PART III | CUSTOMER’S MONEYS AND ASSETS |
15.—(1) In Part 5 of the Act and this Part, “customer”, in relation to the holder of a capital markets services licence, does not include —| (a) | the holder in carrying out any regulated activity for its own account; | | (b) | an officer, an employee or a representative of the holder; or | | (c) | a related corporation of the holder with respect to an account belonging to and maintained wholly for the benefit of that related corporation. [S 226/2023 wef 31/12/2021] |
(2) For the purposes of this Part, a reference to money received on account of a customer of the holder of a capital markets services licence includes —| (a) | money received from, or on account of, the customer in respect of a sale or purchase of any capital markets products; [S 667/2018 wef 08/10/2018] | | (b) | money received from, or on account of, the customer for the holding of any capital markets products, or the maintenance of a trading account for any capital markets products by the customer; [S 667/2018 wef 08/10/2018] | | (c) | [Deleted by S 667/2018 wef 08/10/2018] | | (d) | money received from, or on account of, the customer, where the holder provides product financing to such customer; [S 667/2018 wef 08/10/2018] | | (e) | money received from, or on account of, the customer for the purpose of managing the customer’s funds; and | | (f) | money received from, or on account of, the customer in the course of the business of the holder, |
| (i) | money which is to be used to reduce the amount owed by the customer to the holder; | | (ii) | money which is to be paid to the customer or in accordance with the customer’s written direction; | | (iii) | money which is to be used to defray the holder’s brokerage and other proper charges; [S 667/2018 wef 08/10/2018] | | (iv) | money which is to be paid to any other person entitled to the money; and [S 667/2018 wef 08/10/2018] | | (v) | money received from, or on account of, a customer who is an institutional investor, in connection with any OTC derivatives contract which —| (A) | is entered into by the holder with the customer; | | (B) | is not cleared or settled by a clearing facility; and | | (C) | is booked in Singapore. [S 667/2018 wef 08/10/2018] |
|
|
(3) In this Part —“customer’s assets”, in relation to the holder of a capital markets services licence, means securities and assets, including Government securities and certificates of deposits, that are beneficially owned by a customer of the holder, but does not include —| (a) | money; and | | (b) | securities and assets that are received from, or on account of, a customer who is an institutional investor in connection with any OTC derivatives contract which —| (i) | is entered into by the holder with the customer; | | (ii) | is not cleared or settled by a clearing facility; and | | (iii) | is booked in Singapore; |
|
|
“trust account” means an account opened by a holder of a capital markets services licence that —| (a) | is designated as a trust account, a customer’s account or a customers’ account; and | | (b) | is distinguished and maintained separately from any other account in which the holder deposits its own moneys. [S 667/2018 wef 08/10/2018] |
|
|
|
| Division 2 — Customer’s Moneys |
| Money received on account of customer |
16.—(1) The holder of a capital markets services licence —| (a) | shall treat and deal with all moneys received on account of its customer as belonging to that customer; | | (b) | must, where the holder is a member of an approved clearing house or a recognised clearing house —| (i) | deposit all moneys received on account of a retail customer in respect of any OTC derivatives contract entered into by the holder on behalf of, or with, the retail customer in a trust account; | | (ii) | deposit all moneys received on account of a retail customer in respect of any capital markets products other than an OTC derivatives contract entered into by the holder on behalf of, or with, the retail customer in —| (A) | a trust account that is maintained in accordance with regulation 17; or | | (B) | any other account —| (AA) | into which the retail customer directs that the moneys be deposited; | | (BB) | to which the retail customer has legal and beneficial title; and | | (CC) | which is maintained with a specified financial institution; and |
|
| | (iii) | deposit all moneys received on account of a customer who is not a retail customer in —| (A) | a trust account that is maintained in accordance with regulation 17; or | | (B) | any other account into which that customer directs that the moneys be deposited; [S 667/2018 wef 08/10/2018] |
|
| | (ba) | must, where the holder is not a member of an approved clearing house or a recognised clearing house —| (i) | deposit all moneys received on account of a retail customer in —| (A) | a trust account that is maintained in accordance with regulation 17; or | | (B) | any other account —| (AA) | into which the retail customer directs that the moneys be deposited; | | (BB) | to which the retail customer has legal and beneficial title; and | | (CC) | which is maintained with a specified financial institution; and |
|
