or a recognised market operator. |
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(7) Where an application is made under subsection (1), the Authority shall not exercise its power under subsection (6)(c) without giving the corporation an opportunity to be heard. |
(8) Where a review of the status of a corporation is conducted by the Authority on its own initiative under subsection (5), the Authority shall not exercise its powers under subsection (6)(a) or (b) without giving the corporation an opportunity to be heard. |
(9) Any corporation which is aggrieved by a decision of the Authority made in relation to the corporation after a review under subsection (5) may, within 30 days after the corporation is notified of the decision, appeal to the Minister whose decision shall be final. |
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Cancellation of approval or recognition |
12.—(1) An approved exchange or a recognised market operator which intends to cease operating its market or, where it operates more than one market, all of its markets, may apply to the Authority to cancel its approval as an approved exchange or recognition as a recognised market operator, as the case may be.(2) The Authority may cancel the approval or recognition if it is satisfied that the approved exchange or recognised market operator referred to in subsection (1) has ceased operating its market or all of its markets, as the case may be. |
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Power of Authority to revoke approval and recognition |
13.—(1) The Authority may revoke any approval of a corporation as an approved exchange under section 8(1) or any recognition of a corporation as a recognised market operator under section 8(2) if —(a) | there exists a ground under section 8(7) on which the Authority may refuse an application; | (b) | the corporation does not commence operating its market or, where it operates more than one market, all of its markets, within 12 months from the date on which it was granted the approval under section 8(1) or recognition under section 8(2), as the case may be; | (c) | the corporation ceases to operate its market or, where it operates more than one market, all of its markets; | (d) | the corporation contravenes —(i) | any condition or restriction applicable in respect of its approval or recognition, as the case may be; | (ii) | any direction issued to it by the Authority under this Act; or | (iii) | any provision in this Act; |
| (e) | the corporation operates in a manner that is, in the opinion of the Authority, contrary to the interests of the public; or | (f) | any information or document provided by the corporation to the Authority is false or misleading. |
(2) Subject to subsection (3), the Authority shall not revoke under subsection (1) any approval under section 8(1) or recognition under section 8(2) that was granted to a corporation without giving the corporation an opportunity to be heard. |
(3) The Authority may revoke an approval under section 8(1) or a recognition under section 8(2) that was granted to a corporation on any of the following grounds without giving the corporation an opportunity to be heard:(a) | the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (b) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the corporation; | (c) | the corporation has been convicted, whether in Singapore or elsewhere, of an offence —(i) | involving fraud or dishonesty; or | (ii) | the conviction for which involved a finding that it had acted fraudulently or dishonestly. |
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(4) For the purposes of subsection (1)(c), a corporation shall be deemed to have ceased to operate its market if —(a) | it has ceased to operate the market for more than 30 days, unless it has obtained the prior approval of the Authority to do so; or | (b) | it has ceased to operate the market under a direction issued by the Authority under section 46. |
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(5) Any corporation which is aggrieved by a decision of the Authority made in relation to the corporation under subsection (1) may, within 30 days after the corporation is notified of the decision, appeal to the Minister whose decision shall be final. |
(6) Notwithstanding the lodging of an appeal under subsection (5), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister. |
(7) The Minister may, when deciding an appeal under subsection (5), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(8) Any revocation of approval or recognition of a corporation referred to in subsection (1) shall not operate so as to —(a) | avoid or affect any agreement, transaction or arrangement entered into on a market operated by the corporation, whether the agreement, transaction or arrangement was entered into before or after the revocation of the approval or recognition; or | (b) | affect any right, obligation or liability arising under such agreement, transaction or arrangement. |
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(9) The Authority shall give notice in the Gazette of any revocation of approval or recognition referred to in subsection (1). |
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Subdivision (2) — Exempt Market Operator |
Power of Authority to exempt corporations from approval or recognition |
14.—(1) A corporation that wishes to establish or operate a market may apply to the Authority, in such form and manner as the Authority may prescribe, to be exempted from the requirement under section 6(1) to be an approved exchange or a recognised market operator.(2) The Authority may exempt a corporation referred to in subsection (1) from the requirement under section 6(1) if, in the opinion of the Authority, the objectives specified in section 5 can be achieved without regulating the corporation as an approved exchange or a recognised market operator. |
(3) An application made under subsection (1) shall be accompanied by a non-refundable prescribed application fee, which shall be paid in the manner specified by the Authority. |
(4) The Authority may require an applicant to furnish it with such information or documents as the Authority considers necessary in relation to the application. |
(5) The Authority may, by notice in writing, impose on a corporation exempted under subsection (2) such conditions or restrictions relating to the exemption as the Authority may think fit, including conditions or restrictions relating to —(a) | the activities that the corporation may undertake; | (b) | the securities or futures contracts that may be traded on any market established or operated by the corporation; and | (c) | the nature of the investors or participants who may use, participate or invest in the securities or futures contracts traded on any market established or operated by the corporation. |
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(6) The Authority may, at any time, by notice in writing to a corporation exempted under subsection (2), vary any condition or restriction referred to in subsection (5) or impose such further condition or restriction relating to the exemption as the Authority may think fit. |
(7) The Authority shall give notice in the Gazette of any corporation exempted under subsection (2), and such notice may include the conditions or restrictions imposed by the Authority on the corporation under subsection (5)(b) in relation to the securities or futures contracts that may be traded on any market established or operated by the corporation. |
(8) The Authority may —(a) | exempt any corporation operating any market from the requirement under section 6(1) to be an approved exchange or a recognised market operator; | (b) | by order published in the Gazette, declare that corporation to be an exempt market operator; and | (c) | by notice in writing to that corporation, impose such conditions or restrictions relating to the exemption as the Authority may think fit. |
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(9) The Authority may —(a) | exempt corporations operating any class of markets from the requirement under section 6(1) to be approved exchanges or recognised market operators, subject to such conditions or restrictions as the Authority may think fit to impose by regulations; and | (b) | by order published in the Gazette, declare such corporations to be exempt market operators. |
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(10) An exempt market operator shall comply with all conditions or restrictions imposed on it under subsection (5), (6) or (8), as the case may be. |
(11) Any corporation which contravenes subsection (10) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Power of Authority to revoke exemption |
15.—(1) The Authority may revoke any exemption granted to a corporation under section 14(2), (8) or (9) if —(a) | the corporation does not commence operating its market or, where it operates more than one market, all of its markets, within 12 months from the date on which it was granted the exemption; | (b) | the corporation ceases to operate its market or, where it operates more than one market, all of its markets; | (c) | the corporation contravenes —(i) | any condition or restriction relating to the exemption; | (ii) | any direction issued to it by the Authority under this Act; or | (iii) | any provision in this Act; |
| (d) | the Authority is of the opinion that the corporation has operated in a manner that is contrary to the interests of the public; | (e) | the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (f) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the corporation; | (g) | the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly; | (h) | the Authority is of the opinion that the corporation would be more appropriately regulated as an approved exchange or a recognised market operator; or | (i) | any information or document provided by the corporation to the Authority is false or misleading. |
(2) Subject to subsection (3), the Authority shall not revoke under subsection (1) any exemption granted to a corporation without giving the corporation an opportunity to be heard. |
(3) The Authority may revoke an exemption granted to a corporation on any of the following grounds without giving the corporation an opportunity to be heard:(a) | the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (b) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect, of any property of the corporation; | (c) | the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly. |
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(4) For the purposes of subsection (1)(b), a corporation shall be deemed to have ceased to operate its market if —(a) | it has ceased to operate the market for more than 30 days, unless it has obtained the prior approval of the Authority to do so; or | (b) | it has ceased to operate the market under a direction issued by the Authority under section 46. |
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(5) A corporation which is aggrieved by a decision of the Authority made in relation to the corporation under subsection (1) may, within 30 days after the corporation is notified of the decision, appeal to the Minister whose decision shall be final. |
(6) Notwithstanding the lodging of an appeal under subsection (5), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister. |
(7) The Minister may, when deciding an appeal under subsection (5), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(8) Any revocation under subsection (1) of an exemption granted to a corporation shall not operate so as to —(a) | avoid or affect any agreement, transaction or arrangement entered into on a market operated by the corporation, whether the agreement, transaction or arrangement was entered into before or after the revocation of the exemption; or | (b) | affect any right, obligation or liability arising under such agreement, transaction or arrangement. |
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(9) The Authority shall give notice in the Gazette of any revocation of an exemption referred to in subsection (1). |
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Division 2 — Regulation of Approved Exchanges |
Subdivision (1) — Obligations of Approved Exchanges |
16.—(1) An approved exchange shall, in respect of every market it operates —(a) | as far as is reasonably practicable, ensure that the market is fair, orderly and transparent; | (b) | manage any risks associated with its business and operations prudently; | (c) | in discharging its obligations under this Act, not act contrary to the interests of the public, having particular regard to the interests of the investing public; | (d) | ensure that access for participation in its facilities is subject to criteria that are fair and objective, and that are designed to ensure the orderly functioning of the market and to protect the interests of the investing public; | (e) | maintain business rules and, where appropriate, listing rules that make satisfactory provision for —(i) | a fair, orderly and transparent market in securities or futures contracts that are traded through its facilities; and | (ii) | the proper regulation and supervision of its members; |
| (f) | enforce compliance with its business rules and, where appropriate, its listing rules; | (g) | have sufficient financial, human and system resources —(i) | to operate a fair, orderly and transparent market; | (ii) | to meet contingencies or disasters; and | (iii) | to provide adequate security arrangements; and |
| (h) | ensure that it appoints or employs fit and proper persons as its chairman, chief executive officer, directors and key management officers. |
(2) In subsection (1)(g), “contingencies or disasters” includes technical disruptions occurring within automated systems. |
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Obligation to notify Authority of certain matters |
17.—(1) An approved exchange shall, as soon as practicable after the occurrence of any of the following circumstances, notify the Authority of the circumstance:(a) | any material change to the information provided by the approved exchange in its application under section 7(1) or 11(1); | (b) | the carrying on of any business by the approved exchange other than —(i) | the business of operating a market; | (ii) | a business incidental to operating a market; or | (iii) | such business or class of businesses as the Authority may prescribe; |
| (c) | the acquisition by the approved exchange of a substantial shareholding in a corporation which does not carry on —(i) | the business of operating a market; | (ii) | a business incidental to operating a market; or | (iii) | such business or class of businesses as the Authority may prescribe; |
| (d) | the approved exchange becoming aware of a financial irregularity or other matter which in its opinion —(i) | may affect its ability to discharge its financial obligations; or | (ii) | may affect the ability of a member of the approved exchange to meet its financial obligations to the approved exchange; |
| (e) | the approved exchange reprimanding, fining, suspending, expelling or otherwise taking disciplinary action against a member of the approved exchange; | (f) | any other matter that the Authority may prescribe by regulations or specify by notice in writing to the approved exchange. |
(2) Without prejudice to the generality of section 46(1), the Authority may, at any time after receiving a notification referred to in subsection (1), issue directions to the approved exchange —(a) | where the notification relates to a matter referred to in subsection (1)(b) —(i) | to cease carrying on the first-mentioned business referred to in subsection (1)(b); or | (ii) | to carry on the first-mentioned business referred to in subsection (1)(b) subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 46(1); or |
| (b) | where the notification relates to a matter referred to in subsection (1)(c) —(i) | to dispose of the shareholding referred to in subsection (1)(c); or | (ii) | to exercise its rights relating to such shareholding subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 46(1), |
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and the approved exchange shall comply with such directions. |
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Obligation to maintain proper records |
18. An approved exchange shall maintain a record of all transactions effected through its facilities in such form and manner as the Authority may prescribe, including —(a) | the extent to which the record includes details of each transaction; and | (b) | the period of time that the record is to be maintained. |
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Obligation to submit periodic reports |
19. An approved exchange shall submit to the Authority such reports in such form, manner and frequency as the Authority may prescribe. |
Obligation to assist Authority |
20. An approved exchange shall provide such assistance to the Authority as the Authority may require for the performance of the functions and duties of the Authority, including the furnishing of such returns and the provision of —(a) | such books and other information —(i) | relating to the business of the approved exchange; or | (ii) | in respect of such dealings in securities or trading in futures contracts; and |
| (b) | such other information, |
as the Authority may require for the proper administration of this Act. |
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Obligation to maintain confidentiality |
21.—(1) Subject to subsection (2), an approved exchange and its officers and employees shall maintain, and aid in maintaining, the confidentiality of all user information that —(a) | comes to the knowledge of the approved exchange or any of its officers or employees; or | (b) | is in the possession of the approved exchange or any of its officers or employees. |
(2) Subsection (1) shall not apply to —(a) | the disclosure of user information for such purposes, or in such circumstances, as the Authority may prescribe; | (b) | any disclosure of user information which is authorised by the Authority to be disclosed or furnished; or | (c) | the disclosure of user information pursuant to any requirement imposed under any written law or order of court in Singapore. |
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(3) For the avoidance of doubt, nothing in this section shall be construed as preventing an approved exchange from entering into a written agreement with a user which obliges the approved exchange to maintain a higher degree of confidentiality than that specified in this section. |
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Penalties under this Subdivision |
22. Any approved exchange which contravenes section 16(1), 17, 18, 19, 20 or 21 (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
Subdivision (2) — Rules of Approved Exchanges |
Business rules and listing rules of approved exchanges |
23.—(1) Without limiting the generality of sections 16 and 45 —(a) | the Authority may prescribe the matters that an approved exchange shall make provision for in the business rules or listing rules of the approved exchange; and | (b) | the approved exchange shall make provision for those matters in its business rules or listing rules, as the case may be. |
(2) An approved exchange shall not make any amendment to its business rules or listing rules unless it complies with such requirements as the Authority may prescribe. |
(3) In this Subdivision, any reference to an amendment to a business rule or listing rule shall be construed as a reference to a change to the scope of, or to any requirement, obligation or restriction under, the business rule or listing rule, as the case may be, whether the change is made by an alteration to the text of the rule or by any other notice issued by or on behalf of the approved exchange. |
(4) Any approved exchange which contravenes subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Business rules of approved exchanges have effect as contract |
24.—(1) The business rules of an approved exchange shall be deemed to be, and shall operate as, a binding contract —(a) | between the approved exchange and each member; and | (b) | between each member and every other member. |
(2) The approved exchange and each member shall be deemed to have agreed to observe and perform the provisions of the business rules that are in force for the time being, so far as those provisions are applicable to the approved exchange or that member, as the case may be. |
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Power of court to order observance or enforcement of business rules or listing rules |
25.—(1) Where any person who is under an obligation to comply with, observe, enforce or give effect to the business rules or listing rules of an approved exchange fails to do so, the High Court may, on the application of the Authority, an approved exchange or a person aggrieved by the failure, and after giving the first-mentioned person an opportunity to be heard, make an order directing the first-mentioned person to comply with, observe, enforce or give effect to those business rules or listing rules.(2) A person against whom an order under subsection (1) may be made shall be —(a) | a corporation which —(i) | has been admitted to the official list of an approved exchange; and | (ii) | has not been removed from that official list; |
| (b) | a person associated with a corporation which —(i) | has been admitted to the official list of an approved exchange; and | (ii) | has not been removed from that official list, |
