No. S 81
Futures Trading Act
Chapter 116
Futures Trading (Amendment) Regulations 1996
In exercise of the powers conferred by sections 24, 68 and 70 of the Futures Trading Act, the Monetary Authority of Singapore hereby makes the following Regulations:
1.  These Regulations may be cited as the Futures Trading (Amendment) Regulations 1996 and shall come into operation on 16th February 1996.
2.  Regulation 2 of the Futures Trading Regulations (Rg 1) (referred to in these Regulations as the principal Regulations) is amended —
(a)by inserting, immediately after the definition of “accounts”, the following definition:
“ “adjusted net capital”, in relation to a futures broker, has the same meaning as in regulation 12(5)(f);”;
(b)by deleting the definition of “connected persons”;
(c)by inserting, immediately after the words “futures positions” in the third line of the definition of “contract confirmation note”, the words “or leveraged foreign exchange trading positions”;
(d)by inserting, immediately after the words “futures broker” in the third line of the definition of “customer’s account”, the words “, futures trading adviser”;
(e)by inserting, immediately after the words “futures contract” in the definition of “long”, the words “or a leveraged foreign exchange transaction”;
(f)by deleting the definition of “margin” and substituting the following definition:
“ “margin” means an amount of money, securities or any other collateral, representing a part of the value of the contract or agreement to be entered into, which is deposited by the buyer or the seller of a futures contract or leveraged foreign exchange transaction to ensure performance of the terms of the futures contract or leveraged foreign exchange transaction;”;
(g)by deleting the definition of “mark-to-market” and substituting the following definition:
“ “mark-to-market” means the method or procedure of adjusting the valuation of open positions to reflect current market values;”;
(h)by inserting, immediately after the words “futures position” in the definition of “net asset value”, the words “or leveraged foreign exchange position”;
(i)by deleting the words “futures pool” in the definition of “participant” and substituting the words “pool operated by a futures pool operator”;
(j)by deleting the definition of “position” and substituting the following definition:
“ “position” means a futures contract or a leveraged foreign exchange transaction which is still outstanding and which has not been liquidated —
(a)by an off-setting transaction;
(b)by delivery of the commodity underlying the futures contract or leveraged foreign exchange transaction;
(c)through settlement of the futures contract or leveraged foreign exchange transaction in accordance with the rules of an Exchange or the practices of a futures market or foreign exchange market, as the case may be;
(d)in the case of a futures contract, by substituting the futures contract for cash commodity or in connection with cash commodity transactions; or
(e)in the case of a leveraged foreign exchange transaction, by substituting the leveraged foreign exchange transaction for a futures contract;”;
(k)by inserting, immediately after the words “futures contract” in the definition of “short”, the words “or a leveraged foreign exchange transaction”; and
(l)by deleting the definition of “trading programme” and substituting the following definition:
“ “trading programme” means a system, method or programme pursuant to which a futures trading adviser intends to direct or guide a customer’s futures trading account or leveraged foreign exchange trading account.”.
3.  Regulation 8 of the principal Regulations is deleted and the following regulation substituted therefor:
“Preparation of accounts
8.—(1)  A futures broker, futures trading adviser or futures pool operator shall prepare accounts in accordance with the provisions of the Companies Act (Cap. 50), where applicable, in respect of each financial year and shall attach to such accounts a statement in the prescribed form.
(2)  The statement shall be signed by a director or the secretary of the corporation appointed for that purpose by the board of directors.”.
4.  The principal Regulations are amended by inserting, immediately after regulation 10, the following regulations:
“Appointment of chief executive officer
10A.—(1)  No licensee shall on or after 16th February 1996 appoint a chief executive officer before submitting to the Authority an application in the prescribed form containing a declaration by the appointee verifying that the information relating to him in the application form is correct.
(2)  The appointment of a chief executive officer on or after 16th February 1996 is subject to the Authority’s approval.
Duties of chief executive officer
10B.—(1)  The chief executive officer of a licensee shall —
(a)be a person of high integrity;
(b)observe high standards and professionalism in all his dealings;
(c)be suitably qualified and possess the necessary expertise to manage the licensee’s operations; and
(d)be responsible for the soundness and performance of the licensee and for ensuring its compliance with the Act and these Regulations, the Companies Act (Cap. 50), the business rules of any relevant Exchange and clearing house and any other relevant laws.
(2)  The chief executive officer of a licensee shall —
(a)lay down, and ensure compliance with, sound written policies on all operational areas of the licensee, including the licensee’s financial policies, accounting and internal controls, internal auditing and compliance with all laws and rules governing the licensee’s operations;
(b)be fully aware of and understand the risks associated with the trading or business activities of the licensee;
(c)ensure that the business activities of the licensee are subject to adequate and proper internal audit;
(d)set out in writing the limits of the discretionary powers of each officer, committee, sub-committee and other group of the licensee to commit the licensee to any financial undertaking or to expose the licensee to risk of any nature; and
(e)ensure —
(i)that the licensee keeps a written record of the steps taken by it to monitor compliance with its policies, the limits on discretionary powers and the accounting and operating procedures;
(ii)that the work of the internal audit unit of the licensee or the licensee’s parent corporation covers the licensee’s compliance with all laws and business rules of the relevant Exchanges and clearing houses; and
(iii)the accuracy, correctness and completeness of any report, return or statement submitted by the licensee to its Head Office (if any) and to the Authority.
(3)  For the purposes of this regulation and regulation 10A —
“chief executive officer” includes any person occupying the position of chief executive;
“licensee” means a futures broker, a futures trading adviser or a futures pool operator.”.