| | (ii) | deposit all moneys received on account of a customer who is not a retail customer in —| (A) | a trust account that is maintained in accordance with regulation 17; or | | (B) | any other account into which that customer directs that the moneys be deposited; and [S 667/2018 wef 08/10/2018] |
|
| | (c) | shall not commingle moneys received on account of its customer with other funds, or use the moneys as margin or guarantee for, or to secure any transaction of, or to extend the credit of, any person other than the customer. [S 709/2010 wef 26/11/2010] |
(2) The holder must, no later than the business day immediately following the day on which the holder receives money received on account of its customer or is notified of the receipt of such money (whichever is later) —| (a) | deposit the money in a trust account or other account in accordance with paragraph (1)(b) or (ba), as the case may be; | | (b) | pay the money to the customer; | | (c) | deposit the money in accordance with regulation 19; or | | (d) | invest the money in accordance with regulation 20. [S 667/2018 wef 08/10/2018] |
|
(3) Moneys received by a holder who is a member of an approved clearing house or a recognised clearing house on account of the holder’s customers must not be commingled or deposited in the same trust account, except that —| (a) | moneys received by the holder on account of retail customers in respect of OTC derivatives contracts entered into by the holder on behalf of, or with, retail customers may be commingled or deposited in the same trust account; and | | (b) | moneys received by the holder on account of retail customers in respect of any capital markets products other than an OTC derivatives contracts entered into by the holder on behalf of, or with, retail customers, and all moneys received by the holder on account of customers other than retail customers, may be commingled or deposited in the same trust account. [S 667/2018 wef 08/10/2018] |
|
| (4) Moneys received by a holder who is not a member of an approved clearing house or a recognised clearing house on account of the holder’s customers may be commingled or deposited in the same trust account. [S 667/2018 wef 08/10/2018] |
(5) Where a holder who is a member of an approved clearing house or a recognised clearing house accepts from a customer any moneys deposited or paid for or in relation to an OTC derivatives contract, the holder must —| (a) | inform the customer that the customer may request the holder to separate the books for any money deposited or paid for or in relation to the contracts of the customer from the books for moneys deposited or paid for or in relation to the contracts of any other customer or customers of the holder, subject to additional costs that may be imposed by the holder on the customer; | | (b) | inform the customer of the additional costs that the holder will impose on the customer if the customer makes the request mentioned in sub-paragraph (a); and | | (c) | inform the customer of —| (i) | the consequences of the holder becoming insolvent if the customer makes the request mentioned in sub-paragraph (a); | | (ii) | the consequences of the holder becoming insolvent if the customer does not make the request mentioned in sub-paragraph (a); and | | (iii) | the differences between the consequences mentioned in sub-paragraphs (i) and (ii). [S 667/2018 wef 08/10/2018] |
|
|
(6) In this regulation —| “business day” means the business day of the holder or, if the custodian with whom the trust account is maintained is closed for business on that day and the holder is unable to deposit the money in the trust account, the next business day of the custodian; |
“specified financial institution” means any of the following:| (a) | a bank that holds a licence under section 7 or 79 of the Banking Act 1970; [S 464/2021 wef 01/07/2021] [S 226/2023 wef 31/12/2021] | | (b) | a merchant bank that holds a merchant bank licence, or is treated as having been granted a merchant bank licence, under the Banking Act 1970; [S 464/2021 wef 01/07/2021] [S 226/2023 wef 31/12/2021] | | (c) | a finance company licensed under the Finance Companies Act 1967; [S 226/2023 wef 31/12/2021] | | (d) | a corporation incorporated, formed or established outside Singapore, which is licensed, registered, approved or otherwise regulated as a bank under the law of the foreign country or territory in which it is incorporated, formed or established. [S 667/2018 wef 08/10/2018] |
|
|
|
| Maintenance of trust account with specified financial institutions |
17.—(1) The holder of a capital markets services licence shall maintain a trust account in which it deposits moneys received on account of its customer with —| (a) | a bank that holds a licence under section 7 or 79 of the Banking Act 1970; [S 464/2021 wef 01/07/2021] [S 226/2023 wef 31/12/2021] | | (b) | a merchant bank that holds a merchant bank licence, or is treated as having been granted a merchant bank licence, under the Banking Act 1970; or [S 464/2021 wef 01/07/2021] [S 226/2023 wef 31/12/2021] | | (c) | a finance company licensed under the Finance Companies Act 1967. [S 226/2023 wef 31/12/2021] |