to the extent to which the business rules or listing rules purport to apply to him; or |
| (c) | an approved exchange. |
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(3) This section is in addition to, and not in derogation of, any other remedy available to an aggrieved person referred to in subsection (1). |
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Non-compliance with business rules or listing rules not to substantially affect rights of person |
26. Any failure by an approved exchange to comply with —(a) | this Act; | (b) | its business rules; or | (c) | where applicable, its listing rules, |
in relation to a matter shall not prevent the matter from being treated, for the purposes of this Act, as done in accordance with the business rules or listing rules so long as the failure does not substantially affect the rights of any person entitled to require compliance with the business rules or listing rules. |
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Subdivision (3) — Matters Requiring Approval of Authority |
Control of substantial shareholding in approved exchanges |
27.—(1) No person shall enter into any agreement to acquire shares in an approved exchange by virtue of which he would, if the agreement had been carried out, become a substantial shareholder of the approved exchange without first obtaining the approval of the Authority to enter into the agreement.(2) No person shall become —(a) | a 12% controller; or | (b) | a 20% controller, |
of an approved exchange without first obtaining the approval of the Authority. |
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(3) In subsection (2) —“12% controller” means a person, not being a 20% controller, who alone or together with his associates —(a) | holds not less than 12% of the shares in the approved exchange; or | (b) | is in a position to control not less than 12% of the votes in the approved exchange; |
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“20% controller” means a person who, alone or together with his associates —(a) | holds not less than 20% of the shares in the approved exchange; or | (b) | is in a position to control not less than 20% of the votes in the approved exchange. |
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(4) In this section —(a) | a person holds a share if —(i) | he is deemed to have an interest in that share under section 7(6) to (10) of the Companies Act (Cap. 50); or | (ii) | he otherwise has a legal or an equitable interest in that share, except such interest as is to be disregarded under section 7(6) to (10) of the Companies Act; |
| (b) | a reference to the control of a percentage of the votes in an approved exchange shall be construed as a reference to the control, whether direct or indirect, of that percentage of the total number of votes that might be cast in a general meeting of the approved exchange; and | (c) | a person, A, is an associate of another person, B, if —(i) | A is the spouse, a parent, remoter lineal ancestor or step-parent, a son, daughter, remoter issue, step-son or step-daughter or a brother or sister of B; | (ii) | A is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B or, where B is a corporation, of the directors of B; | (iii) | B is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A or, where A is a corporation, of the directors of A; | (iv) | A is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B; | (v) | B is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A; | (vi) | A is a related corporation of B; | (vii) | A is a corporation in which B, alone or together with other associates of B as described in sub-paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in A; | (viii) | B is a corporation in which A, alone or together with other associates of A as described in sub-paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in B; or | (ix) | A is a person with whom B has an agreement or arrangement, whether oral or in writing and whether express or implied, to act together with respect to the acquisition, holding or disposal of shares or other interests in, or with respect to the exercise of their votes in relation to, the approved exchange. |
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(5) The Authority may grant its approval referred to in subsection (1) or (2) subject to such conditions or restrictions as the Authority may think fit. |
(6) Without prejudice to subsection (11), the Authority may, for the purposes of securing compliance with subsection (1) or (2), or any condition or restriction imposed under subsection (5), by notice in writing, direct the transfer or disposal of all or any of the shares of an approved exchange in which a substantial shareholder, 12% controller or 20% controller of the approved exchange has an interest. |
(7) Until a person to whom a direction has been issued under subsection (6) transfers or disposes of the shares which are the subject of the direction, and notwithstanding anything to the contrary in the Companies Act (Cap. 50) or the memorandum or articles of association or other constituent document or documents of the approved exchange —(a) | no voting rights shall be exercisable in respect of the shares which are the subject of the direction; | (b) | the approved exchange shall not offer or issue any shares (whether by way of rights, bonus, share dividend or otherwise) in respect of the shares which are the subject of the direction; and | (c) | except in a liquidation of the approved exchange, the approved exchange shall not make any payment (whether by way of cash dividend, dividend in kind or otherwise) in respect of the shares which are the subject of the direction. |
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(8) Any issue of shares by an approved exchange in contravention of subsection (7)(b) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return those shares to the approved exchange, upon which the approved exchange shall return to the person any payment received from him in respect of those shares. |
(9) Any payment made by an approved exchange in contravention of subsection (7)(c) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return the payment he has received to the approved exchange. |
(10) The Authority may exempt —(a) | any person or class of persons; or | (b) | any class or description of shares or interests in shares, |
from the requirement under subsection (1) or (2), subject to such conditions or restrictions as may be imposed by the Authority. |
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(11) Any person who contravenes subsection (1) or (2), or any condition or restriction imposed by the Authority under subsection (5), shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
(12) Any person who contravenes subsection (7)(b) or (c), (8) or (9) or any direction issued by the Authority under subsection (6) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Approval of chairman, chief executive officer, director and key persons |
28.—(1) No approved exchange shall appoint a person as its chairman, chief executive officer or director unless the approved exchange has obtained the approval of the Authority.(2) The Authority may, by notice in writing, require an approved exchange to obtain the approval of the Authority for the appointment of any person to any key management position or committee of the approved exchange and the approved exchange shall comply with the notice. |
(3) An application for approval under subsection (1) or (2) shall be made in such form and manner as the Authority may prescribe. |
(4) Without prejudice to the generality of section 45 and to any other matter that the Authority may consider relevant, the Authority may, in determining whether to grant its approval under subsection (1) or (2), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing. |
(5) Subject to subsection (6), the Authority shall not refuse an application for approval under this section without giving the approved exchange an opportunity to be heard. |
(6) The Authority may refuse an application for approval on any of the following grounds without giving the approved exchange an opportunity to be heard:(a) | the person is an undischarged bankrupt, whether in Singapore or elsewhere; | (b) | the person has been convicted, whether in Singapore or elsewhere, of an offence —(i) | involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and | (ii) | punishable with imprisonment for a term of 3 months or more. |
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(7) Where the Authority refuses an application for approval under this section, the Authority need not give the person who was proposed to be appointed an opportunity to be heard. |
(8) An approved exchange shall, as soon as practicable, give written notice to the Authority of the resignation or removal of its chairman, chief executive officer, director or person referred to in the notice issued by the Authority under subsection (2). |
(9) Without prejudice to the generality of section 45, the Authority may make regulations relating to the composition and duties of the board of directors or any committee of an approved exchange. |
(10) In this section, “committee” includes any committee of directors, disciplinary committee, appeals committee or any body responsible for disciplinary action against a member of an approved exchange. |
(11) The Authority may exempt any approved exchange or class of approved exchanges from the requirement under subsection (1) or (8), subject to such conditions or restrictions as may be imposed by the Authority. |
(12) Any approved exchange which contravenes subsection (1), (2) or (8) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
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Power of Authority to approve instruments, contracts and transactions |
29.—(1) No approved exchange shall, without the approval of the Authority, list, de-list or permit the trading of —(a) | any futures contract; | (b) | any right, option or derivative in respect of any debentures, stocks or shares; | (c) | any right under a contract for differences or under any other contract the purpose or purported purpose of which is to secure a profit or avoid a loss by reference to fluctuations in —(i) | the value or price of any debentures, stocks or shares; | (ii) | the value or price of any group of debentures, stocks or shares; or | (iii) | an index of any debentures, stocks or shares; or |
| (d) | such other instrument, contract or transaction, or class of instruments, contracts or transactions as the Authority may prescribe, |
on any market operated by the approved exchange. |
(2) The Authority may grant approval for an approved exchange to list, de-list or permit the trading of any instrument, contract or transaction, or any class of instruments, contracts or transactions, referred to subsection (1), subject to such conditions or restrictions as the Authority may think fit to impose by notice in writing to the approved exchange. |
(3) Any approved exchange which contravenes subsection (1) or any of the conditions or restrictions imposed under subsection (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
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Listing of approved exchanges on securities market |
30.—(1) The securities of an approved exchange shall not be listed for quotation on a securities market that is operated by the approved exchange or any of its related corporations unless the approved exchange and the operator of the securities market have entered into such arrangements as the Authority may require —(a) | for dealing with possible conflicts of interest that may arise from such listing; and | (b) | for the purpose of ensuring the integrity of the trading of the securities of the approved exchange on the securities market. |
(2) Where the securities of an approved exchange are listed for quotation on a securities market operated by the approved exchange or any of its related corporations, the listing rules of the securities market shall be deemed to allow the Authority to act in place of the operator of the securities market in making decisions and taking action, or to require the operator of the securities market to make decisions and to take action on behalf of the Authority, on —(a) | the admission or removal of the approved exchange to or from the official list of the securities market; and | (b) | granting approval for the securities of the approved exchange to be, or stopping or suspending the securities of the approved exchange from being, listed for quotation or quoted on the securities market. |
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(3) The Authority may, by notice in writing to the operator of the securities market —(a) | modify the listing rules of the securities market for the purpose of their application to the listing for quotation or trading of the securities of the approved exchange; or | (b) | waive the application of any listing rule of the securities market to the approved exchange. |
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(4) Any approved exchange which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
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Subdivision (4) — Powers of Authority |
Fixing of position and trading limits in futures contracts |
31.—(1) For the purpose of diminishing, eliminating or preventing excessive speculation in any commodity under a futures contract, the Authority, or an approved exchange with the approval of the Authority, may, by notice in writing from time to time, establish and fix such limits as it considers necessary on the amount of trading which may be done, or positions which may be held, by any person, generally or specifically, under a futures contract traded on the futures market, or traded subject to the business rules, of —(a) | in the case of the establishing and fixing of limits by the Authority, any approved exchange; or | (b) | in the case of the establishing and fixing of limits by an approved exchange, that approved exchange. |
(2) In determining whether a person has exceeded such limits, the positions held and trading done by any other person directly or indirectly controlled by the first-mentioned person shall be included with the positions held and trading done by the first-mentioned person. |
(3) Such limits upon positions and trading shall apply to positions held by, and trading done by, 2 or more persons acting pursuant to an express or implied agreement or understanding as if the positions were held by, or the trading was done by, a single person. |
(4) This section shall not apply to positions as defined by an approved exchange in accordance with such regulations as may be prescribed. |
(5) No person shall, directly or indirectly —(a) | buy or sell, or agree to buy or sell, under a futures contract traded on the futures market of, or subject to the business rules of, an approved exchange, any amount of a commodity in excess of the trading limits fixed for one business day, or any other stated period set by the Authority or the approved exchange; or | (b) | hold or control a net buy or sell position under a futures contract traded on the futures market of, or subject to the business rules of, an approved exchange in excess of any position limit fixed by the Authority or the approved exchange. |
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(6) Nothing in this section shall preclude the Authority, or an approved exchange with the approval of the Authority, from —(a) | establishing or fixing different trading or position limits for different futures contracts, for different delivery months or for different days remaining until the last day of trading in a futures contract; | (b) | fixing different limits for the purposes of subsection (5); or | (c) | excluding transactions from the limits established or fixed under this section. |
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Power of Authority in securities market |
32.—(1) Without prejudice to the generality of section 46, where the Authority is of the opinion that it is necessary to prohibit trading in —(a) | particular securities of, or made available by, an entity; | (b) | particular units or derivatives of units in a business trust; or | (c) | particular units of a collective investment scheme, |
on a securities market of an approved exchange — |
(i) | in order to protect persons buying or selling the securities, units or derivatives of units in a business trust or units in a collective investment scheme; or | (ii) | in the interests of the public, |
the Authority may give notice in writing to the approved exchange stating that it is of that opinion and setting out the reasons for its opinion. |
(2) If, after the receipt of the notice given under subsection (1), the approved exchange fails to take any action in relation to those securities, units or derivatives of units in a business trust or units in a collective investment scheme on that securities market and the Authority continues to be of the opinion that it is necessary to prohibit trading in those securities, units or derivatives of units in a business trust or units in a collective investment scheme on that securities market, the Authority may, by notice in writing to the approved exchange, prohibit trading in those securities, units or derivatives of units in a business trust or units in a collective investment scheme on that securities market for such period, not exceeding 14 days, as is specified in the notice. |
(3) Where the Authority gives a notice to an approved exchange under subsection (2), the Authority shall —(a) | at the same time send a copy of the notice to —(i) | in the case of securities, the entity; | (ii) | in the case of units or derivatives of units in a business trust, the trustee of the business trust; or | (iii) | in the case of units in a collective investment scheme, the responsible person of the collective investment scheme, |
together with a statement setting out the reasons for the giving of the notice; and |
| (b) | as soon as practicable, furnish to the Minister a written report setting out the reasons for the giving of the notice and send a copy of the report to the approved exchange. |
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(4) Any person who is aggrieved by any action taken by the Authority or an approved exchange under this section may, within 30 days after the person is notified of the action, appeal to the Minister whose decision shall be final. |
(5) Notwithstanding the lodging of an appeal under subsection (4), any action taken by the Authority or an approved exchange under this section shall continue to have effect pending the decision of the Minister. |
(6) The Minister may, when deciding an appeal under subsection (4), make such modification as he considers necessary to any action taken by the Authority or an approved exchange under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(7) Any approved exchange which permits trading in securities on the securities market of the approved exchange in contravention of a notice given under subsection (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 and, in the case of a continuing offence, to a further fine not exceeding $10,000 for every day or part thereof during which the offence continues after conviction. |
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Additional powers of Authority in respect of auditors |
33.—(1) If an auditor of an approved exchange, in the course of the performance of his duties, becomes aware of —(a) | any matter which, in his opinion, adversely affects or may adversely affect the financial position of the approved exchange to a material extent; | (b) | any matter which, in his opinion, constitutes or may constitute a breach of any provision of this Act or an offence involving fraud or dishonesty; or | (c) | any irregularity that has or may have a material effect upon the accounts of the approved exchange, including any irregularity that affects or jeopardises, or may affect or jeopardise, the funds or property of investors in securities or futures contracts, |
the auditor shall immediately send to the Authority a written report of the matter or the irregularity. |
(2) An auditor of an approved exchange shall not, in the absence of malice on his part, be liable to any action for defamation at the suit of any person in respect of any statement made in his report under subsection (1). |
(3) Subsection (2) shall not restrict or affect any right, privilege or immunity that the auditor of an approved exchange may have, apart from this section, as a defendant in an action for defamation. |
(4) The Authority may impose all or any of the following duties on an auditor of an approved exchange:(a) | a duty to submit such additional information and reports in relation to his audit as the Authority considers necessary; | (b) | a duty to enlarge, extend or alter the scope of his audit of the business and affairs of the approved exchange; | (c) | a duty to carry out any other examination or establish any procedure in any particular case; | (d) | a duty to submit a report on any matter arising out of his audit, examination or establishment of procedure referred to in paragraph (b) or (c), |
and the auditor shall carry out such duties. |
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(5) The approved exchange shall remunerate the auditor in respect of the discharge by him of all or any of the duties referred to in subsection (4). |
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Emergency powers of Authority |
