REPUBLIC OF SINGAPORE
GOVERNMENT GAZETTE
ACTS SUPPLEMENT
Published by Authority

NO. 10]Friday, March 24 [1995

The following Act was passed by Parliament on 1st March 1995 and assented to by the President on 16th March 1995:—
Futures Trading (Amendment) Act 1995

(No. 9 of 1995)


I assent.

ONG TENG CHEONG
President.
16th March 1995.
Date of Commencement: 1st April 1995
An Act to amend the Futures Trading Act (Chapter 116 of the 1985 Revised Edition) and to make related amendments to the Finance Companies Act (Chapter 108).
Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows:
Short title and commencement
1.  This Act may be cited as the Futures Trading (Amendment) Act 1995 and shall come into operation on such date as the Minister may, by notification in the Gazette, appoint.
Amendment of long title
2.  The long title to the Futures Trading Act (referred to in this Act as the principal Act) is amended by inserting, immediately after the words “futures contracts”, the words “and leveraged foreign exchange trading”.
Amendment of section 2
3.  Section 2 of the principal Act is amended —
(a)by inserting, immediately before the definition of “auditor”, the following definition:
“ “accredited investor” means —
(a)an individual whose net personal assets exceed $5 million or its equivalent in value in foreign currencies; or
(b)a corporation with net assets exceeding $10 million in value or its equivalent in value in foreign currencies as determined in accordance with the most recent audited balancesheet of the corporation;”;
(b)by inserting, immediately before the word “means” in the definition of “commodity”, the words “, in relation to a futures contract,”;
(c)by inserting, immediately after the definition of “commodity”, the following definition:
“ “connected person”, in relation to —
(a)an individual, means —
(i)the individual’s spouse, son, adopted son, step-son, daughter, adopted daughter, step-daughter, father, mother, brother or sister; and
(ii)a firm or a corporation in which the individual or any of the persons mentioned in sub-paragraph (i) has control of not less than 20% of the voting power in the firm or corporation, whether such control is exercised individually or jointly;
(b)a firm or a corporation, means another firm or corporation in which the first-mentioned firm or corporation has control of not less than 20% of the voting power in that other firm or corporation;”;
(d)by inserting, immediately after the words “futures contracts” in the definition of “customer”, the words “or leveraged foreign exchange trading”;
(e)by deleting the definitions of “futures broker” and “futures broker’s representative” and substituting the following definitions:
“ “foreign exchange market” means —
(a)a market, whether in Singapore or elsewhere, at which foreign exchange trading regularly takes place; or
(b)an electronic system, whether operating in Singapore or elsewhere, through which foreign exchange trading is conducted; but excludes an electronic facility which merely provides price or other information on any foreign exchange market (whether the facility is part of or carried on in conjunction with the provision of any other information not related to foreign exchange trading) and which does not permit users of the facility to channel orders for, execute transactions in, or make a market in, foreign exchange transactions;
“foreign exchange trading” has the meaning given to it in section 2A;
“futures broker” means a person, whether as principal or agent, who —
(a)carries on the business of soliciting or accepting orders, for the purchase or sale of any commodity under a futures contract on any Exchange or futures market whether or not that person accepts any money, securities or property (or extends credit in lieu thereof) to margin, guarantee or secure any contract or transaction that may result therefrom; or
(b)carries on the business of leveraged foreign exchange trading,
whether the business is part of, or is carried on in conjunction with, any other business;
“futures broker’s representative” means a person in the direct employment of, or acting for, or by arrangement with, a futures broker who performs any of the functions of a futures broker (other than work ordinarily performed by accountants, clerks or cashiers) in connection with trading in futures contracts or leveraged foreign exchange trading, whether his remuneration is by way of commission, wages or otherwise; and includes any director, officer or employee of a corporation who performs for that corporation any of those functions (whether his remuneration is by way of commission, wages or otherwise);”;
(f)by deleting the definitions of “futures market” and “futures option transaction” and substituting the following definitions:
“ “futures market” means —
(a)a market, an Exchange or other place, whether in Singapore or elsewhere, at which trading in futures contracts regularly takes place; or
(b)an electronic system, whether operating in Singapore or elsewhere, through which trading in futures contracts is carried out; but excludes an electronic facility which merely provides price or other information on futures contracts (whether the facility is part of or carried on in conjunction with the provision of any other information not related to futures contracts) and which does not permit users of the facility to channel orders for, execute transactions in, or make a market in, futures contracts;
“futures option transaction” means a transaction which gives a person a right, acquired for a consideration, to buy or sell within a specified period of time a specified amount of commodity or a specified futures contract at a specified price in accordance with the business rules or practices of an Exchange or a futures market at which the transaction is made;”;
(g)by deleting the words “a futures contract” in the ninth line of the definition of “futures pool operator” and substituting the words “futures contracts, foreign exchange trading or leveraged foreign exchange trading”;
(h)by deleting the definitions of “futures trading adviser” and “futures trading adviser’s representative” and substituting the following definitions:
“ “futures trading adviser” means any person who —
(a)carries on the business of advising other persons, (whether directly or indirectly, through any publication or writing, or by whatever means or media) concerning futures contracts, foreign exchange trading or leveraged foreign exchange trading, including advice on whether to engage in trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading;
(b)as part of a regular business, issues or promulgates any analysis or report concerning futures markets or foreign exchange markets; or
(c)pursuant to a contract or an arrangement with a client, undertakes on behalf of the client (whether on a discretionary authority granted by the client or otherwise) trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading for the purposes of managing the client’s funds,
but does not include —
(i)a bank that is licensed under the Banking Act (Cap. 19) or a merchant bank approved under the Monetary Authority of Singapore Act (Cap. 186);
(ii)an accountant or advocate and solicitor in practice whose carrying on of that business is solely incidental to the practice of his profession;
(iii)a futures broker or futures pool operator (referred to in this sub-paragraph as the licensee) so long as any activity referred to in paragraph (a), (b) or (c) carried out by the licensee is wholly incidental to the carrying on of the business for which he is so licensed;
(iv)a person who carries on the business of printing or publishing a newspaper and is the holder of a permit therefor issued under the Newspaper and Printing Presses Act (Cap. 206) (referred to in this definition as the proprietor) and the author of any advice, analysis or report published in that newspaper (referred to in this definition as the author) where —
(A)insofar as the newspaper is distributed generally to the public, it is distributed only to subscribers to, and purchasers of, the newspaper for value;
(B)the advice is given or the analysis or report is issued or promulgated only through that newspaper;
(C)the proprietor receives no commission or other consideration for giving the advice or for issuing or promulgating the analysis or report other than the consideration received from the sale of the newspaper and advertisements placed in the newspaper;
(D)the author of the advice, analysis or report receives no commission or other consideration in respect of the advice, analysis or report other than the consideration received from the proprietor of the newspaper; and
(E)the proprietor and the author of the advice, analysis or report has no interest, whether directly or indirectly, in any futures contract referred to in the advice, analysis or report; and
(v)such other person carrying on such business as the Authority may by regulations prescribe, so long as any activity referred to in paragraph (a), (b) or (c) carried out by that person is wholly incidental to the carrying on of such prescribed business;
“futures trading adviser’s representative” means a person in the direct employment of, or acting for, or by arrangement with, a futures trading adviser, who performs for that futures trading adviser any of the functions of a futures trading adviser (other than work ordinarily performed by accountants, clerks or cashiers) whether his remuneration is by way of commission, wages or otherwise; and includes any director, officer or employee of a corporation who performs for that corporation any of those functions (whether or not his remuneration is by way of commission, wages or otherwise);
“leveraged foreign exchange trading” has the meaning given to it in section 2A;”; and
(i)by inserting, immediately after the definition of “officer”, the following definition:
“ “related corporation” has the same meaning as in the Companies Act (Cap. 50);”.
New section 2A
4.  The principal Act is amended by inserting, immediately after section 2, the following section:
Meaning of foreign exchange trading and leveraged foreign exchange trading
2A.—(1)  In this Act, unless the context otherwise requires and subject to subsection (2) —
“foreign exchange trading” means the act of entering into or offering to enter into, or inducing or attempting to induce a person to enter into or offer to enter into, a contract or an arrangement whereby a person undertakes to exchange currency at an agreed rate of exchange with another person whether the currency exchange is effected at the same time or at a future date and whether by way of delivery of an amount of currency for another currency, by way of crediting the account of the other person with an amount of another currency, by way of settlement or set-off between two or more persons or otherwise;
“leveraged foreign exchange trading” means —
(a)the act of entering into or offering to enter into, or inducing or attempting to induce a person to enter into or offer to enter into, a contract or an arrangement on a margin basis (other than a contract or an arrangement that is made on an Exchange or a futures market) whereby a person undertakes as determined by the terms and conditions of the contract or arrangement —
(i)to make an adjustment between himself and another person according to whether a currency is worth more or less, as the case may be, in relation to another currency;
(ii)to pay an amount of money determined or to be determined by reference to the change in value of a currency in relation to another currency; or
(iii)to deliver to another person at an agreed future time an agreed amount of currency at an agreed price;
(b)the provision by any person referred to in paragraph (a) of any advance, credit facility or loan, whether directly or indirectly, to facilitate an act of the description referred to in that paragraph; or
(c)the act of entering into or offering to enter into, or inducing or attempting to induce a person to enter into, an arrangement with another person (whether on a discretionary basis or otherwise) to enter into any contract to facilitate an act of the description mentioned in paragraph (a) or (b).
