26. The principal Act is amended by inserting, immediately after section 49, the following Part:“PART VIA Establishment of fidelity funds |
49A.—(1) A Futures Exchange shall establish and keep a fidelity fund (referred to in this Part as a fidelity fund or fund) which shall be administered by the Futures Exchange.(2) The assets of the fidelity fund shall be the property of the Futures Exchange but shall be kept separate from all other property and shall be held in trust for the purposes set out in this Part. |
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Moneys constituting fidelity fund |
49B. The fidelity fund of a Futures Exchange shall consist of —(a) | all moneys paid to the fund by the Futures Exchange; | (b) | the interest and profits from time to time accruing from the investment of the fund; | (c) | all moneys recovered by or on behalf of the Futures Exchange in the exercise of any right of action conferred by this Part; and | (d) | all other moneys lawfully paid into the fund. |
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Fund to be kept in separate bank account |
49C. All moneys forming part of a fidelity fund shall, pending the investment or application thereof in accordance with this Part, be paid or transferred into a bank in Singapore. |
Payments out of fidelity fund |
49D. Subject to this Part, there shall from time to time be paid out of the fidelity fund of a Futures Exchange as required and in such order as the Futures Exchange considers proper —(a) | the amount of all claims, including costs, allowed by the Futures Exchange or established against the Futures Exchange under this Part; | (b) | all legal and other expenses incurred in investigating or defending claims made under this Part or incurred in relation to the fund or in the exercise by the Futures Exchange of the rights, powers and authorities vested in it by this Part in relation to the fund; | (c) | the expenses incurred or involved in the administration of the fund including the salaries and wages of persons employed by the Futures Exchange in relation thereto; and | (d) | all other moneys payable out of the fund in accordance with the provisions of this Act. |
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49E.—(1) A Futures Exchange shall establish and keep proper accounts of its fidelity fund and shall before 31st March in each year cause a balance-sheet in respect of such accounts to be made out as at the preceding 31st December.(2) The Futures Exchange shall appoint an auditor to audit the accounts of the fidelity fund. |
(3) The auditor appointed by the Futures Exchange shall regularly and fully audit the accounts of the fidelity fund and shall audit each balance-sheet and cause it to be laid before the Futures Exchange not later than 3 months after the balance-sheet was made out. |
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Fidelity fund to consist of amount of $5 million |
49F.—(1) The fidelity fund of a Futures Exchange shall consist of an amount of not less than $5 million, or such other sum as may by order be determined by the Minister from time to time, to be paid to the credit of the fund on the establishment of a Futures Exchange under this Act or any time after its establishment as determined by the Minister.(2) The fidelity fund shall be increased by an annual payment into the fund of a sum that is equal to 10% or more of the net income of a Futures Exchange for any one financial year, but the Minister may, after consultation with the Futures Exchange, increase that percentage. |
(3) The Singapore International Monetary Exchange Ltd. shall be exempt from the requirement of subsection (1) until 6 months after the commencement of the Futures Trading (Amendment) Act 1995. |
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Provisions if fund is reduced below $5 million |
49G. If the fidelity fund is reduced below the sum of $5 million or such other sum as the Minister may, by order, prescribe, the Futures Exchange shall take steps to make up the deficiency by transferring an amount that is equal to the deficiency from other funds of the Futures Exchange to the fidelity fund. |
49H. Any moneys in a fidelity fund that are not immediately required for its purposes may be invested by the Futures Exchange in any manner in which trustees are for the time being authorised by law to invest trust funds. |
49I.—(1) Subject to this Part, a fidelity fund shall be held and applied for the purpose of compensating any person, other than an accredited investor, who suffers pecuniary loss because of a defalcation committed in the course of or in connection with the trading of a futures contract which is cleared or to be cleared by a clearing house or a Futures Exchange in Singapore by a member of a Futures Exchange or by any director, officer, futures broker’s representative or employee, as the case may be, of the member of a Futures Exchange in relation to any money or other property which, after the commencement of the Futures Trading (Amendment) Act 1995 —(a) | was entrusted to or received by that member or by any of its directors, officers, futures broker’s representatives or employees for or on behalf of any other person; or | (b) | was entrusted to or received by the member either as the sole trustee or trustees or as trustee or trustees with any other person or persons, or by any of its directors, officers, futures broker’s representatives or employees as trustee or trustees or for or on behalf of the trustees of that money or property. |