5.  Regulation 11 of the principal Regulations is amended by inserting, immediately after subsection (1), the following subsection:
“(1A)  The Authority may grant approval for the acquisition of the shares of a licensee pursuant to paragraph (1) subject to such conditions or restrictions as the Authority thinks fit.”.
6.  Regulation 11A of the principal Regulations is amended by inserting, immediately after the word “requirements” in the marginal note, the words “for futures brokers”.
7.  The principal Regulations are amended by inserting, immediately after regulation 11A, the following regulations:
“Minimum financial requirements for futures trading advisers
11B.—(1)  Subject to this regulation, a person shall not be granted or permitted to hold a futures trading adviser’s licence unless —
(a)in the case of a futures trading adviser which does not manage its customers’ funds but carries on a business of —
(i)advising other persons concerning futures contracts, foreign exchange trading or leveraged foreign exchange trading; or
(ii)promulgating analyses or reports concerning futures markets or foreign exchange markets,
its paid-up capital and its shareholders’ funds are each not less than $1 million or where the futures trading adviser is a foreign company, its net head office funds are not less than $1 million;
(b)in the case of a futures trading adviser which carries on a business of undertaking on behalf of a customer, pursuant to a contract or arrangement with the customer (whether on a discretionary authority granted by the customer or otherwise), trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading for the purposes of managing the customer’s funds, whether or not the futures trading adviser is, in addition, in the business of —
(i)advising other persons concerning futures contracts, foreign exchange trading or leveraged foreign exchange trading; or
(ii)promulgating analyses or reports concerning futures markets or foreign exchange markets,
its paid-up capital and its shareholders’ funds are each not less than $3 million.
(2)  A futures trading adviser to which paragraph (1)(a) applies which has a paid-up capital, shareholders’ funds or net head office funds, as the case may be, of less than $1 million on 16th February 1996 shall be exempt from the requirement of that paragraph for 2 years from that date.
(3)  Notwithstanding paragraph (1) and (2), no futures trading adviser shall, after 16th February 1996, be permitted to hold a futures trading adviser’s licence unless its paid-up capital (or where the person is a foreign company, its net head office funds) is not less than $1 million if the aggregate of the interests of all new shareholders of the futures trading adviser registered at any time after 16th February 1996 is equal to or exceeds 20% of the paid-up capital of the futures trading adviser.
(4)  A futures trading adviser shall not reduce its paid-up capital without the prior approval of the Authority.
Minimum financial requirements for futures pool operators
11C.—(1)  A person shall not be granted or permitted to hold a futures pool operator’s licence unless its paid-up capital and shareholders’ funds are each not less than $3 million.
(2)  A futures pool operator shall not reduce its paid-up capital without the prior approval of the Authority.”.
8.  The principal Regulations are amended by inserting, immediately after regulation 12, the following regulation:
“Reporting of financial requirements by futures brokers
12A.—(1)  A futures broker shall immediately notify the Authority and, in the case of a futures broker which is a member of an Exchange, notify the Authority and the Exchange, where the futures broker determines that an account or accounts which it is carrying for any person is under-margined by an amount which exceeds 75% of the adjusted net capital of the futures broker.
(2)  Paragraph (1) shall apply to any account carried by a futures broker whether for customers or otherwise.
(3)  Where a futures broker which is a member of an Exchange has, within one business day, failed to meet a margin call or to make other deposits as required by an Exchange or clearing house, the Exchange or clearing house shall, at its sole discretion, be entitled to —
(a)immediately liquidate the positions carried by the futures broker for any account;
(b)immediately transfer all or any part of the futures trading and leveraged foreign exchange trading positions, margins and accounts belonging to customers of such futures broker to one or more futures brokers; or
(c)subject the trading of any account of the futures broker to such conditions and restrictions as it deems fit, including but not limited to, restricting trading of that account to only liquidating positions.
(4)  An Exchange may, in consultation with the Authority, exempt a futures broker which is a member of its Exchange from the provisions of paragraph (3) with respect to any particular account on a continuous basis but the Exchange shall continue to monitor that account.”.
9.  Regulation 13(2) of the principal Regulations is amended —
(a)by deleting the word “clients” in sub-paragraphs (a)(i) and (vi), and substituting in each case the word “customers”;
(b)by deleting the word “clients” in sub-paragraph (a)(ii) and substituting the word “customers”;
(c)by deleting the word “client’s” in sub-paragraph (a)(iv) and substituting the word “customer’s”;
(d)by deleting the word “client” in the second line of sub-paragraph (a)(v) and in the sixth line of sub-paragraph (a)(vii) and substituting in each case the word “customer”;
(e)by deleting sub-paragraph (a)(viii) and substituting the following sub-paragraph:
“(viii)an itemised record of each futures contract and transaction arising from foreign exchange trading or leveraged foreign exchange trading for the account of the futures trading adviser and for the account of any director of the futures trading adviser, showing the transaction date, quantity, type of transaction and price, the delivery month, whether the transaction was purchased or sold, the broker carrying the account, if any, and the gain or loss realised;”;
(f)by deleting the word “transaction” in the first and second lines of sub-paragraph (a)(ix) and substituting the words “and transaction arising from foreign exchange trading or leveraged foreign exchange trading”;
(g)by deleting the word “personal” in the fifth line of sub-paragraph (a)(ix);
(h)by deleting the words “in trading futures contracts” in the second and third lines of sub-paragraph (a)(x) and substituting the words “relating to trading in futures contracts, foreign exchange trading and leveraged foreign exchange trading”;
(i)by deleting sub-paragraph (b)(i) and substituting the following sub-paragraph:
“(i)an itemised daily record of each futures contract and transaction arising from foreign exchange trading or leveraged foreign exchange trading of the pool, showing the transaction date, quantity, type of transaction and price, the delivery month, whether the transaction was purchased or sold, the futures broker carrying the account and the futures trading adviser, if any, and the gain or loss realised;”;
(j)by deleting the words “copies of” in sub-paragraph (b)(v);
(k)by inserting, immediately after the word “pool” in the second line of sub-paragraph (b)(v), the words “and transaction of the pool arising from foreign exchange trading or leveraged foreign exchange trading”; and
(l)by deleting sub-paragraphs (b)(viii), (ix) and (x) and substituting the following sub-paragraphs:
“(viii)an itemised daily record of each futures contract and transaction arising from foreign exchange trading or leveraged foreign exchange trading of the futures pool operator for its own account and for any of the directors thereof, showing the transaction date, quantity, type of transaction and price, the delivery month, the futures broker carrying the account, whether the transaction was purchased or sold, and the gain or loss realised;
(ix)each confirmation of a futures contract and transaction arising from foreign exchange trading or leveraged foreign exchange trading and each monthly statement furnished by a futures broker to the futures pool operator relating to the account of the futures pool operator and to the account of any of the directors of the futures pool operator; and
(x)books and records of all other transactions in all other activities in which the futures pool operator engages, including cancelled cheques, bank statements, journals, ledgers, invoices and all other records, data and memoranda which have been prepared in the course of engaging in those activities.”.