(2)  For the purposes of the definitions of “foreign exchange trading” and “leveraged foreign exchange trading” in subsection (1) —
(a)the definitions shall not include any act performed for or in connection with a contract or an arrangement or a proposed contract or proposed arrangement —
(i)arranged by a bank that is licensed under the Banking Act (Cap. 19) or a merchant bank approved under the Monetary Authority of Singapore Act (Cap. 186);
(ii)by any person belonging to such class of persons, or carrying on such class or description of business as may be prescribed by the Authority; or
(iii)which falls within the definition of “futures contract” in section 2; and
(b)“on a margin basis” means the firstmentioned person referred to in the definition entering into the contract or arrangement referred to therein by providing to the offeror or his agent with money, securities, property or other collateral which represents only a part of the value of the contract or arrangement to be entered into by him.
(3)  The Authority may by order modify the definition of “foreign exchange trading” or “leveraged foreign exchange trading” by applying it to such other financial instrument or unit of account as may be prescribed and such order may provide for any necessary modification or adaptation to that definition.”.
New section 4A
5.  The principal Act is amended by inserting, immediately after section 4, the following section:
Power to approve futures contracts
4A.—(1)  A Futures Exchange shall not list or de-list any futures contract on its Exchange or operate any electronic facility for trading of any futures contract without seeking the prior approval of the Authority.
(2)  The Authority may grant approval for the listing of a futures contract on a Futures Exchange or for the trading of any futures contract on an electronic facility operated by the Futures Exchange subject to such conditions as the Authority may think fit.
(3)  The requirement for approval under subsection (1) for the listing of futures contracts shall not apply to those contracts that, on the commencement of the Futures Trading (Amendment) Act 1995, are listed on the Singapore International Monetary Exchange Limited.”.
New section 10A
6.  The principal Act is amended by inserting, immediately after section 10, the following section:
Grace period for licensing of leveraged foreign exchange trading
10A.—(1)  Where a person who —
(a)carries on the business of leveraged foreign exchange trading or who is employed by that person for the purposes of such a business; or
(b)is a director or an officer of a corporation holding a futures broker’s licence or is a person who is employed by a futures broker and who performs any of the functions of that futures broker,
would, but for this section, be liable to a penalty for not being licensed under this Act, he shall not be so liable —
(i)until the expiration of a period of 6 months after the commencement of the Futures Trading (Amendment) Act 1995;
(ii)where, before the expiration of that period of 6 months, he applies to be licensed, until he is licensed; or
(iii)where, before the expiration of that period of 6 months, he applies to be licensed and the Authority refuses to grant a licence to him, until the expiration of a period of 14 days immediately following that refusal or such longer period as the Authority may allow.
(2)  Notwithstanding sub-paragraph (iii) of subsection (1), during the period of 14 days or such longer period as is referred to in that sub-paragraph, the person of the description mentioned in that sub-paragraph shall cease to carry on the business of leveraged foreign exchange trading otherwise than for the purpose of liquidating his customers’ positions.
(3)  The Authority may, by notice in writing, served on any person of the description mentioned in subsection (1) (iii), require that person —
(a)to carry or not to carry on business in any manner specified in the notice;
(b)to deal with any assets whether in or outside Singapore and whether such assets are beneficially owned by that person or not, in any manner so specified; or
(c)to maintain in Singapore or in such other place outside Singapore as may be specified in the notice, in such manner as will enable such person at any time freely to transfer or otherwise dispose of them, such assets of such value or of such class or description as appear to the Authority to be desirable with a view to ensuring that the person will be able to meet its liabilities in respect of any business carried on by that person.
(4)  Any person —
(a)who fails to comply with subsection (2); or
(b)who fails to comply with a requirement of a notice which is served on him under subsection (3),
shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 7 years or to both.”.
Amendment of section 11
7.  Section 11 of the principal Act is amended —
(a)by inserting, immediately before the word “trades” in subsection (1)(b)(ii), the words “in relation to the business of futures trading,”;
(b)by deleting subsection (2) and substituting the following subsection:
(2)  The following persons shall, subject to compliance with such requirements as the Authority may by regulations prescribe, be exempted from subsection (1):
(a)a person who carries on the business of leveraged foreign exchange trading only with accredited investors but not with any other person;
(b)a person who carries on the business of trading in futures contracts or leveraged foreign exchange trading for his own account or for the account of a related corporation or related person;
(c)a person who is licensed under the Securities Industry Act (Cap. 289) or who is exempt under that Act or any regulations made thereunder from holding such a licence and who trades in futures contracts or enters into leveraged foreign exchange trading wholly in connection with and solely incidental to the purchase or sale of securities or for the purpose of hedging a portfolio of securities.”; and
(c)by inserting, immediately after subsection (3), the following subsection:
(4)  For the purposes of this section, “related person”, in relation to an individual, means —
(a)the individual’s spouse, son, adopted son, step-son, daughter, adopted daughter, step-daughter, father, mother, brother or sister; and
(b)a firm or a corporation in which the individual or any of the persons mentioned in paragraph (a) has control of not less than 50% of the voting power in the firm or corporation, whether such control is exercised individually or jointly.”.