| (2) Without prejudice to paragraph (1) and subject to the customer’s prior written consent, the holder may, for the purpose of depositing moneys received on account of its customer (other than moneys received from, or on account of, its retail customer in respect of OTC derivatives contracts that are entered into by the holder with the retail customer) which are denominated in a foreign currency in a trust account, maintain the trust account with a custodian outside Singapore which is licensed, registered or authorised to conduct banking business in the country or territory where the account is maintained. [S 667/2018 wef 08/10/2018] |
| (3) A holder of a capital markets services licence must, before opening a trust account for the purposes of depositing moneys received on account of its customers, assess, and satisfy itself of, the suitability of the financial institution or custodian with which the trust account is to be opened. [S 667/2018 wef 08/10/2018] |
| (4) A holder of a capital markets services licence must periodically assess, and satisfy itself of, the suitability of any financial institution or custodian that maintains the holder’s trust accounts in which moneys received on account of the holder’s customers are deposited. [S 667/2018 wef 08/10/2018] |
| (5) The holder must keep, for the period specified in section 102(3) of the Act, records of the grounds on which the holder satisfied itself of the financial institution’s or custodian’s suitability at each assessment under paragraph (3) or (4). [S 667/2018 wef 08/10/2018] |
| (6) Paragraph (3) does not apply to trust accounts opened by the holder before 8 October 2018. [S 667/2018 wef 08/10/2018] |
|
| Notification and acknowledgment from specified financial institutions |
18.—(1) Where the holder of a capital markets services licence opens a trust account with a financial institution specified in regulation 17(1), the holder shall, before depositing moneys received on account of its customer in the account, give written notice to the financial institution and obtain an acknowledgment from the financial institution that —| (a) | all moneys deposited in the trust account are held on trust by the holder for its customer and the financial institution cannot exercise any right of set-off against the moneys for any debt owed by the holder to the financial institution; and | | (b) | the account is designated as a trust account, or a customer’s or customers’ account, which shall be distinguished and maintained separately from any other account in which the holder deposits its own moneys. [S 667/2018 wef 08/10/2018] |
(2) Where the holder of a capital markets services licence opens a trust account with a custodian outside Singapore in accordance with regulation 17(2), the holder must, before depositing moneys received on account of its customer in the trust account, give written notice to the custodian and obtain an acknowledgment from the custodian that —| (a) | all moneys deposited in the account are held by the holder for its customer and the custodian cannot exercise any right of set off against the moneys for any debt owed by the holder to the custodian; and | | (b) | the account is designated as a trust account, a customer’s account or a customers’ account, and is distinguished and maintained separately from any other account in which the holder deposits its own moneys. [S 667/2018 wef 08/10/2018] |
|
|
| Disclosure to customers in relation to moneys received on account of customers |
18A. The holder of a capital markets services licence must, before depositing moneys received on account of a retail customer in a trust account mentioned in regulation 17, disclose in writing to the retail customer —| (a) | that the retail customer’s moneys will be held on behalf of the holder by, as the case may be —| (i) | a bank that holds a licence under section 7 or 79 of the Banking Act 1970; [S 464/2021 wef 01/07/2021] [S 226/2023 wef 31/12/2021] | | (ii) | a merchant bank that holds a merchant bank licence, or is treated as having been granted a merchant bank licence, under the Banking Act 1970; [S 464/2021 wef 01/07/2021] [S 226/2023 wef 31/12/2021] | | (iii) | a finance company licensed under the Finance Companies Act 1967; or [S 226/2023 wef 31/12/2021] | | (iv) | a custodian outside Singapore which is licensed, registered or authorised to conduct banking business in the country or territory where the account is maintained; |
| | (b) | that the holder may withdraw the retail customer’s moneys from the trust account and deposit the moneys with an approved clearing house, a recognised clearing house, a member of a clearing facility or a member of an organised market for any of the purposes specified in regulation 19; | | (c) | whether or not the retail customer’s moneys will be deposited in a trust account together with, and commingled with, the moneys of the holder’s other customers; | | (d) | if the retail customer’s moneys will be deposited in a trust account together with, and commingled with, the moneys of the holder’s other customers, the risks of such commingling; | | (e) | the consequences for the retail customer’s moneys if the financial institution or custodian with which the trust account is maintained becomes insolvent; | | (f) | the consequences for the retail customer’s moneys if the money is deposited with an approved clearing house, a recognised clearing house, a member of a clearing facility or a member of an organised market, and the approved clearing house, recognised clearing house, member of a clearing facility or member of an organised market becomes insolvent; and | | (g) | if the trust account will be maintained with a custodian outside Singapore in accordance with regulation 17(2) —| (i) | the fact that the laws and practices relating to trust accounts in the jurisdiction under which the custodian is licensed, registered or authorised may be different from the laws and practices in Singapore relating to trust accounts; and | | (ii) | the fact that any such differences may affect the ability of the customer to recover the funds deposited in the trust account. [S 667/2018 wef 08/10/2018] |