10.  Regulation 14 of the principal Regulations is amended —
(a)by deleting sub-paragraphs (a) and (b) of paragraph (2) and substituting the following sub-paragraphs:
“(a)the total amount of realised net gain or loss arising from futures trading positions, foreign exchange trading positions and leveraged foreign exchange trading positions liquidated during the reporting period;
(b)the change in unrealised net gain or loss arising from futures trading positions, foreign exchange trading positions and leveraged foreign exchange trading positions during the reporting period;”;
(b)by inserting, immediately before the words “pool operator” in the second and third lines of paragraph (4), the words “futures”;
(c)by deleting “$500,000” in paragraph (5) and substituting the words “$1 million”; and
(d)by deleting paragraph (8) and substituting the following paragraph:
“(8)  The profit and loss statement required by this regulation shall itemise brokerage commissions, management fees, advisory fees, incentive fees, interest income and expense, total realised net gain or loss from trading in futures contracts, foreign exchange trading and leveraged foreign exchange trading, and change in unrealised net gain or loss on futures trading positions, foreign exchange trading positions and leveraged foreign exchange trading positions during the pool’s financial year.”.
11.  Regulations 15 and 16 of the principal Regulations are deleted and the following regulations substituted therefor:
“Segregation of customers’ funds
15.—(1)  All customers’ funds shall be separately accounted for and segregated as belonging to customers and shall not be commingled with the funds of the futures broker, futures trading adviser or futures pool operator.
(2)  Any customers’ funds received shall be paid without delay into a customer’s account unless otherwise authorised by the customer concerned.
(3)  All customers’ funds when deposited with a bank, merchant bank, another futures broker or any other person approved by the Authority shall be deposited under an account name which clearly identifies the funds as customers’ funds and shows that the funds are segregated as required by the Act.
(4)  A futures broker, futures trading adviser or futures pool operator shall obtain and retain in its files acknowledgement from the bank, merchant bank, futures broker or other person approved by the Authority referred to in paragraph (3) that it was informed that the customers’ funds deposited therein are those of customers and are held in accordance with the provisions of the Act.
(5)  A futures broker, futures trading adviser or futures pool operator shall —
(a)maintain accounts for each of its customers, and each such account shall be maintained in such a way that the outstanding balance can be easily and readily identified with each specific transaction (whether for contracts or investments) and with the dates on which such transactions occurred; and
(b)maintain a record of all securities and properties received from customers in lieu of money as a margin for, or to purchase, guarantee or secure, any futures contract or transaction involving foreign exchange trading or leveraged foreign exchange trading for such customer.
(6)  The records referred to in paragraph (5)(b) shall show separately for each customer —
(a)a description of the securities or properties received;
(b)the name and address of the customer;
(c)the dates when the securities or properties were received; and
(d)the dates when the securities or properties were returned to such customer or otherwise disposed of, together with the facts and circumstances of such disposal.
(7)  Each futures broker, futures trading adviser or futures pool operator shall at all times keep such books and accounts as may be necessary —
(a)to show all its dealings with a customer’s moneys held, received or paid by it, and any other money dealt by it through a customer’s account; and
(b)to distinguish the moneys held, received or paid by it on account of each separate customer and to distinguish such moneys from its own moneys and from other moneys held, received or paid by it on any other account.
(8)  All securities and properties held or received by a futures broker, futures trading adviser or futures pool operator on account of a customer in connection with any futures contract or transaction arising from foreign exchange trading or leveraged foreign exchange trading concluded or to be concluded, or cleared or to be cleared, on an Exchange or any other futures markets or foreign exchange markets, as the case may be, shall be segregated and separately accounted for.
(9)  Every futures broker, futures trading adviser or futures pool operator shall at all times keep such books as may be necessary —
(a)to show all its dealings with each of its customer’s securities and properties held or received by it; and
(b)to distinguish the securities and properties held or received by it on account of each separate customer and to distinguish such securities and properties from its own securities and properties and from other securities and properties held or received by it on any other account.
Investment of customers’ funds
15A.—(1)  A futures broker may hold any of its customer’s moneys in the following forms:
(a)in any securities of the Government;
(b)in any debt instrument of the government of the country in which is situated the market or Exchange where the futures broker normally transacts its business; and
(c)in any other security or instrument as the Authority may determine from time to time.