Amendment of section 12
8.  Section 12 of the principal Act is amended by deleting subsections (2) and (3) and substituting the following subsections:
(2)  A futures broker’s licence, a futures trading adviser’s licence and a futures pool operator’s licence shall only be granted to a corporation.
(3)  A futures broker’s representative’s licence, a futures trading adviser’s representative’s licence and a futures pool operator’s representative’s licence may only be granted to an individual.
(3A)  Subsection (1)(a) and (c) shall not apply to any employee of a person who has complied with the requirements prescribed under subsection (2) of section 11 and is referred to in that subsection to the extent that he acts as or holds himself out as such an employee.
(3B)  Subsection (1)(b) shall not apply to a person who has complied with the requirements prescribed under subsection (2) of section 11 and is referred to in that subsection.”.
Amendment of section 13
9.  Section 13 of the principal Act is amended —
(a)by deleting the words “within one month” in the fifth line of subsection (1), and substituting the words “not later than one month”; and
(b)by inserting, immediately after subsection (3), the following subsections:
(4)  Where the Authority rejects an application for a licence or the renewal of a licence, the prescribed fee shall be refunded to the applicant but if the application is not rejected, the prescribed fee shall be payable notwithstanding the withdrawal of an application.
(5)  The Authority may determine the method or manner of payment of the licence fee referred to in subsection (1).”.
Repeal and re-enactment of section 14
10.  Section 14 of the principal Act is repealed and the following section substituted therefor:
Authority to refuse to grant or renew licences in certain circumstances
14.—(1)  Subject to section 13(3) and any regulations made under this Act, where an application is duly made for the grant or renewal of any licence issued under this Act, the Authority may refuse to grant or renew a licence under this Part —
(a)in the case of an applicant who is an individual, on the ground that —
(i)the applicant has not provided the Authority with such information relating to him or any person employed by or associated with him for the purposes of his business, and to any circumstances likely to affect his method of conducting business, as the Authority may require;
(ii)the applicant is an undischarged bankrupt whether in Singapore or elsewhere or has made a composition or an arrangement with his creditors;
(iii)the applicant, or any person employed by or associated with him for the purposes of his business, has been convicted, whether in Singapore or elsewhere, of an offence the conviction for which involved a finding that he acted fraudulently or dishonestly, or has been convicted of an offence under this Act, or has committed a breach of any regulations made under this Act relating to licensed persons;
(iv)the applicant fails to satisfy the Authority that he is a fit and proper person to be licensed;
(v)the Authority is not satisfied as to the educational or other qualification or experience of the applicant having regard to the nature of the duties of a holder of the licence;
(vi)the Authority has reason to believe that the applicant will not be able to perform the functions for which he is licensed efficiently, honestly or fairly;
(vii)the Authority has reason to believe that the applicant may not be able to act in the best interests of his subscribers, customers or participants having regard to his reputation, character, financial integrity or reliability;
(viii)the Authority is not satisfied as to the financial standing of the applicant;
(ix)the Authority is not satisfied as to the record of past performance or expertise of the applicant;
(x)there are other circumstances which are likely to lead to the improper conduct of business by, or reflect discredit on the method of conducting the business of, the applicant or any person employed by or associated with him for the purpose of his business;
(xi)as far as the Authority can ascertain, the applicant is in arrears in the payment of such contributions on his own behalf to the Central Provident Fund as are required under the Central Provident Fund Act (Cap. 36); or
(xii)the Authority is of the opinion that it is in the interests of the public to do so;
(b)in the case of an applicant that is a corporation, on the ground that —
(i)the applicant has not provided the Authority with such information relating to it or any person employed by or associated with it for the purposes of its business, and to any circumstances likely to affect its method of conducting business, as the Authority may require;
(ii)the applicant or its substantial shareholder is in the course of being wound up or liquidated;
(iii)a receiver or a receiver and manager has been appointed to the applicant or its substantial shareholder;
(iv)the applicant or its substantial shareholder has, whether in Singapore or elsewhere, entered into a compromise or scheme of arrangement with its creditors, being a compromise or scheme of arrangement that is still in operation;
(v)the applicant or its substantial shareholder, or any director, officer or employee of such applicant has been convicted, whether in Singapore or elsewhere, of an offence the conviction for which involved a finding that it or he acted fraudulently or dishonestly, or has been convicted of an offence under this Act, or has committed a breach of any regulations made under this Act relating to licensed persons;
(vi)the Authority is not satisfied as to the educational or other qualification or experience of the officers or employees of the applicant who are to perform duties in connection with the holding of the licence;
(vii)the applicant fails to satisfy the Authority that it is a fit and proper person to be licensed or that all of its directors, officers, employees and substantial shareholders are fit and proper persons;
(viii)the Authority has reason to believe that the applicant may not be able to act in the best interests of its subscribers, customers or participants having regard to the reputation, character, financial integrity and reliability of the applicant or any of its substantial shareholders, directors, officers or employees;
(ix)the Authority is not satisfied as to the financial standing of the applicant or its substantial shareholder or the manner in which its business is to be conducted;
(x)the Authority is not satisfied as to the record of past performance or expertise of the applicant having regard to the nature of the business which the applicant may carry on in connection with the holding of the licence;
(xi)there are other circumstances which are likely to lead to the improper conduct of business by, or reflect discredit on the method of conducting the business of, the applicant or its substantial shareholder or any of the directors, officers or employees of the applicant; or
(xii)the Authority is of the opinion that it is in the interests of the public to do so.