(2) Except as otherwise provided in this section, the total amount that may be paid under this Part to all persons eligible to claim compensation and who suffer loss through defalcations by a member of a Futures Exchange or through defalcations by any of the member’s directors, officers, futures broker’s representatives or employees shall not, in any event, exceed in respect of that member the sum of $500,000, but for the purposes of this subsection any amount paid from a fidelity fund shall, to the extent to which the fund is subsequently reimbursed therefor, be disregarded. |
(3) For the purposes of this section, “director” or “officer”, in relation to a member includes a person who has been, but at the time of any defalcation in question has ceased to be, a director or an officer of a member if, at the time of the defalcation, the person claiming compensation has reasonable grounds for believing that person to be a director or an officer of a member of a Futures Exchange. |
(4) Nothing in this Part shall be construed as to allow a person to claim compensation against the fidelity fund of a Futures Exchange if —(a) | the person has suffered pecuniary loss because of a defalcation committed by a member of a Futures Exchange or by any director, officer, futures broker’s representative or employee of such a member of the Futures Exchange; and | (b) | such defalcation is in respect of moneys deposited by that person with the futures broker or moneys belonging to that person held by that futures broker, in connection with the trading of a contract which is not a futures contract that is cleared or to be cleared by a clearing house or a Futures Exchange in Singapore. |
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49J.—(1) Subject to this Part, every person, other than an accredited investor who suffers pecuniary loss as provided in section 49I(1), shall be entitled to claim compensation from the fidelity fund and to take proceedings in the High Court as provided in this Act against the Futures Exchange to establish such claim.(2) Subject to subsection (3), a person shall in no case have any claim against the fidelity fund in respect of a defalcation in respect of money or other property which prior to the commission of the defalcation had in the due course of the administration of a trust ceased to be under the sole control of the director or directors of the member of the Futures Exchange. |
(3) Subject to this Part, the amount which any claimant shall be entitled to claim as compensation from a fidelity fund shall be 75% of the actual pecuniary loss suffered by him (including the reasonable costs of and disbursements incidental to the making and proof of his claim) less the amount or value of all moneys or other benefits received or receivable by him from any source other than the fund in reduction of the loss but in any event the maximum amount payable to each claimant to satisfy any claim shall not exceed $100,000. |
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Notice calling for claims against fund |
49K.—(1) A Futures Exchange may cause to be published in a daily newspaper published and circulating generally in Singapore a notice, in or to the effect of the form prescribed, specifying a date, not being earlier than 3 months after the date of publication, on or before which claims for compensation from the fidelity fund, in relation to the person specified in the notice, may be made.(2) A claim for compensation from a fidelity fund in respect of a defalcation shall be made in writing to the Futures Exchange —(a) | where a notice under subsection (1) has been published, on or before the date specified in the notice; or | (b) | where no such notice has been published, within 6 months after the claimant became aware of the defalcation, |
and any claim which is not so made shall be barred unless the Futures Exchange otherwise allows. |
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(3) No action for damages shall lie against a Futures Exchange or against any member or employee of a Futures Exchange by reason of any notice published in good faith and without malice for the purposes of this section. |
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Power of Futures Exchange to settle claims |