(2)  A futures broker holding any of its customer’s moneys other than in a form of deposit with a bank or merchant bank shall keep a record of all transactions relating to such moneys including —
(a)the date on which the transaction was made;
(b)the name of the person through whom the transaction was made;
(c)the amount of money transacted;
(d)a description of the transaction;
(e)the place, if any, where the customer’s moneys, securities and properties are kept;
(f)the date on which the subject-matter of the transaction was realised or otherwise disposed of and the amount of money received from the realisation or disposal, if any; and
(g)the name of the person to whom (and through whom, if any) the subject-matter of the transaction was disposed of.
Daily computation for segregated account
15B.—(1)  Each futures broker shall at the close of each business day compute —
(a)the total amount of customer funds on deposit in segregated accounts on behalf of customers;
(b)the total amount of its customer funds required by the Act and these Regulations to be deposited in segregated accounts on account of its customers; and
(c)the amount of the futures broker’s residual interest in the customer accounts.
(2)  The computation shall be completed before noon the next business day and shall be kept by the futures broker together with all supporting data.
Records to be kept by a futures broker
15C.—(1)  A futures broker shall keep full, complete and systematic records, together with all pertinent data and memoranda, of all transactions relating to its business.
(2)  The records to be kept shall include all orders (filled, unfilled or cancelled), trading cards, signature cards, journals, ledgers, cancelled cheques, copies of confirmations, copies of statements of purchase and sale, and all other records, data and memoranda, which have been prepared in the course of its business.
(3)  A futures broker receiving a customer’s order shall immediately upon receipt thereof prepare a written record of such order, including the account identification and order number, and shall record thereon, by time-stamping or other timing device, the date and time the order is received and the time the order is transmitted for execution.
(4)  A futures broker shall immediately upon execution of a customer’s order prepare a written record of the transaction, including the account identification and order number, and shall record thereon, by time-stamping or other timing device, the date and time the order is executed.
(5)  Upon request by the Exchange of which the futures broker is a member or by the Authority, a futures broker shall request from its customers and, upon receipt thereof, provide the Exchange or Authority, as the case may be, with documentation of the cash transactions underlying the exchanges of futures for cash commodities or exchanges of futures in connection with cash commodity transactions.
(6)  A futures broker shall prepare regularly and promptly, and keep systematically the following:
(a)a financial ledger record showing separately for each customer, all charges against and credits to a customer’s account, including but not limited to the customer’s funds deposited, withdrawn or transferred, and the charges and credits resulting from losses or gains on closed transactions;
(b)a record of transactions showing separately for each account —
(i)all futures contracts and leveraged foreign exchange transactions executed for such account, including the date, price, quantity, market and commodity; and
(ii)all futures options transactions executed for such account, including the date, whether the transaction involved a put or call, the expiration date, underlying contract for futures delivery, strike price, and details of the purchase price of the option, including the premium, mark-up commission and fees; and
(c)a daily record or journal showing separately for each business day complete details of —
(i)all futures contracts and leveraged foreign exchange transactions executed on that day, including the date, price, quantity, market, commodity and the person for whom the transaction was made; and
(ii)all futures options transactions executed on that day, including the date, whether the transaction involved a put or call, the expiration date, underlying contract for future delivery, strike price, and details of the purchase price of the option, including the premium, mark-up commission and fees, and the person for whom the transaction was made.
(7)  For the avoidance of doubt, the requirement to prepare and keep a written record upon receipt or execution of an order referred to in this regulation does not apply to a transaction entered into by an arbitrageur, an options market-maker or a member of an Exchange trading in futures contracts for his own account.
(8)  All records and documents required to be kept or prepared under this regulation shall be kept for a period of not less than 6 years from the date of the record or document.
(9)  For the purposes of paragraph (7) —
“arbitrageur” means a person who —
(a)is recognised as such by an Exchange; and
(b)purchases or sells a futures contract in a futures market together with an offsetting sale or purchase of the same or equivalent contract in a different market at as nearly the same time as practicable for the purpose of taking advantage of a difference in prices in the two markets;
“options market-maker” means a person who —
(a)is recognised as such by an Exchange;
(b)enters into futures options transactions for his own account;
(c)regularly publishes bona fide competitive bid and offer quotations in respect of futures options transactions; and
(d)is ready, willing and able to effect transactions in his quoted prices with other persons in respect of those futures options transactions.
Essential particulars of customers
15D.—(1)  A futures broker shall keep a record which shall show for each of its customer’s futures trading accounts or leveraged foreign exchange trading accounts carried by it —
(a)the true name and address of the person for whom such account is carried;
(b)the principal occupation or business of such person; and
(c)the name of any other person guaranteeing such account or exercising any trading control with respect to such account.
(2)  Notwithstanding paragraph (1), where an account carried by a futures broker for a carrying broker is designated in the books of the futures broker as an omnibus account, it is sufficient for the record referred to in that paragraph to show in respect of the information required for that account the particulars as they pertain to the carrying broker, unless the Exchange to which the futures broker is a member otherwise requires.
(3)  A futures trading adviser shall keep a record which shall show for each of its customers —
(a)the true name and address of the customer;
(b)the principal occupation or business of such customer; and
(c)the name of any other person guaranteeing the customer’s account or exercising any trading control with respect to the customer’s account.
(4)  A futures pool operator shall keep a record which shall show the true name and address of each participant of the pool operated by it.
Position limits
16.—(1)  The position limit in respect of —
(a)any futures contract listed on an Exchange; and
(b)any other contract traded by, through or with a futures broker which is a member of an Exchange,
shall be determined from time to time by the Exchange based on such criteria or methodology as may be established by the Exchange with the approval of the Authority.
(2)  The position limit in respect of any futures contract, and any transaction involving leveraged foreign exchange, traded by, through or with a futures broker which is not a member of an Exchange shall be determined by the Authority.