(2)  For the purposes of subsection (1), “substantial shareholder”, in relation to an applicant which is a corporation, has the same meaning as in the Companies Act (Cap. 50).”.
Amendment of section 15
11.  Section 15 of the principal Act is amended by inserting, immediately after subsection (1), the following subsection:
(1A)  The Authority may, at any time, by notice in writing to the holder of a licence, vary any condition or restriction or impose such further condition or restriction as it may think fit.”.
Amendment of section 20
12.  Section 20 (2) of the principal Act is amended —
(a)by deleting the words “section 14(a)” in paragraph (a)(i) and substituting the words “section 14(1)(a)”; and
(b)by deleting the words “section 14(b)” in paragraph (b)(i) and substituting the words “section 14(1)(b)”.
Amendment of section 22
13.  Section 22 (2) of the principal Act is amended by inserting, immediately after the words “futures contracts” in the second and third lines of paragraph (a), the words “or leveraged foreign exchange trading”.
Amendment of section 24
14.  Section 24 of the principal Act is amended by inserting, immediately after the words “futures broker” in the second line, the words “or a futures trading adviser”.
New section 24A
15.  The principal Act is amended by inserting, immediately after section 24, the following section:
Failure to maintain minimum financial requirements
24A.—(1)  If a futures broker becomes aware of any inability by it to comply with the minimum financial requirements prescribed by the Authority under section 24, the futures broker shall forthwith —
(a)notify the Authority of that inability; and
(b)cease carrying on its business as a futures broker otherwise than for the purpose of giving effect to any transaction permitted by or by virtue of its licence and entered into before the time when it became so aware unless the Authority has under subsection (2)(b) permitted the futures broker to continue carrying on its business.
(2)  Where the Authority becomes aware of any inability by a futures broker to comply with the minimum financial requirements prescribed under section 24, the Authority may, whether or not the futures broker has notified the Authority as required under subsection (1)(a) —
(a)suspend the licence of the futures broker; or
(b)permit the futures broker to continue carrying on the business of futures trading or leveraged foreign exchange trading on such conditions, if any, as the Authority may impose.
(3)  A futures broker shall be deemed to be aware of an inability to comply with the minimum financial requirements if any of its directors or officers is so aware or would, with the exercise of reasonable diligence, have been aware of such inability.”.
Amendment of section 25
16.  Section 25 of the principal Act is amended —
(a)by inserting, immediately after the words “futures contracts” in the fourth line of subsection (1)(a), the words “or leveraged foreign exchange trading”;
(b)by inserting, immediately after the words “futures contracts” in subsection (2)(a)(ii), the words “and all purchases and sales in connection with leveraged foreign exchange trading”; and
(c)by deleting paragraph (b) of subsection (3) and substituting the following paragraph:
(b)
(i)a copy of each futures contract made out by him as agent of a customer;
(ii)each futures contract received by him or made out to or by him as principal;
(iii)a copy of the document made out by him as agent of a customer as evidence of each transaction arising from leveraged foreign exchange trading; and
(iv)each document received by him or made out to or by him as principal, which is evidence of a transaction arising from leveraged foreign exchange trading.”.
Amendment of section 27
17.  Section 27 of the principal Act is amended —
(a)by deleting the words “by 3 months” in the fifth line of subsection (2) and substituting the words “by not more than 3 months”; and
(b)by inserting, immediately after subsection (3), the following subsection:
(4)  Notwithstanding any other provision of this Act or the Companies Act (Cap. 50), the Authority may at any time remove an auditor appointed by a futures broker if the Authority is not satisfied with the performance of his duties as an auditor of the futures broker and require the futures broker, as soon as practicable thereafter, to appoint another auditor to replace him.”.