34.—(1) Where the Authority has reason to believe that an emergency exists, or thinks that it is necessary or expedient in the interests of the public or a section of the public or for the protection of investors, the Authority may direct by notice in writing an approved exchange to take such action as it considers necessary to maintain or restore orderly trading in securities or futures contracts or any class of securities or futures contracts.(2) Without prejudice to subsection (1), the actions which the Authority may direct an approved exchange to take shall include —(a) | terminating or suspending trading on the approved exchange; | (b) | confining trading to liquidation of securities or futures contracts positions; | (c) | ordering the liquidation of all positions or any part thereof or the reduction in such positions; | (d) | limiting trading to a specific price range; | (e) | modifying trading days or hours; | (f) | altering conditions of delivery; | (g) | fixing the settlement price at which positions are to be liquidated; | (h) | requiring any person to act in a specified manner in relation to trading in securities or futures contracts or any class of securities or futures contracts; | (i) | requiring margins or additional margins for any securities or futures contracts; and | (j) | modifying or suspending any of the business rules of the approved exchange. |
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(3) Where the approved exchange fails to comply with any direction of the Authority under subsection (1) within such time as is specified by the Authority, the Authority may —(a) | set margin levels in any securities or futures contract or class of securities or futures contracts to cater for the emergency; | (b) | set limits that may apply to market positions acquired in good faith prior to the date of the notice issued by the Authority; or | (c) | take such other action as the Authority may think fit to maintain or restore orderly trading in any securities or futures contracts or class of securities or futures contracts, or liquidation of any position in respect of any securities or futures contract or class of securities or futures contracts. |
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(4) In this section, “emergency” means any threatened or actual market manipulation or cornering, and includes —(a) | any act of any government affecting a commodity or securities; | (b) | any major market disturbance which prevents the market from accurately reflecting the forces of supply and demand for such commodity or securities; or | (c) | any undesirable situation or practice which, in the opinion of the Authority, constitutes an emergency. |
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(5) The Authority may modify any action taken by an approved exchange under subsection (1), including the setting aside of that action. |
(6) Any person who is aggrieved by any action taken by the Authority or an approved exchange under this section may, within 30 days after the person is notified of the action, appeal to the Minister whose decision shall be final. |
(7) Notwithstanding the lodging of an appeal under subsection (6), any action taken by the Authority or an approved exchange under this section shall continue to have effect pending the decision of the Minister. |
(8) The Minister may, when deciding an appeal under subsection (6), make such modification as he considers necessary to any action taken by the Authority or an approved exchange under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(9) Any approved exchange which fails to comply with a direction issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Power of Authority to exempt approved exchanges from provisions of this Part |
35. The Authority may exempt an approved exchange or a class of approved exchanges from any of the provisions of this Part if it is satisfied that the non-compliance by such approved exchange or class of approved exchanges with such provision would not detract from the objectives specified in section 5, subject to such conditions or restrictions as may be imposed by the Authority. |
Subdivision (5) — Immunity |
Immunity from criminal or civil liability |
36. No criminal or civil liability shall be incurred by —(a) | an approved exchange; or | (b) | any person acting on behalf of an approved exchange, including —(i) | any director of the approved exchange; or | (ii) | any member of any committee established by the approved exchange, |
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for any thing done (including any statement made) or omitted to be done with reasonable care and in good faith in the course of, or in connection with, the discharge or purported discharge of its obligations under this Act or the business rules or, where appropriate, listing rules of the approved exchange. |
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Division 3 — Regulation of Recognised Market Operators |
37.—(1) A recognised market operator shall, in respect of every market which it operates —(a) | as far as is reasonably practicable, ensure that the market is fair, orderly and transparent; | (b) | manage any risks associated with its business and operations prudently; | (c) | in discharging its obligations under this Act, not act contrary to the interests of the public, having particular regard to the interests of the investing public; and | (d) | have sufficient financial, human and system resources —(i) | to operate a fair, orderly and transparent market; | (ii) | to meet contingencies or disasters; and | (iii) | to provide adequate security arrangements. |
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(2) In subsection (1)(d), “contingencies or disasters” includes technical disruptions occurring within automated systems. |
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Obligation to notify Authority of certain matters |
38. A recognised market operator shall, as soon as practicable after the occurrence of any of the following circumstances, notify the Authority of the circumstance:(a) | any material change to the information provided by the recognised market operator in its application under section 7(1) or 11(1); | (b) | any change of a director or the chief executive officer of the recognised market operator; | (c) | the recognised market operator becoming aware of a financial irregularity or other matter which in its opinion —(i) | may affect its ability to discharge its financial obligations; or | (ii) | may affect the ability of a participant of the recognised market operator to meet its financial obligations to the recognised market operator; |
| (d) | any other matter that the Authority may prescribe by regulations or specify by notice in writing to the recognised market operator. |
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Obligation to maintain proper records |
39. A recognised market operator shall maintain a record of all transactions effected through its facilities in such form and manner as the Authority may prescribe, including —(a) | the extent to which the record includes details of each transaction; and | (b) | the period of time that the record is to be maintained. |
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Obligation to submit periodic reports |
40. A recognised market operator shall submit to the Authority such reports in such form, manner and frequency as the Authority may prescribe. |
Obligation to assist Authority |
41. A recognised market operator shall provide such assistance to the Authority as the Authority may require for the performance of the functions and duties of the Authority, including the furnishing of such returns and the provision of —(a) | such books and other information —(i) | relating to the business of the recognised market operator; or | (ii) | in respect of such dealings in securities or trading in futures contracts; and |
| (b) | such other information, |
as the Authority may require for the proper administration of this Act. |
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Power of Authority to approve instruments, contracts and transactions |
42.—(1) No recognised market operator shall, without the approval of the Authority, list, de-list or permit the trading of —(a) | any futures contract; | (b) | any right, option or derivative in respect of any debentures, stock or shares; | (c) | any right under a contract for differences or under any other contract the purpose or purported purpose of which is to secure a profit or avoid a loss by reference to fluctuations in —(i) | the value or price of any debentures, stock or shares; | (ii) | the value or price of any group of debentures, stock or shares; or | (iii) | an index of any debentures, stock or shares, and |
| (d) | such other instrument, contract or transaction, or class of instruments, contracts or transactions, as the Authority may prescribe, |
on any market operated by the recognised market operator. |
(2) The Authority may grant approval for any instrument, contract or transaction, or any class of instruments, contracts or transactions, referred to in subsection (1), subject to such conditions or restrictions as the Authority may think fit to impose by notice in writing to the recognised market operator. |
(3) The recognised market operator shall comply with the conditions and restrictions imposed under subsection (2). |
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Penalties under this Division |
43. Any recognised market operator which contravenes section 37(1), 38, 39, 40, 41 or 42(1) or (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
Division 4 — General Powers of Authority |
Power of Authority to remove officers |
44.—(1) Where the Authority is satisfied that an officer of an approved exchange or a recognised market operator —(a) | has wilfully contravened or wilfully caused that approved exchange or recognised market operator to contravene —(i) | this Act; | (ii) | where applicable, its business rules; or | (iii) | where applicable, its listing rules; |
| (b) | has, without reasonable excuse, failed to ensure compliance by that approved exchange or recognised market operator, a member of that approved exchange or recognised market operator, or a person associated with that member with —(i) | this Act; | (ii) | where applicable, the business rules of that approved exchange or recognised market operator; or | (iii) | where applicable, the listing rules of that approved exchange or recognised market operator; |
| (c) | has failed to discharge the duties or functions of his office or employment; | (d) | is an undischarged bankrupt, whether in Singapore or elsewhere; | (e) | has had execution against him in respect of a judgment debt returned unsatisfied in whole or in part; | (f) | has, whether in Singapore or elsewhere, made a compromise or scheme of arrangement with his creditors, being a compromise or scheme of arrangement that is still in operation; or | (g) | has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that he acted fraudulently or dishonestly, |
the Authority may, if it thinks it necessary in the interests of the public or a section of the public or for the protection of investors, by notice in writing direct that approved exchange or recognised market operator to remove the officer from his office or employment, and that approved exchange or recognised market operator shall comply with such notice, notwithstanding the provisions of section 152 of the Companies Act (Cap. 50). |
(2) Without prejudice to any other matter that the Authority may consider relevant, the Authority may, in determining whether an officer of an approved exchange or a recognised market operator has failed to discharge the duties or functions of his office or employment for the purposes of subsection (1)(c), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing. |
(3) Subject to subsection (4), the Authority shall not direct an approved exchange or a recognised market operator to remove an officer from his office or employment without giving the approved exchange or recognised market operator an opportunity to be heard. |
(4) The Authority may direct an approved exchange or a recognised market operator to remove an officer from his office or employment under subsection (1) on any of the following grounds without giving the approved exchange or recognised market operator an opportunity to be heard:(a) | the officer is an undischarged bankrupt, whether in Singapore or elsewhere; | (b) | the officer has been convicted, whether in Singapore or elsewhere, of an offence —(i) | involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and | (ii) | punishable with imprisonment for a term of 3 months or more. |
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(5) Where the Authority directs an approved exchange or a recognised market operator to remove an officer from his office or employment under subsection (1), the Authority need not give that officer an opportunity to be heard. |
(6) Any approved exchange or a recognised market operator that is aggrieved by a direction of the Authority made in relation to the approved exchange or recognised market operator, as the case may be, under subsection (1) may, within 30 days after the approved exchange or recognised market operator, as the case may be, is notified of the direction, appeal to the Minister whose decision shall be final. |
(7) Notwithstanding the lodging of an appeal under subsection (6), any action taken by the Authority under this section, shall continue to have effect pending the decision of the Minister. |
(8) The Minister may, when deciding an appeal under subsection (6), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(9) Subject to subsection (10), no criminal or civil liability shall be incurred by an approved exchange or a recognised market operator in respect of any thing done or omitted to be done with reasonable care and in good faith in the discharge or purported discharge of its obligations under this section. |
(10) Any approved exchange or a recognised market operator which, without reasonable excuse, contravenes a written notice issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Power of Authority to make regulations |
45.—(1) Without prejudice to section 341, the Authority may make regulations relating to the exemption, recognition or approval of, and the requirements applicable to, persons who establish, operate or assist in establishing or operating markets.(2) Regulations made under this section may provide —(a) | that a contravention of any specified provision thereof shall be an offence; and | (b) | for a penalty not exceeding a fine of $150,000 or imprisonment for a term not exceeding 12 months or both for each offence and, in the case of a continuing offence, a further penalty not exceeding a fine of 10% of the maximum fine prescribed for that offence for every day or part thereof during which the offence continues after conviction. |
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Power of Authority to issue directions |
46.—(1) The Authority may, if it thinks it necessary or expedient —(a) | for ensuring fair, orderly and transparent markets; | (b) | for ensuring the integrity and stability of the capital markets or the financial system; | (c) | in the interests of the public or a section of the public or for the protection of investors; | (d) | for the effective administration of this Act; or | (e) | for ensuring compliance with any condition or restriction as may be imposed by the Authority under section 8(4) or (5), 14(5), (6), (8) or (9), 17(2), 27(5) or (10), 28(11), 29(2), 35 or 42(2), or such other obligations or requirements under this Act or as may be prescribed by the Authority, |
issue directions, whether of a general or specific nature, by notice in writing, to an approved exchange, a recognised market operator or an exempt market operator, and the approved exchange, recognised market operator or exempt market operator shall comply with such directions. |
(2) Any approved exchange, a recognised market operator or an exempt market operator which, without reasonable excuse, contravenes a direction issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
(3) For the avoidance of doubt, a direction issued under subsection (1) shall be deemed not to be subsidiary legislation. |
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PART III 47. The objectives of this Part are —(a) | to promote the safety and efficiency of clearing facilities that support systemically-important markets or form an integral part of the financial infrastructure; and | (b) | to reduce systemic risk. |
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Interpretation of this Part |
48.—(1) In this Part, unless the context otherwise requires —“default proceedings” means proceedings or other action taken by a designated clearing house under its default rules; |
“default rules”, in relation to a designated clearing house, means the business rules of the designated clearing house which provide for the taking of proceedings or other action if a participant has failed, or appears to be unable or to be likely to become unable, to meet his obligations for all unsettled or open market contracts to which he is a party; |
“defaulter” means a participant who is the subject of any default proceedings; |
“market charge” means a security interest, whether fixed or floating, granted in favour of a designated clearing house —(a) | over property held by or deposited with the designated clearing house; and | (b) | to secure liabilities arising directly in connection with the designated clearing house ensuring the performance of a market contract; |
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“market collateral” means property held by, or deposited with, a designated clearing house for the purpose of securing liabilities arising directly in connection with the designated clearing house ensuring the performance of market contracts; |
“market contract” means —(a) | a contract subject to the business rules of a designated clearing house that is entered into between the designated clearing house and a participant pursuant to a novation (however described), whether before or after default proceedings have commenced, which is in accordance with those business rules and for the purposes of the clearing or settlement of transactions using the clearing facility of the designated clearing house; or | (b) | a transaction which is being cleared or settled using the clearing facility of a designated clearing house and in accordance with the business rules of the designated clearing house, whether or not a novation referred to in paragraph (a) is to take place; |
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“property”, in relation to a market charge or market collateral, means —(a) | money, letters of credit, banker’s drafts, certified cheques, guarantees or other similar instruments; | (b) | securities; | (c) | futures contracts and any similar financial contract; or | (d) | other assets of value acceptable to a designated clearing house; |
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“relevant office holder” means —(a) | the Official Assignee exercising his powers under the Bankruptcy Act (Cap. 20); | (b) | a person acting in relation to a company as its liquidator, its provisional liquidator, its receiver, its receiver and manager, its judicial manager or an equivalent officer; or | (c) | a person acting in relation to an individual as his trustee in bankruptcy, the interim receiver of his property or an equivalent officer; |
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“settlement”, in relation to a market contract, includes partial settlement. |
(2) Where a charge is granted partly for the purpose specified in the definition of “market charge” and partly for any other purpose or purposes, the charge shall be treated as a market charge under this Part insofar as it has effect for that specified purpose. |
(3) Where collateral is granted partly for the purpose specified in the definition of “market collateral” and partly for any other purpose or purposes, the collateral shall be treated as market collateral under this Part insofar as it has been provided for that specified purpose. |
(4) References in this Part to the law of insolvency are references to —(a) | the Bankruptcy Act; | (b) | Parts VIIIA, IX and X of the Companies Act (Cap. 50); and | (c) | any other written law, whether in Singapore or elsewhere, which is concerned with, or in any way related to, the bankruptcy or insolvency of a person, other than the Banking Act (Cap. 19). |
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(5) References in this Part to settlement, in relation to a market contract, are references to the discharge of the rights and liabilities of the parties to the market contract, whether by performance, compromise or otherwise. |
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Division 1 — Establishment of Clearing Facilities |
49.—(1) Subject to subsection (2), no person shall establish or operate a clearing facility unless that person has notified the Authority of its intent to establish or operate a clearing facility at least 60 business days prior to the establishment, or commencement of operation, of the clearing facility.(2) A person may apply to the Authority to reduce the period referred to in subsection (1) and the Authority may, in its discretion and in relation only to that person, substitute such other period as may be determined by the Authority in place of the period referred to in subsection (1). |