(3)  The position limits under paragraphs (1) and (2) may include limits on a person holding or controlling positions, separately or in combination, net long or net short, for —
(a)the purchase or sale of a futures contract, or on a futures equivalent basis, options thereon; or
(b)a transaction involving leveraged foreign exchange.
(4)  The Authority or the Exchange may require a person (or any person acting for him pursuant to an express or implied agreement or understanding) who holds or controls net long or net short positions in any futures contract or leveraged foreign exchange transaction in excess of the position limit set under paragraph (1) or (2), as the case may be, to trade under such conditions and restrictions as the Authority or the Exchange considers fit to ensure compliance with the position limits set under paragraphs (1) and (2) and may require such person or persons to do any one or more of the following:
(a)to cease any further increase in his or their positions;
(b)to liquidate his or their positions to the position limit set under paragraph (1) or (2) within such time as may be determined by the Authority or the Exchange, as the case may be; or
(c)to be subject to higher margin requirements in respect of his or their positions.
(5)  For the purposes of this regulation, “futures equivalent” means an option contract which has been adjusted by the previous day’s risk factor, or delta coefficient, for that option which had been calculated at the close of trading.”.
12.  Regulation 17 of the principal Regulations is amended —
(a)by inserting, immediately after the words “futures transaction” in the second line of paragraph (1), the words “or leveraged foreign exchange transaction”;
(b)by inserting, immediately after the words “futures contract” in the third line of paragraph (1), the words “or transaction arising from leveraged foreign exchange trading, as the case may be,”;
(c)by inserting, immediately after the words “futures contracts” in paragraph (1)(e), the words “and transactions arising from leveraged foreign exchange trading”;
(d)by inserting, immediately after the words “futures contract” in paragraph (1)(f), the words “or leveraged foreign exchange transaction”; and
(e)by deleting the words “a futures broker” in paragraph (2) and substituting the words “another futures broker”.
13.  Regulation 18(2) of the principal Regulations is amended by deleting the words “a futures broker” and substituting the words “another futures broker”.
14.  Regulation 19(1) of the principal Regulations is amended —
(a)by inserting, immediately after the words “futures contracts” in the first line of sub-paragraph (a)(iv), the words “, foreign exchange transactions or leveraged foreign exchange transactions”;
(b)by deleting the words “, if the futures trading adviser is a corporation” in sub-paragraph (b)(ii);
(c)by inserting, immediately after the words “futures contracts” in the third line of sub-paragraph (f)(i), the words “, foreign exchange trading or leveraged foreign exchange trading, as the case may be”; and
(d)by inserting, immediately after the words “futures contract” in the first line of sub-paragraph (l)(i), the words “, foreign exchange trading or leveraged foreign exchange trading”.
15.  Regulation 20 of the principal Regulations is amended —
(a)by deleting the words “prospective client, funds” in the second line of paragraph (1) and substituting the words “prospective customer, moneys”;
(b)by deleting the words “of the client” in the fifth line of paragraph (1) and substituting the words “, foreign exchange transaction or leveraged foreign exchange transaction of the customer”;
(c)by deleting the word “client” wherever it appears in paragraph (2) and substituting in each case the word “customer”;
(d)by inserting, immediately after the words “futures contract” in the first line of paragraph (2)(a)(iv), the words “, foreign exchange transactions or leveraged foreign exchange transactions”;
(e)by deleting the words “client’s futures trading account” in the second and third lines of paragraph (c)(iii) and substituting the words “customer’s futures trading account, foreign exchange trading account or leveraged foreign exchange trading account”;
(f)by inserting, immediately after the words “futures contracts” in the first line of paragraph (2)(e)(i), the words “, foreign exchange trading or leveraged foreign exchange trading”; and
(g)by inserting, immediately after paragraph (3), the following paragraphs:
“(4)  A futures trading adviser which carries on a business of undertaking on behalf of a customer, pursuant to a contract or arrangement with the customer (whether on a discretionary authority granted by the customer or otherwise), trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading for the purposes of managing the customer’s funds, shall —
(a)ensure that customers’ funds are segregated and not commingled with funds belonging to the futures trading adviser, its staff or their connected persons; and
(b)make arrangements for a custodian to maintain a trust account for the futures trading adviser’s customers.
(5)  For the purposes of paragraph (4) —
“custodian” means a financial institution licensed, regulated or supervised by —
(a)the Authority; or
(b)where the financial institution has its principal place of business outside Singapore, by a supervisory authority which is recognised by the Authority,
and the financial institution is appointed by the customer or by the futures trading adviser with the prior written consent of the customer;
“trust account” means a current, deposit or property account which —
(a)is kept with a custodian; and
(b)contains the words “Trust Account/Customers” in its title.”.
16.  Regulation 21 of the principal Regulations is amended —
(a)by deleting the words “client for its benefit, the benefit of” in the second and third lines of paragraph (1) and substituting the words “customer for its own benefit, the benefit of its”;
(b)by deleting paragraphs (2), (3) and (4);
(c)by renumbering paragraph (5) as paragraph (2) and by deleting the words “Futures Exchange as have been approved by the Authority,” in the fourth and fifth lines of the paragraph and substituting the word “Exchange”;
(d)by inserting, immediately after paragraph (2), the following paragraph:
“(3)  A futures broker shall, at a minimum, establish and enforce internal rules, procedures and controls to —
(a)ensure, to the extent that is possible, that each order received from a customer which is capable of being executed at or near the market price is transmitted —
(i)to the floor; or
(ii)to an electronic system provided by an Exchange through which trading in futures contracts is carried out,
before any order for the same futures contract for an account of the futures broker, an account belonging to a connected person or an account in which it has an interest (including any account over which it has discretion), unless the prior specific consent of the customer has been obtained; and
(b)prevent a connected person, or a person controlling an account in which the futures broker has an interest (including any account over which it has discretion), from placing orders, directly or indirectly, with another futures broker in a manner that will circumvent the provisions of sub-paragraph (a).”;
(e)by renumbering paragraph (6) as paragraph (4) and by deleting the words “deal in any futures market” in the third and fourth lines of the paragraph and substituting the words “engage in trading in futures contracts or leveraged foreign exchange trading”; and
(f)by inserting, immediately after paragraph (4), the following paragraph:
“(5)  For the purposes of paragraph (4), a futures broker and its representative shall not be deemed to be exercising discretion in respect of a customer’s order if the customer specifies the commodity, the quantity of the commodity, year and delivery month of the contract, and whether the transaction is for the purchase or sale of the commodity.”.