Amendment of section 34
18.  Section 34 of the principal Act is amended —
(a)by inserting, immediately after the words “futures market positions” in the third and fourth lines of subsection (2), the words “and all open positions in foreign exchange trading and leveraged foreign exchange trading”; and
(b)by inserting, immediately after the word “otherwise” in the second line of subsection (6), the words “, removal of an auditor by the Authority,”.
Amendment of section 37
19.  Section 37 of the principal Act is amended —
(a)by deleting paragraph (a) of subsection (1) and substituting the following paragraph:
(a)treat and deal with all moneys, securities or property received by him from a customer as belonging to that customer;”;
(b)by deleting paragraph (a) of subsection (2) and substituting the following paragraph:
(a)a bank licensed under the Banking Act (Cap. 19) or a merchant bank approved under the Monetary Authority of Singapore Act (Cap. 186);”;
(c)by deleting paragraphs (b) and (c) of subsection (3) and substituting the following paragraphs:
(b)purchasing, margining, guaranteeing, securing, transferring, adjusting or settling —
(i)dealings in futures contracts; or
(ii)dealings in leveraged foreign exchange trading,
effected by the broker on the instructions, or on behalf, as the case may be, of a customer of the futures broker;
(c)defraying brokerage and other proper charges incurred in respect of dealings in futures contracts or leveraged foreign exchange trading transactions effected by the futures broker on the instructions, or on behalf, as the case may be, of a customer of the broker;”;
(d)by inserting, immediately after the words “futures contracts” in the third line of subsection (5), the words “or leveraged foreign exchange trading”;
(e)by deleting the words “in connection with trading in futures contracts” in the last line of subsection (6) and substituting the words “directly in connection with trading in futures contracts or leveraged foreign exchange trading carried out on behalf of that customer”; and
(f)by deleting subsection (9) and substituting the following subsection:
(9)  For the purposes of this section, “customer” means a person on behalf of whom the futures broker deals, or from whom the futures brokers accepts instructions to deal, in futures contracts or leveraged foreign exchange trading, but does not include —
(a)the futures broker itself with respect to dealings for the proprietary account of the futures broker;
(b)a director, officer, employee or futures broker’s representative of the futures broker; or
(c)a related corporation of the futures broker with respect to instructions accepted to deal for an account belonging to and wholly for the benefit of that related corporation.”.
New sections 37A to 37D
20.  The principal Act is amended by inserting, immediately after section 37, the following sections:
Front-running
37A.—(1)  No futures broker shall knowingly buy any futures contract for its own account, an account belonging to a connected person or for an account in which it has an interest (including any account over which it has discretion) when that futures broker has received any order to buy any futures contract of the same type for any other person at the prevailing market price or at the same price and has not executed that order, except in accordance with the business rules and practices of an Exchange or a futures market.
(2)  No futures broker shall knowingly sell any futures contract for its own account, an account belonging to a connected person or for an account in which it has an interest (including any account over which it has discretion) when that futures broker has received any order to sell any futures contract of the same type for any other person at the prevailing market price or at the same price and has not executed that order, except in accordance with the business rules and practices of an Exchange or a futures market.
Trading against customer
37B.  No futures broker shall knowingly enter into a transaction to buy from or sell to its customer any futures contract for its own account, an account of a connected person or for an account in which it has an interest (including any account over which it has discretion), except with the customer’s prior consent and in accordance with the business rules and practices of an Exchange or a futures market.
Cross-trading
37C.  No futures broker shall knowingly fill or execute a customer’s order for the purchase or sale of a futures contract on a futures market, by offsetting against the order or orders of any other person, without effecting such a purchase or sale of the futures contract on the trading floor or electronic futures trading system and in accordance with the business rules and practices of an Exchange or a futures market.
Dealings by directors, officers or employees of holders of licences
37D.  A futures broker, a futures trading adviser or a futures pool operator shall not give unsecured credit to a director, officer or employee of that futures broker, futures trading adviser or futures pool operator or to a person who to his knowledge, is a connected person of such director, officer or employee if —
(a)the unsecured credit is given for the purpose of enabling or assisting the person to whom the credit is given for the purpose of trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading; or
(b)the person giving the unsecured credit knows or has reason to believe that the unsecured credit will be used for the purpose of trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading.”.
Amendment of section 39
21.  Section 39 of the principal Act is amended —
(a)by deleting the words “futures contract account” in the first and second lines of subsection (1) and substituting the words “futures trading account or leveraged foreign exchange trading account”;
(b)by deleting the words “or guiding the client’s futures trading” in the third and fourth lines of subsection (3) and substituting the words “or foreign exchange trading account or guiding the client’s futures trading account or foreign exchange trading”; and
(c)by inserting, immediately after the words “futures contract” at the end of subsection (4), the words “or a transaction in foreign exchange trading or leveraged foreign exchange trading”.