(3) The notice referred to in subsection (1) shall provide information in such form and manner as may be prescribed by the Authority. |
(4) The application referred to in subsection (2) shall provide information in such form and manner as may be prescribed by the Authority. |
(5) The Authority may require a person providing the notice referred to in subsection (1) to furnish the Authority with such information or documents as the Authority considers necessary in relation to the notice. |
(6) In subsection (1), “business day” has the same meaning as in section 4(1) of the Companies Act (Cap. 50). |
(7) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction. |
(8) Any person who contravenes subsection (5) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Provision of information to Authority |
50.—(1) A person operating a clearing facility shall submit to the Authority such reports in such form, manner and frequency as the Authority may prescribe.(2) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Notification of change of particulars |
51.—(1) A person operating a clearing facility shall, no later than 14 days after the occurrence of any of the following circumstances, notify the Authority of the circumstance:(a) | a change of its chief executive officer; | (b) | a change of the address of the principal place of business at which it carries on the business of operating a clearing facility; | (c) | a material change in the business of the clearing facility; | (d) | an intention to cease operations of the clearing facility; | (e) | such other matter as the Authority may prescribe. |
(2) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Obligation to assist Authority |
52.—(1) A person operating a clearing facility shall provide such assistance to the Authority as the Authority may require for the performance of the functions and duties of the Authority, including the furnishing of such returns and the provision of —(a) | such books and other information —(i) | relating to the business of the clearing facility; or | (ii) | in respect of any transaction or class of transactions cleared or settled by the clearing facility; and |
| (b) | such other information, |
as the Authority may require for the proper administration of this Act. |
(2) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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53. Sections 49, 50 and 51 shall not apply to such persons or class of persons as may be prescribed by the Authority. |
Power to stop commencement or order cessation |
54.—(1) The Authority may, prior to the end of the notification period referred to in section 49(1) or such other period as may be substituted by the Authority under section 49(2), by notice in writing, order a person who has given notice under section 49(1) not to establish or commence operation of a clearing facility if —(a) | the person did not furnish the Authority with such information or documents as required under section 49(5); | (b) | any information or document provided by the person to the Authority is false or misleading; or | (c) | the Authority is of the opinion that it is in the interests of the public to do so. |
(2) The Authority may, by notice in writing, order a person to cease operating its clearing facility if —(a) | the person has contravened any provision of this Act or any other written law in the course of operating its clearing facility; | (b) | the person provided any information or document to the Authority that is false or misleading; | (c) | in the opinion of the Authority, the person is operating the clearing facility in a manner that is likely to pose systemic risk to the financial system of Singapore; | (d) | the person is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (e) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the person; | (f) | the person has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly; or | (g) | the Authority is of the opinion that it is in the interests of the public to do so. |
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(3) Subject to subsection (4), the Authority shall not make an order under subsection (1) or (2) without giving the person an opportunity to be heard. |
(4) The Authority may order a person not to establish or commence operation of a clearing facility under subsection (1) or to cease operating its clearing facility under subsection (2) on any of the following grounds without giving the person an opportunity to be heard:(a) | the person is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (b) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the person; | (c) | the person has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly. |
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(5) Any person who is aggrieved by an order of the Authority made in relation to the person under subsection (1) or (2) may, within 30 days after the person is notified of that order, appeal to the Minister whose decision shall be final. |
(6) Notwithstanding the lodging of an appeal under subsection (5), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister. |
(7) The Minister may, when deciding an appeal under subsection (5), make such modification as he considers necessary to any action taken by the Authority, and such modified action shall have effect from the date of the Minister’s decision. |
(8) Any order made under subsection (2) shall not operate so as to —(a) | avoid or affect any agreement, transaction or arrangement entered into in connection with the use of a clearing facility operated by the person, whether the agreement, transaction or arrangement was entered into before or after the order of the cessation; or | (b) | affect any right, obligation or liability arising under such agreement, transaction or arrangement. |
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(9) Any person who contravenes an order made under subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction. |
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Division 2 — Designation of Persons Operating Clearing Facilities |
Designation of persons operating clearing facilities |
55.—(1) The Authority may designate a person operating a clearing facility as a designated clearing house for the purposes of this Act, if it is satisfied that —(a) | a disruption in the operations of the clearing facility could trigger, cause or transmit further systemic disruptions to capital markets or the financial system of Singapore; | (b) | a disruption in the operations of the clearing facility could affect public confidence in capital markets, financial institutions or the financial system of Singapore; or | (c) | it is in the interests of the public to do so. |
(2) The Authority shall give notice in the Gazette of any person designated under subsection (1). |
(3) A designation by the Authority under subsection (1) shall continue to have effect until it is withdrawn by the Authority. |
(4) The Authority shall not designate any person operating a clearing facility as a designated clearing house without giving that person an opportunity to be heard. |
(5) Any person operating a clearing facility who is aggrieved by a decision of the Authority to designate the person as a designated clearing house under subsection (1) may, within 30 days after the person is notified of the decision, appeal to the Minister whose decision shall be final. |
(6) Notwithstanding the lodging of an appeal under subsection (5), the designation by the Authority under this section shall continue to have effect pending the decision of the Minister. |
(7) The Minister may, when deciding an appeal under subsection (5), direct that the Authority shall not designate the person as a designated clearing house, and such order shall have effect from the date of the Minister’s decision. |
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Prohibition on holding out |
56.—(1) No person shall hold himself out as a designated clearing house unless he has been designated by the Authority under section 55(1).(2) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction. |
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General criteria to be taken into account by Authority |
57. Without affecting the generality of section 55, the Authority may have regard to the following matters in determining whether it is satisfied of the considerations in section 55(1):(a) | the size and structure, or proposed size and structure, of the clearing facility; | (b) | the nature of the services provided, or to be provided, by the clearing facility; | (c) | the nature of the transactions cleared, or to be cleared, by the clearing facility; | (d) | the market where the transactions cleared through the clearing facility are traded or to be traded; | (e) | the nature of the investors or participants, or proposed investors or participants, who may use or have an interest in the clearing facility; | (f) | whether the person operating the clearing facility is otherwise regulated by the Authority under this Act or any other written law; | (g) | whether the clearing facility takes on counterparty risks, through novation or otherwise, in the clearing or settlement of transactions; | (h) | the parties who may be affected in the event that the clearing facility runs into difficulties; | (i) | the interests of the public; and | (j) | any other circumstances that the Authority may deem relevant. |
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Withdrawal of designation |
58.—(1) The Authority may withdraw the designation of any designated clearing house at any time, on its own initiative or on the application of the designated clearing house, if the Authority is of the opinion that the considerations in section 55(1) are no longer valid or satisfied.(2) The Authority shall give notice in the Gazette of any withdrawal under subsection (1). |
(3) The Authority shall not withdraw on its own initiative the designation of any person operating a clearing facility as a designated clearing house without giving the person an opportunity to be heard. |
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Division 3 — Regulation of Designated Clearing Houses |
Subdivision (1) — Obligations of Designated Clearing Houses |
59.—(1) A designated clearing house shall —(a) | as far as is reasonably practicable, operate a safe and efficient clearing facility; | (b) | manage any risks associated with its business and operations prudently; | (c) | in discharging its obligations under this Act, not act contrary to the interests of the public, having particular regard to the interests of the investing public; | (d) | ensure that access for participation in its clearing facility is subject to criteria that are fair and objective, and that are designed to ensure the safe and efficient functioning of its facility and to protect the interests of the investing public; | (e) | maintain business rules that make satisfactory provision for —(i) | the clearing facility to be operated in a safe and efficient manner; and | (ii) | the proper regulation and supervision of its members; |
| (f) | enforce compliance by its members with its business rules; | (g) | have sufficient financial, human and system resources —(i) | to operate a safe and efficient clearing facility; | (ii) | to meet contingencies or disasters; and | (iii) | to provide adequate security arrangements; and |
| (h) | ensure that it appoints or employs fit and proper persons as its chairman, chief executive officer, directors and key management officers. |
(2) The obligations imposed on the designated clearing house under this Act shall apply to all facilities for clearing or settlement operated by the designated clearing house. |
(3) Notwithstanding subsection (2), the Authority may by notice in writing exempt any clearing facility operated by a designated clearing house from all or any of the provisions of this Act, if the Authority is satisfied that such exemption would not detract from the objectives specified in section 47. |
(4) In subsection (1)(g), “contingencies or disasters” includes technical disruptions occurring within automated systems. |
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Obligation to notify Authority of certain matters |
60.—(1) A designated clearing house shall, as soon as practicable after the occurrence of any of the following circumstances, notify the Authority of the circumstance:(a) | the carrying on of any business by the designated clearing house other than —(i) | the business of operating a clearing facility; | (ii) | a business incidental to operating a clearing facility; or | (iii) | such business or class of businesses as the Authority may prescribe; |
| (b) | the acquisition by the designated clearing house of a substantial shareholding in a corporation which does not carry on —(i) | the business of operating a clearing facility; | (ii) | a business incidental to operating a clearing facility; or | (iii) | such business or class of businesses as the Authority may prescribe; |
| (c) | the designated clearing house becoming aware of a financial irregularity or other matter which in its opinion —(i) | may affect its ability to discharge its financial obligations; or | (ii) | may affect the ability of a member of the designated clearing house to meet its financial obligations to the designated clearing house; |
| (d) | the designated clearing house reprimanding, fining, suspending, expelling or otherwise taking disciplinary action against a member of the designated clearing house; | (e) | any other matter that the Authority may prescribe by regulations or specify by notice in writing to the designated clearing house. |
(2) Without prejudice to the generality of section 79(1), the Authority may, at any time after receiving a notification referred to in subsection (1), issue directions to the designated clearing house —(a) | where the notification relates to a matter referred to in subsection (1)(a) —(i) | to cease carrying on the first-mentioned business referred to in subsection (1)(a); or | (ii) | to carry on the first-mentioned business referred to in subsection (1)(a) subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 79(1); or |
| (b) | where the notification relates to a matter referred to in subsection (1)(b) —(i) | to dispose of the shareholding referred to in subsection (1)(b); or | (ii) | to exercise its rights relating to such shareholding subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 79(1), |
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and the designated clearing house shall comply with such directions. |
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Obligation to manage risks prudently |
61.—(1) Without prejudice to the generality of section 59(1)(b), a designated clearing house shall ensure that the systems and controls concerning the assessment and management of risks to its clearing facility are adequate and appropriate for the scale and nature of its operations.(2) Without prejudice to the generality of section 81S, the Authority may make regulations relating to the matters in subsection (1), including —(a) | the limits in respect of positions held with the designated clearing house; and | (b) | the measures to manage any risks assumed by the designated clearing house. |
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Obligation in relation to customers’ money and assets held by designated clearing house |
62.—(1) A designated clearing house which accepts money or assets deposited with or paid to it by its members in respect of or in relation to contracts of the customers of such members shall, in respect of all market contracts in relation to which money or assets are deposited with or paid to it (being market contracts which are cleared or settled by it), require each of its members to notify it in such manner as it may determine —(a) | whether a market contract is a contract of a customer of the member; and | (b) | whether the money or assets being deposited with or paid to the designated clearing house is or are deposited or paid in respect of or in relation to a contract of a customer of the member. |
(2) Where a member has notified the designated clearing house under subsection (1) that the money or assets are deposited or paid in respect of or in relation to a contract of a customer of the member, the designated clearing house shall —(a) | account for all such money and assets on an aggregated basis, separate from all other money and assets received by the designated clearing house from the member; and | (b) | subject to sections 63 and 64, ensure that such money is deposited in a trust account, or such assets are deposited in a custody account, to be held for the benefit of the customers of the member and disposed of or used only in respect of or in relation to contracts of customers of the member. |
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(3) Where a designated clearing house has been convicted of an offence under section 70 for a contravention of subsection (2)(b), in so far as any money which has been deposited in a trust account, or any asset which has been deposited in a custody account, is used for any purpose other than —(a) | in respect of or in relation to contracts of a customer of the member; or | (b) | in accordance with sections 63 and 64, |
the designated clearing house shall — |
(i) | in the case of money, repay the money to the trust account referred to in subsection (2)(b); or | (ii) | in the case of assets —(A) | return the asset to the custody account referred to in subsection (2)(b); or | (B) | if the asset cannot be returned to the custody account, deposit an amount of money which is equivalent to the monetary value of the asset at the time of the contravention of subsection (2)(b) in a trust account referred to in subsection (2)(b) for the benefit of the customers of the member. |
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Permissible use of customers’ money and assets by designated clearing house |
63.—(1) Where a member of a designated clearing house fails to meet its obligations to the designated clearing house, the designated clearing house may use any money or assets deposited or paid in respect of or in relation to contracts of customers of the member and held by the designated clearing house, including any money deposited in the trust account and any assets deposited in the custody account referred to in section 62(2)(b), to meet the obligations of the member to the designated clearing house, if the designated clearing house has reasonable grounds for forming an opinion that —(a) | the failure of the member to meet the member’s obligations is directly attributable to the failure of any of the customers of the member to meet that customer’s obligations under any market contract; and | (b) | the failure to use the money or assets to meet the obligations of the member may jeopardise the financial integrity of the designated clearing house. |
(2) A designated clearing house shall notify the Authority prior to using any such money or assets in the circumstances specified in subsection (1). |
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Permissible investments of customers’ money and assets by designated clearing house |
64.—(1) Subject to subsection (2), a designated clearing house may invest any money or assets deposited or paid in respect of or in relation to contracts of customers of a member and held by the designated clearing house in the course of its clearing or settlement activities, including any money deposited in the trust account and any assets deposited in the custody account referred to in section 62(2)(b), in any security, instrument or other form of investment arrangement as the Authority may prescribe.(2) The designated clearing house shall seek the approval of the Authority before investing any such money or assets under subsection (1). |
(3) The designated clearing house seeking the approval of the Authority under subsection (2) shall satisfy the Authority —(a) | that the management of the investments made by the designated clearing house is consistent with the principles of preserving principal and maintaining sufficient liquidity to meet the obligations of customers of members of the designated clearing house; | (b) | that prudential measures have been adopted to manage the risks in respect of the designated clearing house’s investment activities; and | (c) | of any other matter which the Authority considers necessary for the sound management of the investments. |
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(4) The Authority may grant the approval referred to in subsection (2) subject to such conditions or restrictions as the Authority may think fit. |
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Obligation to maintain proper records |
65.—(1) A designated clearing house shall maintain a record of all transactions effected through its clearing facility in such form and manner as the Authority may prescribe.(2) The matters which the Authority may prescribe under subsection (1) shall include —(a) | the extent to which the record includes details of each transaction; and | (b) | the period of time that the record is to be maintained. |
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Obligation to submit periodic reports |
66. A designated clearing house shall submit to the Authority such reports in such form, manner and frequency as the Authority may prescribe. |
Obligation to assist Authority |