17.  Regulation 22 of the principal Regulations is amended —
(a)by deleting “—(1)” in the first line of paragraph (1); and
(b)by deleting paragraph (2).
18.  The principal Regulations are amended by inserting, immediately after regulation 22, the following regulations:
“Exemption for approved body corporate, approved headquarters company, approved finance and treasury centre and specified persons
22A.—(1)  Except as provided for in this regulation, section 12(1)(b) and (c) and Parts IV and V of the Act shall not have effect in relation to —
(a)an approved body corporate which carries on a class of business involving the giving of advice concerning trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading to, or the management of funds for trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading on behalf of, customers for investment purposes but only to the extent that such provision of advice or management of customers’ funds is made in respect of designated investments for foreign investors within the meaning of the Income Tax (Concessionary Rate of Tax for Approved Fund Managers) Regulations (Cap. 134, Rg 7);
(b)an approved headquarters company or an approved Finance and Treasury Centre which carries on a class of business involving the giving of advice concerning trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading or the management of funds for trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading but only to the extent that the provision of investment advice or the management of the funds has been approved as a qualifying service in relation to that headquarters company or Finance and Treasury Centre under section 43E(2)(a) or 43G(2)(a) of the Income Tax Act (Cap. 134), as the case may be; or
(c)a person resident in Singapore who acts, whether directly or indirectly, as a futures trading adviser to not more than 30 accredited investors.
(2)  A person shall not be exempted or shall cease to be exempted under paragraph (1)(a), (b) or (c), as the case may be, from section 12(1)(b) and (c), Parts IV and V of the Act, if he acts as a futures trading adviser to persons other than those persons in respect of whom he is granted exemption under paragraph (1)(a), (b) or (c), as the case may be.
(3)  An individual shall not be exempted, or shall cease to be exempted, from section 12(1)(c) and Parts IV and V of the Act, if —
(a)he is or becomes an employee of a holder of a futures trading adviser’s licence;
(b)he has been adjudged a bankrupt whether in Singapore or elsewhere;
(c)he has been convicted —
(i)whether in Singapore or elsewhere, of any offence in connection with the promotion, formation or management of a corporation, or involving fraud or dishonesty;
(ii)of any offence under the Companies Act (Cap. 50) involving lack of diligence in the discharge of his duties as a director of a corporation;
(iii)of any offence under the Act or any regulations made thereunder; or
(iv)of any offence under the Banking Act (Cap. 19), the Finance Companies Act (Cap. 108), the Securities Industry Act (Cap. 289), the Commodity Futures Act (Cap. 48A), the Money-changing and Remittance Businesses Act (Cap. 181), the Insurance Act (Cap. 142) or the Penal Code (Cap. 224), or any subsidiary legislation made under any of those Acts; or
(d)he fails to comply with paragraph (5).
(4)  A corporation shall not be exempted, or shall cease to be exempted, from section 12(1)(b) and Parts IV and V of the Act, if —
(a)it is being or will be wound up;
(b)a levy of execution in respect of it has not been satisfied;
(c)a receiver or manager has been appointed, whether by a court or creditors in Singapore or elsewhere, in respect of its property;
(d)it has entered into any composition or arrangement with its creditors;
(e)any of its directors, officers or members has been convicted —
(i)whether in Singapore or elsewhere, of any offence in connection with the promotion, formation or management of a corporation, or involving fraud or dishonesty;
(ii)of any offence under the Companies Act (Cap. 50) involving lack of diligence in the discharge of his duties as a director of a corporation;
(iii)of any offence under the Act or any regulations made thereunder; or
(iv)of any offence under the Banking Act (Cap. 19), the Finance Companies Act (Cap. 108), the Securities Industry Act (Cap. 289), the Commodity Futures Act (Cap. 48A), the Money-changing and Remittance Businesses Act (Cap. 181), the Insurance Act (Cap. 142) or the Penal Code (Cap. 224), or any subsidiary legislation made under any of those Acts; or
(f)it fails to comply with paragraph (5).
(5)  Every person who carries on such business as a futures trading adviser as is referred to in paragraph (1)(c) shall —
(a)lodge with the Authority —
(i)a prescribed notice of commencement of business not later than 14 business days after the commencement of his business as a futures trading adviser; and
(ii)a prescribed notice of cessation of business not later than 14 business days after the cessation of his business as a futures trading adviser; and
(b)furnish to the Authority at such time and in such manner as the Authority may direct, all such information concerning the affairs of its business (other than the identity of, and information relating to, the affairs of specific customers) as the Authority may reasonably require.
(6)  In this regulation —
“approved body corporate” means a body corporate which has been approved by the Authority for the purposes of section 43A(1)(b) of the Income Tax Act (Cap. 134);
“Finance and Treasury Centre” means a Finance and Treasury Centre approved under section 43G(2)(a) of the Income Tax Act;
“headquarters company” means a headquarters company approved under section 43E(2)(a) of the Income Tax Act.