New section 39A
22.  The principal Act is amended by inserting, immediately after section 39, the following section:
Control over Futures Exchange in acquisition of shares in corporation
39A.—(1)  No Futures Exchange shall, without the prior approval of the Authority, enter into an agreement to acquire the share capital of any corporation if the result of the acquisition is that the Futures Exchange will acquire or hold, whether directly or indirectly, an interest of 20% or more of the share capital of that corporation.
(2)  The Authority may grant its approval under subsection (1) with or without conditions or may refuse to grant its approval.
(3)  A Futures Exchange that contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000.”.
Amendment of section 43
23.  Section 43 (1) of the principal Act is amended by inserting, immediately after the words “futures contracts” in paragraphs (a) and (c), the words “, foreign exchange trading or leveraged foreign exchange trading”.
Amendment of section 45
24.  Section 45 of the principal Act is amended —
(a)by inserting, immediately after the words “futures market” in the fourth and in the eighth lines of subsection (1), the words “or foreign exchange market”; and
(b)by inserting, immediately after the word “information” in the second line of subsection (2), the words “in relation to trading in futures contracts”.
Amendment of section 49
25.  Section 49 of the principal Act is amended by inserting, immediately after the words “futures contracts” wherever they appear in subsection (1), the words “or leveraged foreign exchange trading”.
New Part VIA
26.  The principal Act is amended by inserting, immediately after section 49, the following Part:
PART VIA
FIDELITY FUNDS
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.
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.
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.
Accounts of fund
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.
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.
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.
Investment of 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.
Application of fund
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.
Claims against fund
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.
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.
(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.
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.
(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.
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.”.
Amendment of section 50
27.  Section 50 of the principal Act is amended by inserting, immediately after the words “futures market” in the fourth and in the last lines, the words “or leveraged foreign exchange trading”.
Amendment of section 51
28.  The principal Act is amended by renumbering section 51 as subsection (1) of that section, and by inserting immediately thereafter the following subsection:
(2)  No person shall knowingly execute, or hold himself out as having executed, an order to make a purchase or sale in connection with leveraged foreign exchange trading, without having effected a bona fide purchase or sale in accordance with the order.”.
Amendment of section 52
29.  Section 52 of the principal Act is amended by inserting, immediately after the words “futures contracts” in the fourth line, the words “or leveraged foreign exchange trading”.
Amendment of section 54
30.  Section 54 of the principal Act is amended by inserting, immediately after the words “futures contract” in the third line, the words “or leveraged foreign exchange trading”.
Amendment of section 55
31.  Section 55 of the principal Act is amended by inserting, immediately after the words “class of futures contracts,” in the third and fourth lines, the words “or engage in leveraged foreign exchange trading,”.
Amendment of section 57
32.  Section 57 (1) of the principal Act is amended by inserting, immediately after the words “futures contracts” in the fourth line, the words “or in connection with leveraged foreign exchange trading”.
Amendment of section 58
33.  Section 58 of the principal Act is amended by inserting, immediately after the words “futures market”, the words “or leveraged foreign exchange trading”.
New sections 59A and 59B
34.  The principal Act is amended by inserting, immediately after section 59, the following sections:
Production orders against futures brokers, etc., to produce material relating to drug trafficking
59A.—(1)  The Attorney-General or any person duly authorised by him in writing may, for the purpose of an investigation into drug trafficking, apply to the High Court for an order under subsection (2) in relation to particular material or material of a particular description.
(2)  The High Court may, if on such an application it is satisfied that the conditions referred to in subsection (3) are fulfilled, make an order that the licensee who appears to the Court to be in possession of the material to which the application relates shall —
(a)produce the material to the Attorney-General or the person authorised by him for the Attorney-General or such person to take away; or
(b)give the Attorney-General or the person authorised by him access to the material, within a reasonable period, but not less than 7 days, as the order may specify.
(3)  The conditions referred to in subsection (2) are —
(a)
(i)subject to section 59B, where the application is in respect of a foreign offence, that there is a prima facie case that a specified person has carried on or has benefited from drug trafficking; and
(ii)in any other case, that there are reasonable grounds for suspecting that a specified person has carried on or has benefited from drug trafficking;
(b)that there are reasonable grounds for believing that the material to which the application relates —
(i)is likely to be of substantial value (whether by itself or together with other material) to the investigation for the purpose of which the application is made; and
(ii)does not consist of or include items subject to legal privilege; and
(c)that it is not contrary to the public interest to produce the material to which the application relates.
(4)  A licensee who complies with an order under subsection (2) shall not be treated as being in breach of any restriction on the disclosure of information or material relating to a customer’s account imposed by any rule of law, contract or otherwise.
(5)  No action shall lie against a licensee who in good faith produces materials or gives access to materials relating to the account of a customer by reason of that licensee having made the production or given access in compliance with an order made against it under subsection (2) or any act done or omitted to be done in relation to the funds, investment or property in the account of that customer in consequence of the production of or access to those materials.