49L.—(1) A Futures Exchange may, subject to this Part, allow and settle any proper claim for compensation from a fidelity fund at any time after the commission of the defalcation in respect of which the claim arose.(2) Subject to subsection (3), a person shall not commence proceedings under this Part against a Futures Exchange without the consent of the Futures Exchange unless —(a) | the Futures Exchange has disallowed his claim; and | (b) | the claimant has exhausted all relevant rights of action and other legal remedies for recovery of the money or other property, in respect of which the defalcation was committed, available against the member of the Futures Exchange in relation to whom or to which the claim arose and all other persons liable in respect of the loss suffered by the claimant. |
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(3) A person who has been refused consent by a Futures Exchange may apply for leave to a Judge of the High Court in chambers who may make such order in the matter as he thinks fit. |
(4) A Futures Exchange after disallowing (whether wholly or partly) any claim for compensation from a fidelity fund shall serve notice of such disallowance in the prescribed form on the claimant or his solicitor. |
(5) No proceedings against a Futures Exchange in respect of a claim which has been disallowed by the Futures Exchange shall be commenced after the expiration of 3 months after service of notice of disallowance under subsection (4). |
(6) In any proceedings brought to establish a claim, evidence of any admission or confession by, or other evidence which would be admissible against, the member of a Futures Exchange or other person by whom it is alleged a defalcation was committed shall be admissible to prove the commission of the defalcation, notwithstanding that the member or other person is not the defendant in or a party to those proceedings, and all defences which would have been available to that member or person shall be available to the Futures Exchange. |
(7) A Futures Exchange or, where proceedings are brought to establish a claim, the High Court, if satisfied that the defalcation on which the claim is founded was actually committed, may allow the claim and act accordingly, notwithstanding that the person who committed the defalcation has not been convicted or prosecuted therefor or that the evidence on which the Futures Exchange or the High Court, as the case may be, acts would not be sufficient to establish the guilt of that person upon a criminal trial in respect of the defalcation. |
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Power of Futures Exchange to require production of evidence |
49M. A Futures Exchange may, at any time and from time to time, require any person to produce and deliver any contract notes, documents or statements of evidence necessary to support any claim made or necessary for the purpose either of exercising its rights against a member of a Futures Exchange or the directors of that member or any other person concerned or of enabling criminal proceedings to be taken against any person in respect of a defalcation, and in default of delivery of any such contracts, documents or statements of evidence by such first-mentioned person, the Futures Exchange may disallow any claim by him under this Part. |
Subrogation of Futures Exchange to rights, etc., of claimant upon payment from fund |
49N. On payment out of a fidelity fund of any moneys in respect of any claim under this Part, the Futures Exchange shall be subrogated to the extent of such payment to all the rights and remedies of the claimant in relation to the loss suffered by him by reason of the defalcation on which the claim was based. |
Payment of claims only from fund |
49O. No moneys or other property belonging to a Futures Exchange, other than the fidelity fund, shall be available for the payment of any claim under this Part whether the claim is allowed by the Futures Exchange or is made the subject of an order of the High Court. |
Provision where fund insufficient to meet claims or where claims exceed total amount payable |
49P.—(1) Where the amount at credit in a fidelity fund is insufficient to pay the whole amount of all claims against it which have been allowed or in respect of which orders of the High Court have been made, then the amount at credit in the fund shall, subject to subsection (2), be apportioned between the claimants in such manner as the Futures Exchange thinks equitable, and any such claim so far as it then remains unpaid shall be charged against future receipts of the fund and paid out of the fund when moneys are available therein.(2) Where the aggregate of all claims which have been allowed or in respect of which orders of the High Court have been made in relation to defalcations by or in connection with a member of a Futures Exchange exceeds the total amount which may, pursuant to section 49I(2), be paid under this Part in respect of that member, then the said total amount shall be apportioned between the claimants in such manner as the Futures Exchange thinks equitable, and upon payment out of the fund of the said total amount in accordance with such apportionment of all such claims and any orders relating thereto and all other claims against the fund which may thereafter arise or be made in respect of defalcations by or in connection with the said member shall be absolutely discharged.”. |
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