67. A designated clearing house shall provide such assistance to the Authority as the Authority may require for the performance of the functions and duties of the Authority, including the furnishing of such returns and the provision of —(a) | such books and other information —(i) | relating to the business of the designated clearing house; or | (ii) | in respect of any transaction or class of transactions cleared or settled by the designated clearing house; and |
| (b) | such other information, |
as the Authority may require for the proper administration of this Act. |
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Obligation to maintain confidentiality |
68.—(1) Subject to subsection (2), a designated clearing house and its officers and employees shall maintain, and aid in maintaining, confidentiality of all user information that —(a) | comes to the knowledge of the designated clearing house or any of its officers or employees; or | (b) | is in the possession of the designated clearing house or any of its employees. |
(2) Subsection (1) shall not apply to —(a) | the disclosure of user information for such purposes, or in such circumstances, as the Authority may prescribe; | (b) | any disclosure of user information which is authorised by the Authority to be disclosed or furnished; or | (c) | the disclosure of user information pursuant to any requirement imposed under any written law or order of court in Singapore. |
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(3) For the avoidance of doubt, nothing in this section shall be construed as preventing a designated clearing house from entering into a written agreement with a user which obliges the designated clearing house to maintain a higher degree of confidentiality than that specified in this section. |
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Annual fees payable by designated clearing house |
69.—(1) Every designated clearing house shall pay to the Authority such annual fees as may be prescribed and in such manner as may be specified by the Authority.(2) The Authority may, where it considers appropriate, refund or remit the whole or part of any annual fee paid or payable to it. |
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Penalties under this Subdivision |
70. Any designated clearing house which contravenes section 59(1), 60, 61(1), 62(2) or (3), 63(2), 64(2), 65, 66, 67 or 68(1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
Subdivision (2) — Rules of Designated Clearing Houses |
Business rules of designated clearing houses |
71.—(1) Without limiting the generality of sections 59 and 81S —(a) | the Authority may prescribe the matters that a designated clearing house shall make provision for in the business rules of the designated clearing house; and | (b) | the designated clearing house shall make provision for these matters in its business rules. |
(2) A designated clearing house shall not make any amendment to its business rules unless it complies with such requirements as the Authority may prescribe. |
(3) In this Subdivision, any reference to an amendment to a business rule shall be construed as a reference to a change to the scope of, or to any requirement, obligation or restriction under the business rule, whether the change is made by an alteration to the text of the rule or by any other notice issued by or on behalf of the designated clearing house. |
(4) Any designated clearing house which contravenes subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Business rules of designated clearing houses have effect as contract |
72.—(1) The business rules of a designated clearing house shall be deemed to be, and shall operate as, a binding contract —(a) | between the designated clearing house and each issuer of securities; | (b) | between the designated clearing house and each participant; | (c) | between each issuer of securities and each participant; and | (d) | between each participant and every other participant. |
(2) The designated clearing house, each issuer of securities and each participant shall be deemed to have agreed to observe, and perform the obligations under, the provisions of the business rules that are in force for the time being, so far as those provisions are applicable to the designated clearing house, issuer or participant, as the case may be. |
(3) In this section, “issuer”, in relation to any securities, means a person who issued or made available, or proposes to issue or make available, the securities, being securities that are cleared or settled by the designated clearing house. |
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Power of court to order observance or enforcement of business rules |
73.—(1) Where any person who is under an obligation to comply with, observe, enforce or give effect to the business rules of a designated clearing house fails to do so, the High Court may, on the application of the Authority, a designated clearing house or a person aggrieved by the failure, after giving the first-mentioned person an opportunity to be heard, make an order directing the first-mentioned person to comply with, observe, enforce or give effect to those business rules.(2) In this section, “person” includes a designated clearing house. |
(3) This section is in addition to, and not in derogation of, any other remedies available to the aggrieved person referred to in subsection (1). |
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Non-compliance with business rules not to substantially affect rights of person |
74. Any failure by a designated clearing house to comply with this Act or its business rules in relation to a matter shall not prevent the matter from being treated, for the purposes of this Act, as done in accordance with the business rules so long as the failure does not substantially affect the rights of any person entitled to require compliance with the business rules. |
Subdivision (3) — Matters Requiring Approval of Authority |
Control of substantial shareholding in designated clearing houses |
75.—(1) No person shall enter into any agreement to acquire shares in a designated clearing house by virtue of which he would, if the agreement had been carried out, become a substantial shareholder of the designated clearing house without first obtaining the approval of the Authority to enter into the agreement.(2) No person shall become —(a) | a 12% controller; or | (b) | a 20% controller, |
of a designated clearing house without first obtaining the approval of the Authority. |
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(3) In subsection (2) —“12% controller” means a person, not being a 20% controller, who alone or together with his associates —(a) | holds not less than 12% of the shares in the designated clearing house; or | (b) | is in a position to control not less than 12% of the votes in the designated clearing house; |
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“20% controller” means a person who, alone or together with his associates —(a) | holds not less than 20% of the shares in the designated clearing house; or | (b) | is in a position to control not less than 20% of the votes in the designated clearing house. |
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(4) In this section —(a) | a person holds a share if —(i) | he is deemed to have an interest in that share under section 7(6) to (10) of the Companies Act (Cap. 50); or | (ii) | he otherwise has a legal or an equitable interest in that share, except such interest as is to be disregarded under section 7(6) to (10) of the Companies Act; |
| (b) | a reference to the control of a percentage of the votes in a designated clearing house shall be construed as a reference to the control, whether direct or indirect, of that percentage of the total number of votes that might be cast in a general meeting of the designated clearing house; and | (c) | a person, A, is an associate of another person, B, if —(i) | A is the spouse, a parent, remoter lineal ancestor or step-parent, a son, daughter, remoter issue, step-son or step-daughter or a brother or sister of B; | (ii) | A is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B or, where B is a corporation, of the directors of B; | (iii) | B is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A or, where A is a corporation, of the directors of A; | (iv) | A is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B; | (v) | B is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A; | (vi) | A is a related corporation of B; | (vii) | A is a corporation in which B, alone or together with other associates of B as described in paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in A; | (viii) | B is a corporation in which A, alone or together with other associates of A as described in paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in B; or | (ix) | A is a person with whom B has an agreement or arrangement, whether oral or in writing and whether express or implied, to act together with respect to the acquisition, holding or disposal of shares or other interests in, or with respect to the exercise of their votes in relation to, the designated clearing house. |
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(5) The Authority may grant its approval referred to in subsection (1) or (2) subject to such conditions or restrictions as the Authority may think fit. |
(6) Without prejudice to subsection (11), the Authority may, for the purposes of securing compliance with subsection (1) or (2) or any condition or restriction imposed under subsection (5), by notice in writing, direct the transfer or disposal of all or any of the shares of a designated clearing house in which a substantial shareholder, 12% controller or 20% controller of the designated clearing house has an interest. |
(7) Until a person to whom a direction has been issued under subsection (6) transfers or disposes of the shares which are the subject of the direction, and notwithstanding anything to the contrary in the Companies Act (Cap. 50) or the memorandum or articles of association or other constituent document or documents of the designated clearing house —(a) | no voting rights shall be exercisable in respect of the shares which are the subject of the direction; | (b) | the designated clearing house shall not offer or issue any shares (whether by way of rights, bonus, share dividend or otherwise) in respect of the shares which are the subject of the direction; and | (c) | except in a liquidation of the designated clearing house, the designated clearing house shall not make any payment (whether by way of cash dividend, dividend in kind, or otherwise) in respect of the shares which are the subject of the direction. |
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(8) Any issue of shares by a designated clearing house in contravention of subsection (7)(b) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return those shares to the designated clearing house, upon which the designated clearing house shall return to the person any payment received from him in respect of those shares. |
(9) Any payment made by a designated clearing house in contravention of subsection (7)(c) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return the payment he has received to the designated clearing house. |
(10) The Authority may exempt —(a) | any person or class of persons; or | (b) | any class or description of shares or interests in shares, |
from subsection (1) or (2), subject to such conditions or restrictions as may be imposed by the Authority. |
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(11) Any person who contravenes subsection (1) or (2), or any condition or restriction imposed by the Authority under subsection (5), shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
(12) Any person who contravenes subsection (7)(b) or (c), (8) or (9) or any direction issued by the Authority under subsection (6) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Approval of chairman, chief executive officer, director and key persons |
76.—(1) No designated clearing house shall appoint a person as its chairman, chief executive officer or director unless the designated clearing house has obtained the approval of the Authority.(2) The Authority may, by notice in writing, require a designated clearing house to obtain the approval of the Authority for the appointment of any person to any key management position or committee of the designated clearing house and the designated clearing house shall comply with the notice. |
(3) An application for approval under subsection (1) or (2) shall be made in such form and manner as the Authority may prescribe. |
(4) Without prejudice to the generality of section 81S and any other matter that the Authority may consider relevant, the Authority may, in determining whether to grant its approval under subsection (1) or (2), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing. |
(5) Subject to subsection (6), the Authority shall not refuse an application for approval under this section without giving the designated clearing house an opportunity to be heard. |
(6) The Authority may refuse an application for approval on any of the following grounds without giving the designated clearing house an opportunity to be heard:(a) | the person is an undischarged bankrupt, whether in Singapore or elsewhere; | (b) | the person has been convicted, whether in Singapore or elsewhere, of an offence —(i) | involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and | (ii) | punishable with imprisonment for a term of 3 months or more. |
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(7) Where the Authority refuses an application for approval under this section, the Authority need not give the person who was proposed to be appointed an opportunity to be heard. |
(8) A designated clearing house shall, as soon as practicable, give written notice to the Authority of the resignation or removal of its chairman, chief executive officer, director or person referred to in the notice issued by the Authority under subsection (2). |
(9) Without prejudice to the generality of section 81S, the Authority may make regulations relating to the composition and duties of the board of directors or any committee of a designated clearing house. |
(10) In this section, “committee” includes any committee of directors, disciplinary committee, appeals committee or any body responsible for disciplinary action against a member of a designated clearing house. |
(11) The Authority may exempt any designated clearing house or a class of designated clearing houses from complying with subsection (1) or (8), subject to such conditions or restrictions as may be imposed by the Authority. |
(12) Subject to subsection (11), any designated clearing house which contravenes subsection (1), (2) or (8) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
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Listing of designated clearing houses on securities market |
77.—(1) The securities of a designated clearing house shall not be listed for quotation on a securities market that is operated by any of its related corporations unless the designated clearing house and the operator of the securities market have entered into such arrangements as the Authority may require —(a) | for dealing with possible conflicts of interest that may arise from such listing; and | (b) | for the purpose of ensuring the integrity of the trading of the securities of the designated clearing house. |
(2) Where the securities of a designated clearing house are listed for quotation on a securities market operated by any of its related corporations, the listing rules of the securities market shall be deemed to allow the Authority to act in place of the operator of the securities market in making decisions and taking action, or to require the operator of the securities market to make decisions and to take action on behalf of the Authority, on —(a) | the admission or removal of the designated clearing house to or from the official list of the securities market; and | (b) | granting approval for the securities of a designated clearing house to be, or stopping or suspending the securities of the designated clearing house from being listed for quotation or quoted on the securities market. |
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(3) The Authority may, by notice in writing to the operator of the securities market —(a) | modify the listing rules of the securities market for the purpose of their application to the listing of the securities of the designated clearing house for quotation or trading; or | (b) | waive the application of any listing rule of the securities market to the designated clearing house. |
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(4) Any designated clearing house which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
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Subdivision (4) — Powers of Authority |
Power to impose conditions or restrictions |
78.—(1) The Authority may impose on a designated clearing house such conditions or restrictions as it thinks fit by notice in writing, in addition to the obligations imposed on the designated clearing house under this Division, for the purposes of furthering the objectives specified in section 47.(2) The Authority may, at any time, by notice in writing to the designated clearing house, vary any condition or restriction as it may think fit. |
(3) Without affecting the generality of subsection (1) or (2), the conditions or restrictions that the Authority may impose include conditions or restrictions relating to —(a) | the activities that the designated clearing house may undertake; | (b) | the products that may be cleared by the clearing facility; | (c) | the nature of investors or participants who may use or participate in the clearing facility; and | (d) | the requirement for the designated clearing house to operate as a corporation. |
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(4) Any designated clearing house which contravenes any condition or restriction imposed under subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Power of Authority to issue directions |
79.—(1) The Authority may, if it thinks it necessary or expedient —(a) | for ensuring the safe and efficient clearing and settlement of transactions; | (b) | for ensuring the integrity and stability of the capital markets or the financial system; | (c) | in the interests of the public or a section of the public or for the protection of investors; | (d) | for the effective administration of this Act; or | (e) | for ensuring compliance with any condition or restriction as may be imposed by the Authority under section 60(2), 64(4), 75(5) or (10), 76(11), 78(1) or (2), or 81C, or such other obligations or requirements under this Act or as may be prescribed by the Authority, |
issue directions by notice in writing either of a general or specific nature to a designated clearing house, and the designated clearing house shall comply with such directions. |
(2) Any designated clearing house which, without reasonable excuse, contravenes a direction issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
(3) For the avoidance of doubt, a direction issued under subsection (1) shall be deemed not to be subsidiary legislation. |
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Power to order cessation of designated clearing houses |
80.—(1) The Authority may, by notice in writing to a designated clearing house, order the designated clearing house to cease operating any of its clearing facilities if —(a) | the designated clearing house fails to comply with any obligation imposed on it under section 59(1); | (b) | the designated clearing house contravenes any provision of this Act or any condition or restriction imposed on it, or direction issued to it, by the Authority under any provision of this Act; | (c) | the designated clearing house is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (d) | the designated clearing house operates in a manner that is, in the opinion of the Authority, contrary to the interests of the public; | (e) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the designated clearing house; | (f) | the designated clearing house has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly; or | (g) | the designated clearing house has provided any information or document to the Authority that is false or misleading. |
(2) The Authority shall give notice in the Gazette of any order made under subsection (1). |
(3) Subject to subsection (4), the Authority shall not order a designated clearing house to cease operating a clearing facility under subsection (1) without giving the designated clearing house an opportunity to be heard. |
(4) The Authority may order a designated clearing house to cease operating a clearing facility under subsection (1) on any of the following grounds without giving the designated clearing house an opportunity to be heard:(a) | the designated clearing house is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (b) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to, or in respect of, any property of the designated clearing house; | (c) | the designated clearing house has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly. |
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(5) Any designated clearing house that is aggrieved by a decision of the Authority made in relation to the designated clearing house under subsection (1) may, within 30 days after the designated clearing house is notified of the decision, appeal to the Minister whose decision shall be final. |
(6) Notwithstanding the lodging of an appeal under subsection (5), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister. |