Exemption for order fillers and persons engaging in leveraged foreign exchange trading only with accredited investors
22B.—(1)  Except as provided for in this regulation, sections 11 and 12(1)(a) and Parts IV and V of the Act shall not have effect in relation to —
(a)a person who carries on the business of leveraged foreign exchange trading only with accredited investors but not with any other person; or
(b)an order-filler.
(2)  An individual shall not be exempted or shall cease to be exempted from section 12(1)(a) and Parts IV and V of the Act, if —
(a)he is or becomes an employee of a holder of a futures broker’s licence;
(b)he has been adjudged a bankrupt whether in Singapore or elsewhere;
(c)he has been convicted —
(i)whether in Singapore or elsewhere, of any offence in connection with the promotion, formation or management of a corporation, or involving fraud or dishonesty;
(ii)of any offence under the Companies Act (Cap. 50) involving lack of diligence in the discharge of his duties as a director of a corporation;
(iii)of any offence under the Act or any regulations made thereunder; or
(iv)of any offence under the Banking Act (Cap. 19), the Finance Companies Act (Cap. 108), the Securities Industry Act (Cap. 289), the Commodity Futures Act (Cap. 48A), the Money-changing and Remittance Businesses Act (Cap. 181), the Insurance Act (Cap. 142) or the Penal Code (Cap. 224), or any subsidiary legislation made under any of those Acts; or
(d)he fails to comply with paragraph (4) or (5), as the case may be.
(3)  A corporation shall not be exempted, or shall cease to be exempted, from section 11 and Parts IV and V of the Act, if —
(a)it is being or will be wound up;
(b)a levy of execution in respect of it has not been satisfied;
(c)a receiver or manager has been appointed, whether by a court or creditors in Singapore or elsewhere, in respect of its property;
(d)it has entered into any composition or arrangement with its creditors;
(e)any of its directors, officers or members has been convicted —
(i)whether in Singapore or elsewhere, of any offence in connection with the promotion, formation or management of a corporation, or involving fraud or dishonesty;
(ii)of any offence under the Companies Act (Cap. 50) involving lack of diligence in the discharge of his duties as a director of a corporation;
(iii)of any offence under the Act or any regulations made thereunder;
(iv)of any offence under the Banking Act, the Finance Companies Act, the Securities Industry Act, the Commodity Futures Act, the Money-changing and Remittance Businesses Act, the Insurance Act or the Penal Code (Cap. 224), or any subsidiary legislation made under any of those Acts; or
(f)it fails to comply with paragraph (4) or (5), as the case may be.
(4)  Every person who carries on such business as a futures broker as is referred to in paragraph (1)(a) shall —
(a)lodge with the Authority —
(i)a prescribed notice of commencement of business not later than 14 business days after the commencement of his business as a futures broker; and
(ii)a prescribed notice of cessation of business not later than 14 business days after the cessation of his business as a futures broker; and
(b)furnish to the Authority, at such time and in such manner as the Authority may direct, all such information concerning the affairs of its business (other than the identity of and information relating to the affairs of specific customers) as the Authority may reasonably require.
(5)  Every person who carries on such business as a futures broker as is referred to in paragraph (1)(b) shall lodge with the Authority —
(a)a prescribed notice of commencement of business not later than 14 business days after the commencement of his business as an order-filler; and
(b)a prescribed notice of cessation of business not later than 14 business days after the cessation of his business as an order-filler.
(6)  In this regulation, an “order-filler” means an individual who is registered as a member of an Exchange for the purpose of entering into contracts on the floor of that Exchange only on behalf of members thereof which are licensed as futures brokers under section 11(1) of the Act.”.
19.  Regulation 23 of the principal Regulations is amended by deleting the words “Form 24” in the fourth line and substituting the words “Form 31”.
20.  The principal Regulations are amended by inserting, immediately after regulation 24, the following regulations:
“Segregated customers’ funds kept by exchange or clearing house
25.—(1)  A futures broker shall, in the manner determined by the Exchange, inform the Exchange —
(a)whether a futures contract that is being established on the Exchange is a futures broker’s customer’s contract; and
(b)whether any moneys, securities or properties being deposited with or paid to the Exchange are deposited or paid in respect of or in relation to a futures broker’s customer’s contract.
(2)  The Exchange or its clearing house on receiving moneys, securities and properties which have been notified under paragraph (1) as deposited or paid in respect of or in relation to a futures broker’s customer’s contract —
(a)shall account for such moneys, securities and properties on an aggregated basis, separate from other moneys, securities and properties received by the Exchange or its clearing house from the member; and
(b)ensure that such moneys, securities and properties are deposited in a trust account to be held for the benefit of the member who deposited the moneys, securities and properties and disposed of or used only in respect of or in relation to the futures broker’s customer’s contracts.
(3)  In this regulation —
“customer” has the same meaning as in section 37(9) of the Act;
“futures broker’s customer’s contract” means a futures contract established for the account of a customer of the futures broker.
Winding down and transfer of positions, margins and accounts of defaulting futures broker
26.—(1)  In the event of a default by a futures broker, an Exchange or a clearing house may, with the approval of the Authority —
(a)manage, deal with or liquidate all or any part of the positions belonging to customers and non-customers of the futures broker in default; and
(b)order the transfer of all or any part of the positions, margins and accounts belonging to customers and non-customers of the futures broker in default to one or more futures brokers willing to assume such positions or obligated to do so.
(2)  In this regulation —
“default” means a breach of the minimum financial requirements prescribed in these Regulations, or provided in the business rules of an Exchange or clearing house, as approved by the Authority;
“customer” has the same meaning as in section 37(9) of the Act.