(6)  The proceedings for an application of a production order under this section shall be heard in camera.
(7)  In this section —
“drug trafficking” and “foreign offence” have the same meanings as in the Drug Trafficking (Confiscation of Benefits) Act (Cap. 84A);
“items subject to legal privilege” has the same meaning as in section 33(2) of the Drug Trafficking (Confiscation of Benefits) Act.
(8)  In this section and section 59B, “licensee” means the holder of a licence under this Act for a futures broker, a futures broker’s representative, a futures trading adviser, a futures trading adviser’s representative, a futures pool operator or a futures pool operator’s representative.
Production orders to assist foreign authority investigating drug trafficking
59B.—(1)  The Attorney-General or any person duly authorised by him in writing may make an application under section 59A for the purpose of assisting a foreign authority in its investigation into a foreign offence, if and only if, the conditions in subsection (2) in addition to those in section 59A(3) are fulfilled.
(2)  The conditions referred to in subsection (1) are —
(a)there exists a mutual legal assistance treaty, memorandum of understanding or other agreement or arrangement in drug-related matters between Singapore and the foreign government and the conditions therein have been fulfilled in respect of any particular request for assistance from the Attorney-General, which conditions sball be in addition to and not in derogation of the conditions in this subsection;
(b)the foreign authority has agreed to provide reciprocal assistance in drugrelated matters to Singapore;
(c)the foreign offence which is the subject of the investigation constitutes an offence against the law of or of a part of the State of the foreign authority and the act or omission constituting the offence or the equivalent act or omission would, if it had occurred in Singapore, have constituted an offence under the Drug Trafficking (Confiscation of Benefits) Act (Cap. 84A) or the Misuse of Drugs Act (Cap. 185);
(d)the seriousness of the foreign offence under investigation is of sufficient gravity and the material which is the subject of the application is of sufficient importance to the investigation and whether the material could not reasonably be obtained by other means;
(e)the assistance is not likely to prejudice the sovereignty, security or other essential interests of Singapore;
(f)it is appropriate in the public interest to give the assistance sought;
(g)the foreign authority undertakes that the material sought if granted by the High Court pursuant to a production order under this section shall not be used for any other purpose except for the investigation of the foreign offence or for the prosecution of the offender concerned and the material shall be returned to the Attorney-General upon completion of the investigation or the proceedings against the offender; and
(h)such other conditions as the Minister may prescribe.
(3)  The proceedings for an application of a production order under subsection (1) shall be heard in camera.
(4)  In this section —
“drug-related matters” includes the subject of mutual assistance in the investigation of drug trafficking offences within the meaning of the Drug Trafficking (Confiscation of Benefits) Act (Cap. 84A);
“foreign authority” means a foreign government or an appropriate authority designated by a foreign government exercising any function corresponding to a function of the Minister in charge of the Drug Trafficking (Confiscation of Benefits) Act (Cap. 185) or the Misuse of Drugs Act;
“foreign country” means any country or territory outside Singapore;
“foreign government” means the government of a foreign country;
“foreign offence” has the same meaning as in the Drug Trafficking (Confiscation of Benefits) Act (Cap. 84A).”.
Amendment of section 62
35.  Section 62 of the principal Act is amended by inserting, immediately after paragraph (a), the following paragraphs:
(aa)foreign exchange trading;
(ab)leveraged foreign exchange trading;”.
Amendment of section 68
36.  Section 68 of the principal Act is amended by deleting the words “from all or any of the provisions of this Act” and substituting the words “or any class of persons from all or any of the provisions of this Act or any regulations made thereunder”.
Amendment of section 70
37.  Section 70 of the principal Act is amended —
(a)by inserting, immediately after the words “futures contract” in subsection (2)(e), the words “, foreign exchange trading or leveraged foreign exchange trading”;
(b)by inserting, immediately after the words “futures contracts” in subsection (2)(f), the words “or leveraged foreign exchange transactions”;
(c)by inserting, immediately after paragraph (i) of subsection (2), the following paragraphs:
(ia)providing for the establishment and regulation of any electronic system by a Futures Exchange, whether by itself or in conjunction with other futures exchanges, and for the imposition and variation of such requirements, conditions or restrictions as the Authority may think fit;
(ib)the manner in which a holder of a licence conducts its dealings with its customers, conflicts of interest involving the holder of a licence and its customers, and the duties of a holder of a licence to its customers when making recommendations with respect to trading in futures contracts or leveraged foreign exchange trading;”; and
(d)by inserting, immediately after the words “futures contracts” in subsection (4)(a)(ii), the words “or engage in leveraged foreign exchange trading”.
Amendment to Finance Companies Act
38.  The Finance Companies Act is amended by deleting the words “subsection (6)” in section 23(7)(c) and substituting the words “subsection (6) (a), (b) and (c)”.