(7) The Minister may, when deciding an appeal under subsection (5), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(8) The Authority may direct, by notice in writing, a designated clearing house, to whom an order to cease operations of its clearing facility has been made by the Authority under subsection (1), to take such action as it considers necessary, including any of the following actions:(a) | ordering the liquidation of all positions or part thereof or the reduction in such positions; | (b) | altering conditions of delivery of transactions cleared or settled or to be cleared or settled through the clearing facility; | (c) | fixing the settlement price at which transactions are to be liquidated; | (d) | requiring margins or additional margins for transactions cleared or settled or to be cleared or settled through the clearing facility; | (e) | modifying or suspending any of the business rules of the designated clearing house, |
and the designated clearing house shall comply with that direction. |
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(9) The Authority may modify any action taken by a designated clearing house under subsection (8), including the setting aside of that action. |
(10) Any person who is aggrieved by any action taken by the Authority or a designated clearing house under subsection (8) or (9) may, within 30 days after the person is notified of the action, appeal to the Minister whose decision shall be final. |
(11) Notwithstanding the lodging of an appeal under subsection (10), any action taken by the Authority or a designated clearing house under this section shall continue to have effect pending the decision of the Minister. |
(12) The Minister may, when deciding an appeal under subsection (10), make such modification as he considers necessary to any action taken by the Authority or a designated clearing house under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(13) Subject to any direction issued by the Authority under subsection (8) to the contrary, an order of cessation made under subsection (1) shall not operate so as to —(a) | avoid or affect any agreement, transaction or arrangement entered into in connection with the use of the clearing facility operated by the designated clearing house, whether the agreement, transaction or arrangement was entered into before or after the order of the cessation; or | (b) | affect any right, obligation or liability arising under such agreement, transaction or arrangement. |
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(14) Any designated clearing house which contravenes an order of cessation made under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction. |
(15) Any designated clearing house which fails to comply with a direction issued under subsection (8) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Emergency powers of Authority |
81.—(1) Where the Authority has reason to believe that an emergency exists, or thinks that it is necessary or expedient in the interests of the public or a section of the public or for the protection of investors, the Authority may direct by notice in writing a designated clearing house to take such action as it considers necessary to maintain or restore safe and efficient operations of the clearing facilities operated by the designated clearing house.(2) Without prejudice to subsection (1), the actions which the Authority may direct a designated clearing house to take include —(a) | ordering the liquidation of all positions or part thereof or the reduction of such positions; | (b) | altering conditions of delivery of transactions cleared or settled or to be cleared or settled through the clearing facility; | (c) | fixing the settlement price at which transactions are to be liquidated; | (d) | requiring margins or additional margins for transactions cleared or settled or to be cleared or settled through the clearing facility; and | (e) | modifying or suspending any of the business rules of the designated clearing house. |
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(3) Where a designated clearing house fails to comply with any direction of the Authority under subsection (1) within such time as is specified by the Authority, the Authority may —(a) | set margin levels for transactions cleared or settled or to be cleared or settled through the clearing facility to cater for the emergency; | (b) | set limits that may apply to market positions acquired in good faith prior to the date of the notice issued by the Authority; or | (c) | take such other action as the Authority thinks fit to maintain or restore safe and efficient operations of the clearing facilities operated by the designated clearing house. |
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(4) In this section, “emergency” means any threatened or actual market manipulation or cornering, and includes —(a) | any act of any government affecting a commodity or securities; | (b) | any major market disturbance which prevents the market from accurately reflecting the forces of supply and demand for such commodity or securities; or | (c) | any undesirable situation or practice which, in the opinion of the Authority, constitutes an emergency. |
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(5) The Authority may modify any action taken by a designated clearing house under subsection (1), including the setting aside of that action. |
(6) Any person who is aggrieved by any action taken by the Authority or a designated clearing house under this section may, within 30 days after the person is notified of the action, appeal to the Minister whose decision shall be final. |
(7) Notwithstanding the lodging of an appeal under subsection (6), any action taken by the Authority or a designated clearing house under this section shall continue to have effect pending the decision of the Minister. |
(8) The Minister may, when deciding an appeal under subsection (6), make such modification as he considers necessary to any action taken by the Authority or a designated clearing house under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(9) Any designated clearing house which fails to comply with a direction issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Power of Authority to remove officers |
81A.—(1) Where the Authority is satisfied that an officer of a designated clearing house —(a) | has wilfully contravened or wilfully caused that designated clearing house to contravene this Act or its business rules; | (b) | has, without reasonable excuse, failed to ensure compliance with this Act or the business rules of that designated clearing house, by that designated clearing house or a member of that designated clearing house or a person associated with that member; | (c) | has failed to discharge the duties or functions of his office or employment; | (d) | is an undischarged bankrupt, whether in Singapore or elsewhere; | (e) | has had execution against him in respect of a judgment debt returned unsatisfied in whole or in part; | (f) | has, whether in Singapore or elsewhere, made a compromise or scheme of arrangement with his creditors, being a compromise or scheme of arrangement that is still in operation; or | (g) | has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that he acted fraudulently or dishonestly, |
the Authority may, if it thinks it necessary in the interests of the public or a section of the public or for the protection of investors, by notice in writing direct that designated clearing house to remove the officer from his office or employment, and that designated clearing house shall comply with such notice, notwithstanding the provisions of section 152 of the Companies Act (Cap. 50). |
(2) Without prejudice to any other matter that the Authority may consider relevant, the Authority may, in determining whether an officer of a designated clearing house has failed to discharge the duties or functions of his office or employment for the purposes of subsection (1)(c), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing. |
(3) Subject to subsection (4), the Authority shall not direct a designated clearing house to remove an officer from his office or employment without giving the designated clearing house an opportunity to be heard. |
(4) The Authority may direct a designated clearing house to remove an officer from his office or employment under subsection (1) on any of the following grounds without giving the designated clearing house an opportunity to be heard:(a) | the officer is an undischarged bankrupt, whether in Singapore or elsewhere; | (b) | the officer has been convicted, whether in Singapore or elsewhere, of an offence —(i) | involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and | (ii) | punishable with imprisonment for a term of 3 months or more. |
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(5) Where the Authority directs a designated clearing house to remove an officer from his office or employment under subsection (1), the Authority need not give that officer an opportunity to be heard. |
(6) Any designated clearing house that is aggrieved by a direction of the Authority made in relation to the designated clearing house under subsection (1) may, within 30 days after the designated clearing house is notified of the direction, appeal to the Minister whose decision shall be final. |
(7) Notwithstanding the lodging of an appeal under subsection (6), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister. |
(8) The Minister may, when deciding an appeal under subsection (6), make such modifications as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(9) Subject to subsection (10), no criminal or civil liability shall be incurred by a designated clearing house in respect of any thing done or omitted to be done with reasonable care and in good faith in the discharge or purported discharge of its obligations under this section. |
(10) Any designated clearing house which, without reasonable excuse, contravenes a written notice issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Additional powers of Authority in respect of auditors |
81B.—(1) If an auditor of a designated clearing house, in the course of the performance of his duties, becomes aware of —(a) | any matter which, in his opinion, adversely affects or may adversely affect the financial position of the designated clearing house to a material extent; | (b) | any matter which, in his opinion, constitutes or may constitute a breach of any provision of this Act or an offence involving fraud or dishonesty; or | (c) | any irregularity that has or may have a material effect upon the accounts of the designated clearing house, including any irregularity that affects or jeopardises, or may affect or jeopardise, the funds or property of investors, |
the auditor shall immediately send to the Authority a written report of the matter or the irregularity. |
(2) An auditor shall not, in the absence of malice on his part, be liable to any action for defamation at the suit of any person in respect of any statement made in his report under subsection (1). |
(3) Subsection (2) shall not restrict or affect any right, privilege or immunity that the auditor may have, apart from this section, as a defendant in an action for defamation. |
(4) The Authority may impose all or any of the following duties on an auditor of a designated clearing house:(a) | a duty to submit such additional information and reports in relation to his audit as the Authority considers necessary; | (b) | a duty to enlarge, extend or alter the scope of his audit of the business and affairs of the designated clearing house; | (c) | a duty to carry out any other examination or establish any procedure in any particular case; | (d) | a duty to submit a report on any matter arising out of his audit, examination or establishment of procedure referred to in paragraph (b) or (c), |
and the auditor shall carry out such duties. |
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(5) The designated clearing house shall remunerate the auditor in respect of the discharge by him of all or any of the duties referred to in subsection (4). |
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Power of Authority to exempt designated clearing houses from provisions of this Part |
81C. The Authority may exempt a designated clearing house or a class of designated clearing houses from any of the provisions of this Part if it is satisfied that the non-compliance by such designated clearing house or class of designated clearing houses with such provision would not detract from the objectives specified in section 47, subject to such conditions or restrictions as may be imposed by the Authority. |
Subdivision (5) — Immunity |
Immunity from criminal or civil liability |
81D. No criminal or civil liability shall be incurred by —(a) | a designated clearing house; or | (b) | any person acting on behalf of a designated clearing house, including —(i) | any director of the designated clearing house; or | (ii) | any member of any committee established by the designated clearing house, |
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for any thing done (including any statement made) or omitted to be done with reasonable care and in good faith in the course of, or in connection with, the discharge or purported discharge of its or his obligations under this Act or the business rules of the designated clearing house, including its default rules. |
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Application of this Division |
81E. This Division shall apply to such transaction or class of transactions cleared or settled by any designated clearing house or class of designated clearing houses, and to such extent as may be prescribed by the Authority. |
Proceedings of designated clearing house shall take precedence over law of insolvency |
81F.—(1) The following shall not be invalid to any extent at law by reason only of inconsistency with any law relating to the distribution of the assets of a person on insolvency, bankruptcy or winding up, or on the appointment of a receiver, a receiver and manager or an equivalent officer over any of the assets of a person:(a) | a market contract; | (b) | a disposition of property pursuant to a market contract; | (c) | the provision of market collateral; | (d) | a contract effected by a designated clearing house for the purpose of realising property provided as market collateral, or any disposition of property pursuant to such a contract; | (e) | a disposition of property in accordance with the business rules of a designated clearing house as to the application of property provided as market collateral; | (f) | a disposition of property as a result of which the property becomes subject to a market charge, or any transaction pursuant to which that disposition is made; | (g) | a disposition of property for the purpose of enforcing a market charge; | (h) | a market charge; | (i) | any default proceedings. |
(2) A relevant office holder, or a court applying the law relating to insolvency in Singapore, shall not exercise his or its power to prevent, or interfere with —(a) | the settlement of a market contract in accordance with the business rules of a designated clearing house, or proceedings or other action taken under those business rules; or | (b) | default proceedings. |
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(3) Subsection (2) shall not operate to prevent a relevant office holder from recovering an amount under section 81L after the completion of a specified event referred to in section 81L(3). |
(4) Where a participant which is also a bank licensed under the Banking Act (Cap. 19) becomes insolvent, the liabilities of the bank accorded priority under sections 61 and 62 of that Act and the Payment and Settlement Systems (Finality and Netting) Act (Cap. 231) shall have priority over unsecured liabilities of the bank accorded priority under the provisions of this Division. |
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Supplementary provisions as to default proceedings |
81G.—(1) A court may, on the application of a relevant office holder, make an order to alter, or to release the relevant office holder from complying with, the functions of his office that are affected by default proceedings if default proceedings have been, could be, or could have been, taken.(2) The functions of the relevant office holder shall be construed subject to an order made under subsection (1). |
(3) Sections 45, 74 and 76 of the Bankruptcy Act (Cap. 20) and sections 210, 258, 260, 262 (3), 299(1) and 309 of the Companies Act (Cap. 50) shall not prevent, or interfere with, any default proceedings. |
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Duty to report on completion of default proceedings |
81H.—(1) A designated clearing house shall, upon the conclusion of any default proceeding commenced by it, make a report on those proceedings stating in respect of each defaulter who is a subject of those proceedings —(a) | the net sum, if any, certified by the designated clearing house to be payable by or to the defaulter; or | (b) | the fact that no sum is so payable, |
as the case may be, and the designated clearing house may include in that report such other particulars in respect of those proceedings as it thinks fit. |
(2) A designated clearing house which has made a report under subsection (1) shall supply the report to —(a) | the Authority; | (b) | any relevant office holder acting in relation to —(i) | the defaulter to whom the report relates; or | (ii) | the estate of that defaulter; and |
| (c) | where there is no relevant office holder referred to in paragraph (b), the defaulter to whom the report relates. |
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(3) The designated clearing house shall publish a notice of the fact that a report has been made under subsection (1) in such manner as it thinks appropriate to bring that fact to the attention of the creditors of the defaulter to whom the report relates. |
(4) Where a relevant office holder or defaulter receives under subsection (2) a report made under subsection (1), he shall, at the request of a creditor of the defaulter to whom the report relates —(a) | make the report available for inspection by the creditor; and | (b) | on payment of such reasonable fee as the relevant office holder or defaulter, as the case may be, determines, supply to the creditor all or any part of that report. |
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(5) In subsections (2), (3) and (4), “report” includes a copy of a report. |
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Net sum payable on completion of default proceedings |
81I.—(1) This section shall apply to any net sum certified under section 81H(1)(a) by a designated clearing house, upon the completion by it of any default proceedings, to be payable by or to a defaulter.(2) Notwithstanding section 87 or 88 of the Bankruptcy Act (Cap. 20), and section 327 of the Companies Act (Cap. 50), where a receiving or winding up order has been made, or a resolution for voluntary winding up has been passed, any net sum as certified under section 81H(1)(a) shall —(a) | be provable in the bankruptcy or winding up or payable to the relevant office holder, as the case may be; and | (b) | be taken into account, where appropriate, under section 88 of the Bankruptcy Act or section 327 of the Companies Act. |
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Disclaimer of onerous property, rescission of contracts, etc. |
81J.—(1) Section 110 of the Bankruptcy Act and section 332 of the Companies Act shall not apply —(a) | to a market contract; | (b) | to a contract effected by a designated clearing house for the purpose of realising property provided as market collateral; | (c) | to a market charge; or | (d) | to any default proceedings. |
(2) Section 77 of the Bankruptcy Act and sections 259 and 299(1) of the Companies Act shall not apply to any act, matter or thing which has been done under —(a) | a market contract; | (b) | a disposition of property pursuant to a market contract; | (c) | the provision of market collateral; | (d) | a contract effected by a designated clearing house for the purpose of realising property provided as market collateral, or any disposition of property pursuant to such a contract; | (e) | a disposition of property in accordance with the business rules of a designated clearing house relating to the application of property provided as market collateral; | (f) | a disposition of property as a result of which the property becomes subject to a market charge, or any transaction pursuant to which that disposition is made; | (g) | a disposition of property for the purpose of enforcing a market charge; | (h) | a market charge; or | (i) | any default proceedings. |
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Adjustment of prior transactions |
81K.—(1) No order shall be made by a court under —(a) | section 98 or 99 of the Bankruptcy Act (Cap. 20); | (b) | section 227T, 329 or 331 of the Companies Act (Cap. 50); or | (c) | section 73B of the Conveyancing and Law of Property Act (Cap. 61), |
in relation to any matter to which this section applies. |
(2) The matters to which this section applies are —(a) | a market contract; | (b) | a disposition of property pursuant to a market contract; | (c) | the provision of market collateral; | (d) | a contract effected by a designated clearing house for the purpose of realising property provided as market collateral; | (e) | a disposition of property in accordance with the business rules of a designated clearing house relating to the application of property provided as market collateral; | (f) | a disposition of property as a result of which the property becomes subject to a market charge, or any transaction pursuant to which that disposition is made; | (g) | a disposition of property for the purpose of enforcing a market charge; | (h) | a market charge; | (i) | any default proceedings. |