Requirement for exchange to register trading personnel
27.  An Exchange shall not allow —
(a)any person in or surrounding any pit, or other place provided by the Exchange for trading of futures contracts, to purchase or sell for another person or for his own account any futures contracts; or
(b)any person to purchase or sell for another person or for his own account using any electronic system provided by the Exchange through which trading in futures contracts is carried out,
unless that person is registered with the Exchange and such registration has not expired, nor been suspended or revoked by the Exchange.
Large trader reports
28.—(1)  An Exchange shall submit to the Authority on a weekly basis, or at any time upon request by the Authority, a report showing for each type of futures contract listed on that Exchange the aggregate position carried in any futures trading account beneficially held by the same person that exceeds such quantity of futures contracts or futures equivalent option contracts or both as the Authority may, from time to time, determine.
(2)  The report to be submitted by an Exchange to the Authority under paragraph (1) shall be in a format approved by the Authority.
(3)  For the purposes of this regulation, “futures equivalent” has the same meaning as in regulation 16.
Verification of margin funds placed with Exchange or clearing house
29.—(1)  An Exchange or clearing house shall cause its auditors to submit a report to the Authority bi-annually, or at such other times as requested by the Authority —
(a)certifying that the moneys, securities and properties deposited by a member with the Exchange or its clearing house as margins in respect of or in relation to a futures broker’s customer’s contract are —
(i)segregated from the other moneys, securities and properties deposited by a member with the Exchange or clearing house as margins; and
(ii)deposited in a trust account as required by regulation 25(2)(b) and are not commingled with the funds of the Exchange or its clearing house; and
(b)showing the amount (on an aggregated basis) of all moneys, securities and properties deposited by a member as margins with the Exchange or clearing house —
(i)in respect of or in relation to a futures broker’s customer’s contract; and
(ii)in respect of or in relation to a futures contract other than that referred to in sub-paragraph (i).
(2)  In this regulation, “futures broker’s customer’s contract” means a futures contract established for the account of a customer of the futures broker and which has been notified as such under regulation 25.”;
21.  The First and Second Schedules to the principal Regulations are deleted and the following Schedules substituted therefor:
“FIRST SCHEDULE
Regulation 7.
List Of Forms
First column.
Second column.
Third column.
Provision of the future Trading Act (Chapter 116) and the Futures Trading Regulations for which Forms are prescribed.
Description of Forms.
Number of Form in Second Schedule.
Sections:
 
 
4
Application for approval of a body corporate as a Future Exchange
1
8
Application for approval of a body corporate as a clearing house
2
13(1)
Application for futures broker’s licence
3
13(1)
Application for futures trading adviser’s licence
4
13(1)
Application for futures pool operator’s licence
5
13(1)
Application for renewal of futures broker’s licence, futures trading adviser’s licence or futures pool operator’s licence
6
13(1)
Application for futures broker’s representative’s licence, futures trading adviser’s representative’s licence or futures pool operator’s representative’s licence
7
13(1)
Application for renewal of futures broker’s representative’s licence, futures trading adviser’s representative’s licence or futures pool operator’s representative’s licence
8
17
Notice of change of principal place of business
9
17
Notification of cessation of business
10
17
Notification of cessation to act as a representative
11
39(1)
Risk disclosure statement required to be furnished by a futures broker
12
39(2)
Risk disclosure statement required to be provided to participants in a futures pool or foreign exchange pool
13
39(3)
Risk disclosure statement required to be furnished by a futures trading adviser
14
49k(1)
Notice calling for claims against a Futures Exchange Fidelity fund
15
49l(4)
Notice of disallowance of claim against a Futures Exchange Fidelity fund
16
8(1)
Statement relating to accounts of a futures broker
17
8(1)
Statement relating to accounts of a futures trading adviser
18
8(1)
Statement relating to accounts of a futures pool operator
19
10
Auditor’s report - for a futures broker
20
10
Auditor’s report - for a futures trading adviser
21
10
Auditor’s report - for a futures pool operator
22
10A
Application for appointment of chief executive officer
23
12
Quartely statement of financial condition to be prepared by a futures broker
24
12
Quartely statement of computation of adjusted net capital
25
12
Quartely statement of segregation requirement and location of segregated funds
26
22A(5) and 22B(4)
Notice of commencement of business of persons eligible for exemption from licensing as a futures broker or futures trading adviser
27
22A(5) and 22B(4)
Notice of cessation of business of persons exempted from licensing as a futures broker or futures trading adviser
28
22B(5)
Notice of commencement of business of order-fillers
29
22B(5)
Notice of cessation of business of order-fillers
30
23
Notice of change of representative’s principal
31
SECOND SCHEDULE
Regulation 7.
Section 4.
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Section 8
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Section 13(1)
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Section 13(1)
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Section 13(1)
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Section 13(1)
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Section 13(1)
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Section 13(1)
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Section 17
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Section 17
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Section 17
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Section 39(1)
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Section 39(2)
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Section 39(3)
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Section 49K(1)
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Section 49L(4)
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Regulation 8(1)
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Regulation 8(1)
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Regulation 8(1)
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Regulation 10
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Regulation 10
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Regulation 10
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Regulation 10A
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Regulation 12
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Regulation 12
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Regulation 12
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Regulations 22A(5) and 22B(4)
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Regulations 22A(5) and 22B(4)
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Regulation 22B(5)
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Regulation 22B(5)
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Regulation 23
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[G.N. Nos. S 412/94; S 6/95]
Made this 15th day of February 1996.
LEE EK TIENG
Managing director,
Monetary Authority of Singapore.
[BFI FC 010/84 V8; AG/SL/35/94 Vol. 2]
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