Futures Trading (Amendment) Regulations 1997

No. S 457

Futures Trading Act

(Chapter 116)

Futures Trading (Amendment) Regulations 1997

In exercise of the powers conferred by sections 24 and 70 of the Futures Trading Act, the Monetary Authority of Singapore hereby makes the following Regulations:

Citation and commencement

1. These Regulations may be cited as the Futures Trading (Amendment) Regulations 1997 and shall come into operation on 2nd January 1998.

Amendment of regulation 2

2. Regulation 2 of the Futures Trading Regulations (Rg 1) (referred to in these Regulations as the principal Regulations) is amended by inserting, immediately after the definition of “short”, the following definition:

“ “SIMEX” means the Singapore International Monetary Exchange Limited;”.

Deletion and substitution of regulation 11A

3. Regulation 11A of the principal Regulations is deleted and the following regulation substituted therefor:

“Minimum capital requirements of futures brokers

11A.—(1) Subject to this regulation, a person shall not on or after 2nd January 1998 be granted or permitted to hold a futures broker’s licence unless —

(a)

in the case of a futures broker granted a futures broker’s licence before 6th January 1995 —

(i)	where the futures broker is incorporated in Singapore, its shareholders funds are not less than $5 million; or
(ii)	where the futures broker is a foreign company, its net head office funds are not less than $5 million;

(b)

in the case of a futures broker granted a futures broker’s licence on or after 6th January 1995 that is a member of an Exchange —

(i)	where the futures broker is incorporated in Singapore, its paid-up capital and shareholders funds are each not less than $5 million; or
(ii)	where the futures broker is a foreign company, its net head office funds are not less than $5 million;

(c)

in the case of a futures broker granted a futures broker’s licence on or after 6th January 1995 that is not a member of an Exchange —

(i)	where the futures broker is incorporated in Singapore, its paid-up capital and shareholders funds are each not less than $8 million; or
(ii)	where the futures broker is a foreign company, its net head office funds are not less than $8 million; and

(d)

in the case of a futures broker to which paragraph (2) applies —

(i)	where the futures broker is incorporated in Singapore, its paid-up capital and shareholders funds are each not less than $500,000; or
(ii)	where the futures broker is a foreign company, its net head office funds are not less than $500,000.

(2) Paragraph (1)(d) applies to a futures broker who is a member of an Exchange and who, in relation to such futures contracts as may be traded by him —

(a)	trades only in futures contracts in respect of which the underlying commodity is any class of oil;
(b)	trades only with accredited investors;
(c)	does not accept money, securities or property from a customer as a margin for, or to guarantee or secure, the futures contracts of that customer; and
(d)	does not carry customer’s positions, margins or accounts in its own books.

(3) Notwithstanding paragraph (1)(a), the Authority may by notice in writing require that the paid-up capital of any futures broker referred to in paragraph (1)(a) be a sum not less than $5 million within the time specified in the notice.

(4) The Authority may, by notice in writing, extend the time for the futures broker to comply with paragraph (3).

(5) A futures broker who fails to comply with a notice issued under paragraph (3) within the time allowed for compliance under this regulation shall not be permitted to hold a futures broker’s licence.

(6) A futures broker shall not reduce its paid-up capital without the approval of the Authority.”.

Amendment of regulation 12

4. Regulation 12 of the principal Regulations is amended —

(a)

by deleting paragraph (1) and substituting the following paragraphs:

“(1) Subject to this regulation, every futures broker, other than a futures broker to which regulation 11A(1)(d) applies, shall not allow its adjusted net capital to fall for 4 consecutive weeks below the higher of $2 million or the sum of —

(a)	2% of every amount of funds that a customer of the futures broker deposits with the futures broker that is in excess of the maintenance margins of that customer; and
(b)	4% of the maintenance margins of customers and non-customers relating to all futures contracts and leveraged foreign exchange trading transactions.

(1A) Every futures broker to which regulation 11A(1)(d) applies shall not allow its adjusted net capital to fall for 4 consecutive weeks below $300,000.”.

(b)

by inserting, immediately after the words “paragraph (1)” in the third line and in the last line of paragraph (2), the words “or (1A)”;

(c)

by deleting paragraph (3) and substituting the following paragraph:

“(3) Subject to this regulation, every futures broker that is a member of an Exchange, other than a futures broker to which regulation 11A(1)(d) applies, shall notify the Exchange immediately if its adjusted net capital falls below the higher of $3 million or the sum of —

(a)	2% of every amount of funds that a customer of the futures broker deposits with the futures broker that is in excess of the maintenance margins of that customer; and
(b)	6% of the maintenance margins of customers and non-customers relating to all futures contracts and leveraged foreign exchange trading transactions.”;

(d)

by inserting, immediately after the words “paragraph (1)” wherever they appear in paragraph (3A), the words “or (1A)”;

(e)

by inserting, immediately after the words “futures broker” in the first line of paragraph (3B), the words “other than a futures broker to which regulation 11A(1)(d) applies”;

(f)

by inserting, immediately after paragraph (4), the following paragraphs:

“(4A) Subject to such conditions as the Authority may impose, or from time to time vary or revoke, a futures broker may meet up to 50% of the adjusted net capital requirements under paragraph (1) or (3) or both, by providing SIMEX with one or more qualifying letters of credit for the appropriate amount that the futures broker wishes to meet in that manner.

(4B) Where the aggregate amount payable under the qualifying letter or letters of credit exceeds 50% of the respective adjusted net capital requirements of the futures broker under paragraph (1) or (3), that amount may not be used to meet more than 50% of the respective adjusted net capital requirements of that futures broker.”; and

(g)

by deleting the full-stop at the end of the definition of “non-customer” in paragraph (7) and substituting a semi-colon, and by inserting immediately thereafter the following definition:

“ “qualifying letter of credit” means an irrevocable letter of credit made in favour of SIMEX issued by a bank approved by, and in a form acceptable to, SIMEX, which is to be used solely for the purpose of meeting part of the adjusted net capital requirements of the futures broker under this regulation.”.

Amendment of regulation 12A

5. Regulation 12A(1) of the principal Regulations is amended —

(a)	by deleting “75%” in the penultimate line and substituting “100%”; and
(b)	by inserting, immediately after the word “broker” in the last line, the words “or, where applicable, of the sum of the adjusted net capital of the futures broker and the aggregate amount payable under the qualifying letter or letters of credits that may be used by the futures broker under regulation 12(4A) to meet his adjusted net capital requirements under regulation 12(1) and (3)”.

Amendment of Second Schedule

6. The Second Schedule to the principal Regulations is amended by deleting Form 25 and substituting the following Form:

[G.N. Nos. S 412/94; S 6/95; S 81/96; S 103/96; S 351/96; S 352/96]

Made this 2nd day of October 1997.

LEE EK TIENG

Managing Director,
Monetary Authority of Singapore.

[BFI 010/84 V11; AG/SL/35/94 Vol. 4]

Search within Legislation