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Right of relevant office holder to recover certain amounts arising from certain transactions |
81L.—(1) Where a participant (referred to as the first participant) sells securities at an over-value to, or purchases securities at an under-value from, another participant (referred to as the second participant) in the circumstances referred to in subsection (3), and thereafter a relevant office holder acts for —(a) | the second participant; | (b) | the principal of the second participant in the sale or purchase; or | (c) | the estate of the second participant or person referred to in paragraph (b), |
then, unless a court otherwise orders, the relevant office holder may recover from the first participant, or the principal of the first participant, an amount equal to the specified gain obtained under the sale or purchase by the first participant, or the principal of the first participant. |
(2) The amount equal to the specified gain is recoverable even if the sale or purchase may have been discharged according to the business rules of a designated clearing house and replaced by a market contract. |
(3) The circumstances referred to in subsection (1) are that —(a) | a specified event has occurred in relation to the second participant or the principal of the second participant within the period of 6 months immediately following the date on which the sale or purchase was entered into; and | (b) | at the time the sale or purchase was entered into, the first participant or the principal of the first participant knew, or ought reasonably to have known, that a specified event was likely to occur in relation to the second participant or the principal of the second participant. |
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(4) In this section —“specified event”, in relation to a second participant or a person who is or was, in respect of a sale or purchase referred to in subsection (1), the principal of the second participant, means —(a) | the making of a bankruptcy order against the second participant or that person, as the case may be; | (b) | the making of a statutory declaration in respect of the second participant or that person, as the case may be, under section 291(1) of the Companies Act (Cap. 50); | (c) | the summoning of a meeting of creditors in relation to the second participant or that person, as the case may be, under section 296 of the Companies Act; | (d) | the presentation of a petition for the winding up of the second participant or that person, as the case may be, before a court; or | (e) | the making of a judicial management order by a court under Part VIIIA of the Companies Act in respect of the second participant or that person, as the case may be; |
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“specified gain”, in relation to a sale or purchase referred to in subsection (1), means the difference between —(a) | the market value of the securities which are the subject of the sale or purchase; and | (b) | the value of the consideration for the sale or purchase, |
as at the time the sale or purchase was entered into. |
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Application of market collateral not affected by certain other interest, etc. |
81M.—(1) This section shall have effect with respect to the application of a designated clearing house of property provided as market collateral (referred to in this section as the property).(2) The property may be applied in accordance with the business or default rules of a designated clearing house so far as it is necessary for it to be so applied notwithstanding —(a) | any prior equitable interest or right, or any right or remedy arising from a breach of fiduciary duty, unless the designated clearing house had actual notice of the interest, right or breach of duty (other than any interest or right arising from the situation referred to in paragraph (b)), as the case may be, at the time the property was provided as market collateral; or | (b) | that the property is deposited by the designated clearing house in a trust account held for the benefit of a participant. |
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(3) No right or remedy arising subsequent to the provision of the property as market collateral may be enforced to prevent, or interfere with, the application of the property by the designated clearing house in accordance with its business or default rules. |
(4) Where a designated clearing house has power under this section to apply the property notwithstanding an interest, a right or a remedy, a person to whom the designated clearing house disposes of the property in accordance with its business or default rules shall take free from that interest, right or remedy. |
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Enforcement of judgments over property subject to market charge, etc. |
81N.—(1) Where property is subject to a market charge or has been provided as market collateral, no execution or other legal process for the enforcement of a judgment or an order may be commenced or continued, and no distress may be levied, against the property by a person not seeking to enforce any interest in, or security over, the property, except with the consent of the designated clearing house concerned.(2) Where by virtue of this section a person would not be entitled to enforce a judgment or an order against any property, any injunction or other remedy granted by any court with a view to facilitating the enforcement of any such judgment or order shall not extend to that property. |
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Law of insolvency in other jurisdictions |
81O.—(1) Notwithstanding any other written law or rule of law, a court shall not recognise or give effect to —(a) | an order of a court exercising jurisdiction under the law of insolvency in a place outside Singapore; or | (b) | an act of a person appointed in a place outside Singapore to perform a function under the law of insolvency in that place, |
insofar as the making of the order or doing of the act would be prohibited under this Act for a court in Singapore or a relevant office holder respectively. |
(2) In this section, “law of insolvency”, in relation to a place outside Singapore, means any law of that place which is similar to, or serves the same purposes as, any part of the law of insolvency in Singapore. |
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Participant to be party to certain transactions as principal |
81P.—(1) Where a participant —(a) | in his capacity as such enters into any transaction (including a market contract) with a designated clearing house; and | (b) | but for this subsection or any provision in the business rules or default rules of a designated clearing house, would be a party to that transaction as agent, |
then, notwithstanding any other written law or rule of law, as between, but only as between, the designated clearing house and any other person (including the participant and the person who is his principal in respect of that transaction), the participant shall for all purposes (including any action, claim or demand, whether civil or criminal) — |
(i) | be deemed not to be a party to that transaction as agent; and | (ii) | be deemed to be a party to that transaction as principal. |
(2) Where —(a) | 2 or more participants in their capacities as such enter into any transaction; and | (b) | but for this subsection, any of the participants would be a party to that transaction as agent, |
then, notwithstanding any other written law or rule of law, a participant to whom paragraph (b) applies shall for all purposes (including any action, claim or demand, whether civil or criminal), except as between, but only as between, him and the person who is his principal in respect of that transaction — |
(i) | be deemed not to be a party to the transaction as agent; and | (ii) | be deemed to be a party to the transaction as principal. |
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Preservation of rights, etc. |
81Q. Except to the extent that it expressly provides, this Division shall not operate to limit, restrict or otherwise affect —(a) | any right, title, interest, privilege, obligation or liability of a person; or | (b) | any investigation, legal proceedings or remedy in respect of any such right, title, interest, privilege, obligation or liability. |
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Immunity from criminal or civil liability |
81R.—(1) No criminal or civil liability shall be incurred by —(a) | a person discharging, by virtue of a delegation under the default rules of a designated clearing house, an obligation of the designated clearing house in connection with any default proceedings; or | (b) | any person acting on behalf of a person referred to in paragraph (a), including —(i) | any member of the board of directors of the last-mentioned person; and | (ii) | any member of any committee established by the last-mentioned person, |
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in respect of any thing done or omitted to be done with reasonable care and in good faith in the discharge or purported discharge of that obligation. |
(2) Where a relevant office holder takes action in relation to any property of a defaulter which is liable to be dealt with in accordance with the default rules of a designated clearing house, and reasonably believes or has reasonable grounds for believing that he is entitled to take that action, he shall not be liable to any person in respect of any loss or damage resulting from his action except insofar as the loss or damage, as the case may be, is caused by the negligence of the office holder. |
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Division 5 — General Powers of Authority |
Power of Authority to make regulations |
81S.—(1) Without prejudice to section 341, the Authority may make regulations relating to requirements applicable to any person operating a clearing facility, whether or not the person has been designated by the Authority as a designated clearing house under section 55(1).(2) Regulations made under this section may provide —(a) | that a contravention of any specified provision thereof shall be an offence; and | (b) | for penalties not exceeding a fine of $150,000 or imprisonment for a term not exceeding 12 months or both for each offence and, in the case of a continuing offence, to a further penalty not exceeding a fine of 10% of the maximum fine prescribed for that offence for every day or part thereof during which the offence continues after conviction. |
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PART IIIA APPROVED HOLDING COMPANIES |
81T. The objectives of this Part are —(a) | to provide a regulatory framework for the establishment and operation of holding companies of —(i) | approved exchanges; | (ii) | designated clearing houses; and | (iii) | corporations that are approved holding companies, |
and to ensure that such holding companies are fit and proper to perform their functions; and |
| (b) | to reduce systemic risk. |
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Division 1 — Establishment of Approved Holding Companies |
81U.—(1) No corporation shall be the holding company of any approved exchange, designated clearing house, or corporation which is an approved holding company, unless the first-mentioned corporation is an approved holding company.(2) Any corporation which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part thereof during which the offence continues after conviction. |
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81V.—(1) A corporation may apply to the Authority to be approved as an approved holding company.(2) An application made under subsection (1) shall be —(a) | made in such form and manner as the Authority may prescribe; and | (b) | accompanied by a non-refundable prescribed application fee, which shall be paid in the manner specified by the Authority. |
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(3) The Authority may require an applicant to furnish it with such information or documents as the Authority considers necessary in relation to the application. |
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Power of Authority to approve holding companies |
81W.—(1) Where an application is made under section 81V(1), the Authority may approve the corporation as an approved holding company subject to such conditions or restrictions as the Authority may think fit to impose by notice in writing, if the Authority is satisfied that —(a) | it would not be contrary to the interests of the public or contrary to the objectives specified in section 81T to approve the corporation; and | (b) | the grounds referred to in subsection (5) for refusing such approval do not apply. |
(2) The Authority may, at any time, by notice in writing to the corporation, vary any condition or restriction or impose such further conditions or restrictions as the Authority may think fit. |
(3) An approved holding company shall, for the duration of the approval, satisfy all conditions and restrictions that may be imposed on it under subsections (1) and (2). |
(4) Subject to subsection (5), the Authority shall not refuse to approve a corporation under subsection (1) without giving the corporation an opportunity to be heard. |
(5) The Authority may refuse to approve a corporation on any of the following grounds without giving the corporation an opportunity to be heard:(a) | the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (b) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the corporation; | (c) | the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly. |
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(6) The Authority shall give notice in the Gazette of any corporation approved under subsection (1). |
(7) Any applicant that is aggrieved by the refusal of the Authority to grant an approval under subsection (1) may, within 30 days after the applicant is notified of the decision, appeal to the Minister whose decision shall be final. |
(8) Any corporation which contravenes subsection (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Annual fees payable by approved holding company |
81X.—(1) Every approved holding company shall pay to the Authority such annual fees as may be prescribed and in such manner as may be specified by the Authority.(2) The Authority may, where it considers appropriate, refund or remit the whole or part of any annual fee paid or payable to it. |
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81Y.—(1) An approved holding company which intends to cease its activities as an approved holding company may apply to the Authority to cancel its approval.(2) The Authority may cancel the approval if it is satisfied that the approved holding company referred to in subsection (1) has ceased its activities as an approved holding company. |
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Power of Authority to revoke approval |
81Z.—(1) The Authority may revoke any approval of a corporation as an approved holding company under section 81W(1) if —(a) | the corporation ceases to be the holding company of any approved exchange, designated clearing house or corporation which is an approved holding company; | (b) | the corporation is being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (c) | the corporation contravenes —(i) | any condition or restriction applicable in respect of its approval; | (ii) | any direction issued to it by the Authority under this Act; or | (iii) | any provision in this Act; |
| (d) | the corporation operates in a manner that is, in the opinion of the Authority, contrary to the interests of the public; | (e) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the corporation; | (f) | the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly; or | (g) | any information or document provided by the corporation to the Authority is false or misleading. |
(2) Subject to subsection (3), the Authority shall not revoke under subsection (1) any approval under section 81W(1) that was granted to a corporation without giving the corporation an opportunity to be heard. |
(3) The Authority may revoke an approval under section 81W(1) that was granted to a corporation on any of the following circumstances without giving the corporation an opportunity to be heard:(a) | the corporation is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere; | (b) | a receiver, a receiver and manager or an equivalent person has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the corporation; | (c) | the corporation has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that it had acted fraudulently or dishonestly. |
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(4) Any corporation which is aggrieved by a decision of the Authority made in relation to the corporation under subsection (1) may, within 30 days after the corporation is notified of the decision, appeal to the Minister whose decision shall be final. |
(5) Notwithstanding the lodging of an appeal under subsection (4), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister. |
(6) The Minister may, when deciding an appeal under subsection (4), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(7) The Authority shall give notice in the Gazette of any revocation of approval referred to in subsection (1). |
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Division 2 — Regulation of Approved Holding Companies |
Obligation to notify Authority of certain matters |
81ZA.—(1) An approved holding company shall, as soon as practicable after the occurrence of any of the following circumstances, notify the Authority of the circumstance:(a) | any material change to the information provided by the approved holding company in its application under section 81V(1); | (b) | the carrying on of any activity by the approved holding company other than —(i) | the activities of a holding company of any approved exchange, designated clearing house or corporation that is an approved holding company; | (ii) | an activity incidental to being a holding company of any approved exchange, designated clearing house or corporation that is an approved holding company; or | (iii) | such activity or class of activities as the Authority may prescribe; |
| (c) | the acquisition by the approved holding company of a substantial shareholding in a corporation which does not carry on —(i) | any activity of a holding company of any approved exchange, designated clearing house or corporation that is an approved holding company; | (ii) | any activity incidental to being a holding company of any approved exchange, designated clearing house or corporation that is an approved holding company; or | (iii) | such activity or class of activities as the Authority may prescribe; |
| (d) | any other matter that the Authority may prescribe by regulations or specify by notice in writing to the approved holding company. |
(2) Without prejudice to the generality of section 81ZL(1), the Authority may, at any time after receiving a notification referred to in subsection (1), issue directions to the approved holding company —(a) | where the notification relates to a matter referred to in subsection (1)(b) —(i) | to cease carrying on the first-mentioned activity referred to in subsection (1)(b); or | (ii) | to carry on the first-mentioned activity referred to in subsection (1)(b) subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 81ZL(1); or |
| (b) | where the notification relates to a matter referred to in subsection (1)(c) —(i) | to dispose of the shareholding referred to in subsection (1)(c); or | (ii) | to exercise its rights relating to such shareholding subject to such conditions or restrictions as the Authority may impose, if the Authority is of the opinion that this is necessary for any purpose referred to in section 81ZL(1), |
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and the approved holding company shall comply with such directions. |
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(3) Any approved holding company which contravenes subsection (1) or (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
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Obligation to submit periodic reports |
81ZB.—(1) An approved holding company shall submit to the Authority such reports in such form, manner and frequency as the Authority may prescribe.(2) Any approved holding company which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
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Obligation to assist Authority |
81ZC.—(1) An approved holding company shall provide such assistance to the Authority as the Authority may require for the performance of the functions and duties of the Authority, including the furnishing of such returns and the provision of —(a) | such books and other information relating to the activities of the approved holding company; and | (b) | such other information, |
as the Authority may require for the proper administration of this Act. |
(2) Any approved holding company which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
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Obligation to maintain confidentiality |
81ZD.—(1) Subject to subsection (2), an approved holding company and its officers and employees shall maintain, and aid in maintaining, the confidentiality of all user information that —(a) | comes to the knowledge of the approved holding company or any of its officers or employees; or | (b) | is in the possession of the approved holding company or any of its officers or employees. |
(2) Subsection (1) shall not apply to —(a) | the disclosure of user information for such purposes, or in such circumstances, as the Authority may prescribe; | (b) | any disclosure of user information which is authorised by the Authority to be disclosed or furnished; or | (c) | the disclosure of user information pursuant to any requirement imposed under any written law or order of court in Singapore. |
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(3) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
(4) For the avoidance of doubt, nothing in this section shall be construed as preventing an approved holding company from entering into a written agreement with a user which obliges the approved holding company to maintain a higher degree of confidentiality than that specified in this section. |
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Control of substantial shareholding in approved holding companies |
81ZE.—(1) No person shall enter into any agreement to acquire shares in an approved holding company by virtue of which he would, if the agreement had been carried out, become a substantial shareholder of the approved holding company without first obtaining the approval of the Authority to enter into the agreement.(2) No person shall become —(a) | a 12% controller; or | (b) | a 20% controller, |
of an approved holding company without first obtaining the approval of the Authority. |
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(3) In subsection (2) —“12% controller” means a person, not being a 20% controller, who alone or together with his associates —(a) | holds not less than 12% of the shares in the approved holding company; or | (b) | is in a position to control not less than 12% of the votes in the approved holding company; |
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“20% controller” means a person who, alone or together with his associates —(a) | holds not less than 20% of the shares in the approved holding company; or | (b) | is in a position to control not less than 20% of the votes in the approved holding company. |
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(4) In this section —(a) | a person holds a share if —(i) | he is deemed to have an interest in that share under section 7(6) to (10) of the Companies Act (Cap. 50); or | (ii) | he otherwise has a legal or an equitable interest in that share, except such interest as is to be disregarded under section 7(6) to (10) of the Companies Act; |
| (b) | a reference to the control of a percentage of the votes in an approved holding company shall be construed as a reference to the control, whether direct or indirect, of that percentage of the total number of votes that might be cast in a general meeting of the approved holding company; and | (c) | a person, A, is an associate of another person, B, if —(i) | A is the spouse, a parent, remoter lineal ancestor or step-parent, a son, daughter, remoter issue, step-son or step-daughter or a brother or sister of B; | (ii) | A is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B, or where B is a corporation, of the directors of B; | (iii) | B is a corporation the directors of which are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A, or where A is a corporation, of the directors of A; | (iv) | A is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of B; | (v) | B is a person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of A; | (vi) | A is a related corporation of B; | (vii) | A is a corporation in which B, alone or together with other associates of B as described in paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in A; | (viii) | B is a corporation in which A, alone or together with other associates of A as described in paragraphs (ii) to (vi), is in a position to control not less than 20% of the votes in B; or | (ix) | A is a person with whom B has an agreement or arrangement, whether oral or in writing and whether express or implied, to act together with respect to the acquisition, holding or disposal of shares or other interests in, or with respect to the exercise of their votes in relation to, the approved holding company. |
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(5) The Authority may grant its approval referred to in subsection (1) or (2) subject to such conditions or restrictions as the Authority may think fit. |
(6) Without prejudice to subsection (11), the Authority may, for the purposes of securing compliance with subsection (1) or (2) or any condition or restriction imposed under subsection (5), by notice in writing, direct the transfer or disposal of all or any of the shares of an approved holding company in which a substantial shareholder, 12% controller or 20% controller of the approved holding company has an interest. |
(7) Until a person to whom a direction has been issued under subsection (6) transfers or disposes of the shares which are the subject of the direction, and notwithstanding any thing to the contrary in the Companies Act (Cap. 50) or the memorandum or articles of association or other constituent document or documents of the approved holding company —(a) | no voting rights shall be exercisable in respect of the shares which are the subject of the direction; | (b) | the approved holding company shall not offer or issue any shares (whether by way of rights, bonus, share dividend or otherwise) in respect of the shares which are the subject of the direction; and | (c) | except in a liquidation of the approved holding company, the approved holding company shall not make any payment (whether by way of cash dividend, dividend in kind or otherwise) in respect of the shares which are the subject of the direction. |
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(8) Any issue of shares by an approved holding company in contravention of subsection (7)(b) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return those shares to the approved holding company, upon which the approved holding company shall return to the person any payment received from him in respect of those shares. |
(9) Any payment made by an approved holding company in contravention of subsection (7)(c) shall be deemed to be null and void, and a person to whom a direction has been issued under subsection (6) shall immediately return the payment he has received to the approved holding company. |
(10) The Authority may exempt —(a) | any person or class or persons; or | (b) | any class or description of shares or interests in shares, |
from the requirement under subsection (1) or (2), subject to such conditions or restrictions as may be imposed by the Authority. |
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(11) Any person who contravenes subsection (1) or (2), or any condition or restriction imposed by the Authority under subsection (5), shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
(12) Any person who contravenes subsection (7)(b) or (c), (8) or (9) or any direction issued by the Authority under subsection (6) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Approval of chairman, chief executive officer, director and key persons |
81ZF.—(1) An approved holding company shall ensure that it appoints or employs fit and proper persons as its chairman, chief executive officer, directors and key management officers.(2) No approved holding company shall appoint a person as its chairman, chief executive officer or director unless the approved holding company has obtained the approval of the Authority. |
(3) The Authority may, by notice in writing, require an approved holding company to obtain the approval of the Authority for the appointment of any person to any key management position or committee of the approved holding company and the approved holding company shall comply with the notice. |
(4) An application for approval under subsection (2) or (3) shall be made in such form and manner as the Authority may prescribe. |
(5) Without prejudice to the generality of section 81ZK and to any other matter that the Authority may consider relevant, the Authority may, in determining whether to grant its approval under subsection (2) or (3), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing. |
(6) Subject to subsection (7), the Authority shall not refuse an application for approval under this section without giving the approved holding company an opportunity to be heard. |
(7) The Authority may refuse an application for approval on any of the following grounds without giving the approved holding company an opportunity to be heard:(a) | the person is an undischarged bankrupt, whether in Singapore or elsewhere; | (b) | the person has been convicted, whether in Singapore or elsewhere, of an offence —(i) | involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and | (ii) | punishable with imprisonment for a term of 3 months or more. |
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(8) Where the Authority refuses an application for approval under this section, the Authority need not give the person who was proposed to be appointed an opportunity to be heard. |
(9) An approved holding company shall, as soon as practicable, give written notice to the Authority of the resignation or removal of its chairman, chief executive officer, director or person referred to in the notice issued by the Authority under subsection (3). |
(10) Without prejudice to the generality of section 81ZK, the Authority may make regulations relating to the composition and duties of the board of directors or any committee of an approved holding company. |
(11) In this section, “committee” includes any committee of directors, disciplinary committee, appeals committee or any body responsible for disciplinary action against a member of an approved exchange or a designated clearing house of which an approved holding company is the holding company. |
(12) The Authority may exempt an approved holding company or a class of approved holding companies from the requirement under subsection (1), (2) or (9), subject to such conditions or restrictions as may be imposed by the Authority. |
(13) Any approved holding company which contravenes subsection (1), (2), (3) or (9) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
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Listing of approved holding companies on securities market |
81ZG.—(1) The securities of an approved holding company shall not be listed for quotation on a securities market that is operated by any of its related corporations unless the approved holding company and the operator of the securities market have entered into such arrangements as the Authority may require —(a) | for dealing with possible conflicts of interest that may arise from such listing; and | (b) | for the purpose of ensuring the integrity of trading of the securities of the approved holding company. |
(2) Where the securities of an approved holding company are listed for quotation on a securities market operated by any of its related corporations, the listing rules of the securities market shall be deemed to allow the Authority to act in place of the operator of the securities market in making decisions and taking action, or to require the operator of the securities market to make decisions and to take action on behalf of the Authority, on —(a) | the admission to, or removal of, the approved holding company from the official list of the securities market; and | (b) | granting, stopping or suspending the securities of the approved holding company from being listed for quotation or quoted on the securities market. |
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(3) The Authority may, by notice in writing to the operator of the securities market —(a) | modify the listing rules of the securities market for the purpose of their application to the listing for quotation or trading of the securities of the approved holding company; or | (b) | waive the application of any listing rule of the securities market to the approved holding company. |
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(4) Any approved holding company which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $20,000 for every day or part thereof during which the offence continues after conviction. |
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Additional powers of Authority in respect of auditors |
81ZH.—(1) If an auditor of an approved holding company, in the course of the performance of his duties, becomes aware of —(a) | any matter which, in his opinion, adversely affects or may adversely affect the financial position of the approved holding company to a material extent; | (b) | any matter which, in his opinion, constitutes or may constitute a breach of any provision of this Act or an offence involving fraud or dishonesty; or | (c) | any irregularity that has or may have a material effect upon the accounts of the approved holding company, including any irregularity that affects or jeopardises, or may affect or jeopardise, the funds or property of investors, |
the auditor shall immediately send to the Authority a written report of the matter or the irregularity. |
(2) An auditor shall not, in the absence of malice on his part, be liable to any action for defamation at the suit of any person in respect of any statement made in his report under subsection (1). |
(3) Subsection (2) shall not restrict or affect any right, privilege or immunity that the auditor has, apart from this section, as a defendant in an action for defamation. |
(4) The Authority may impose all or any of the following duties on an auditor of an approved holding company:(a) | a duty to submit such additional information and reports in relation to his audit as the Authority considers necessary; | (b) | a duty to enlarge, extend or alter the scope of his audit of the business and affairs of the approved holding company; | (c) | a duty to carry out any other examination or establish any procedure in any particular case; | (d) | a duty to submit a report on any matter arising out of his audit, examination or establishment of procedure referred to in paragraph (b) or (c), |
and the auditor shall carry out such duties. |
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(5) The approved holding company shall remunerate the auditor in respect of the discharge by him of all or any of the duties referred to in subsection (4). |
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Power of Authority to exempt approved holding companies from provisions of this Part |
81ZI. The Authority may exempt an approved holding company or a class of approved holding companies from any of the provisions of this Part, if it is satisfied that the non-compliance by such approved holding company or class of approved holding companies with such provision would not detract from the objectives specified in section 81T, subject to such conditions or restrictions as may be imposed by the Authority. |
Power of Authority to remove officers |
81ZJ.—(1) Where the Authority is satisfied that an officer of an approved holding company —(a) | has wilfully contravened or wilfully caused that approved holding company to contravene this Act; | (b) | has, without reasonable excuse, failed to ensure compliance with this Act by that approved holding company; | (c) | has failed to discharge the duties or functions of his office or employment; | (d) | is an undischarged bankrupt, whether in Singapore or elsewhere; | (e) | has had execution against him in respect of a judgment debt returned unsatisfied in whole or in part; | (f) | has, whether in Singapore or elsewhere, made a compromise or scheme of arrangement with his creditors, being a compromise or scheme of arrangement that is still in operation; or | (g) | has been convicted, whether in Singapore or elsewhere, of an offence involving fraud or dishonesty or the conviction for which involved a finding that he acted fraudulently or dishonestly, |
the Authority may, if it thinks it necessary in the interests of the public or a section of the public or for the protection of investors, by notice in writing direct that approved holding company to remove the officer from his office or employment and that approved holding company shall comply with such notice, notwithstanding the provisions of section 152 of the Companies Act (Cap. 50). |
(2) Without prejudice to any other matter that the Authority may consider relevant, the Authority may, in determining whether an officer of an approved holding company has failed to discharge the duties or functions of his office or employment for the purposes of subsection (1)(c), have regard to such criteria as the Authority may prescribe or specify in directions issued by notice in writing. |
(3) Subject to subsection (4), the Authority shall not direct an approved holding company to remove an officer from his office or employment without giving the approved holding company an opportunity to be heard. |
(4) The Authority may direct an approved holding company to remove an officer from his office or employment under subsection (1) on any of the following grounds without giving the approved holding company an opportunity to be heard:(a) | the officer is an undischarged bankrupt, whether in Singapore or elsewhere; | (b) | the officer has been convicted, whether in Singapore or elsewhere, of an offence —(i) | involving fraud or dishonesty or the conviction for which involved a finding that he had acted fraudulently or dishonestly; and | (ii) | punishable with imprisonment for a term of 3 months or more. |
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(5) Where the Authority directs an approved holding company to remove an officer from his office or employment under subsection (1), the Authority need not give that officer an opportunity to be heard. |
(6) Any approved holding company that is aggrieved by a direction of the Authority made in relation to the approved holding company under subsection (1) may, within 30 days after the approved holding company is notified of the direction, appeal to the Minister whose decision shall be final. |
(7) Notwithstanding the lodging of an appeal under subsection (6), any action taken by the Authority under this section shall continue to have effect pending the decision of the Minister. |
(8) The Minister may, when deciding an appeal under subsection (6), make such modification as he considers necessary to any action taken by the Authority under this section, and such modified action shall have effect from the date of the Minister’s decision. |
(9) Subject to subsection (10), no criminal or civil liability shall be incurred by an approved holding company in respect of any thing done or omitted to be done with reasonable care and in good faith in the discharge or purported discharge of its obligations under this section. |
(10) Any approved holding company which, without reasonable excuse, contravenes a written notice issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
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Power of Authority to make regulations |
81ZK.—(1) Without prejudice to section 341, the Authority may make regulations relating to the approval of, and the requirements applicable to, persons who establish, operate, or assist in establishing or operating approved holding companies.(2) Regulations made under this section may provide —(a) | that a contravention of any specified provision thereof shall be an offence; and | (b) | for penalties not exceeding a fine of $150,000 or imprisonment for a term not exceeding 12 months or both for each offence and, in the case of a continuing offence, a further penalty not exceeding a fine of 10% of the maximum fine prescribed for that offence for every day or part thereof during which the offence continues after conviction. |
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Power of Authority to issue directions |
81ZL.—(1) The Authority may, if it thinks it necessary or expedient —(a) | for ensuring fair, orderly and transparent markets; | (b) | for ensuring safe and efficient clearing facilities; | (c) | for ensuring the integrity and stability of the capital markets or the financial system; | (d) | in the interests of the public or a section of the public or for the protection of investors; | (e) | for the effective administration of this Act; or | (f) | for ensuring compliance with any condition or restriction as may be imposed by the Authority under section 81W(1) or (2), 81ZA(2), 81ZE(5) or (10), 81ZF(12) or 81ZI, or such other obligations or requirements under this Act or as may be prescribed by the Authority, |
issue directions by notice in writing either of a general or specific nature to an approved holding company, and the approved holding company shall comply with such directions. |
(2) Any approved holding company which, without reasonable excuse, contravenes a direction issued under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $150,000 and, in the case of a continuing offence, to a further fine not exceeding $15,000 for every day or part thereof during which the offence continues after conviction. |
(3) For the avoidance of doubt, a direction issued under subsection (1) shall be deemed not to be subsidiary legislation.”. |
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