|
|
| Customer’s money deposited with approved clearing house, etc. |
19. Despite regulations 16 and 17, the holder of a capital markets services licence to deal in capital markets products may deposit moneys received on account of its customer, other than moneys received on account of a retail customer in respect of OTC derivatives contracts, with an approved clearing house, a recognised clearing house, a member of an organised market or a member of a clearing facility —| (a) | for the purpose of entering into, facilitating the continued holding of a position in, or facilitating a transaction in, any capital markets products on behalf of the customer on the organised market; | | (b) | for the purpose of the clearing or settlement of any capital markets products on the clearing facility for the customer; or | | (c) | for any other purpose specified under the business rules and practices of the approved clearing house, recognised clearing house, organised market or clearing facility, as the case may be. [S 667/2018 wef 08/10/2018] |
|
| Investment of moneys received on account of customers |
20.—(1) Notwithstanding regulations 16 and 17, the holder of a capital markets services licence may hold moneys received on account of its customer on trust for the customer, including moneys which the holder may from time to time advance to the customer’s trust account in accordance with regulation 23, in any of the following forms of investment:| (a) | any Government securities; | | (b) | any debt instrument of the government of the country of an organised market on which the holder normally transacts its business; or [S 667/2018 wef 08/10/2018] | | (c) | any other securities or instrument as the Authority may from time to time, by a guideline issued by the Authority, determine. |
(2) The holder of a capital markets services licence maintaining any moneys received on account of its customer in any of the forms of investment specified in paragraph (1) shall keep a record of all transactions relating to such moneys, including —| (a) | the date on which the transaction was made; | | (b) | where applicable, the name of the person through whom the transaction was made; | | (c) | the amount of money invested in the transaction; | | (d) | a description of the transaction; | | (e) | the place, if any, where the moneys and assets are kept; | | (f) | where applicable, 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) | where applicable, the name of the person, if any, to whom or through whom the subject-matter of the transaction was disposed of. |
|
|
| Moneys received from retail customer |
20A. The holder of a capital markets services licence must not enter into any contract, arrangement or transaction, the purpose or effect of which is to transfer any right, interest, benefit or title in any moneys received from its retail customer to itself or any other person, unless —| (a) | the contract, arrangement or transaction is entered into in connection with lending of the retail customer’s specified products; and | | (b) | the holder complies with regulation 45(1), (3) and (4) in relation to the lending of the retail customer’s specified products. [S 667/2018 wef 08/10/2018] |
|
| Withdrawal of money from trust account |
21.—(1) The holder of a capital markets services licence shall not withdraw any money from a customer’s trust account except for the purpose of —| (a) | making a payment to any person entitled thereto; | | (b) | making a payment to meet an obligation of a customer whose money is deposited in that account, being an obligation that arises from any dealing in capital markets products by the holder for the customer; [S 667/2018 wef 08/10/2018] | | (c) | defraying its brokerage and other proper charges; | | (d) | making a payment to any other person or account in accordance with the written direction of the customer; | | (e) | reimbursing the holder any moneys that it has advanced to the account and any interest and returns that it is entitled to by virtue of regulation 23, so long as such withdrawal does not result in the account becoming under-margined or under-funded; | | (f) | making a deposit in accordance with regulation 19 or an investment in accordance with regulation 20; or | | (g) | making a payment or withdrawal that is authorised by law. [S 667/2018 wef 08/10/2018] |
| (2) Despite paragraph (1)(d), the holder of a capital markets services licence must not withdraw any money from a retail customer’s trust account for the purpose of making a payment to any other person or account to meet any obligation of the holder in relation to any transaction, arrangement or contract entered into by the holder for the benefit of the holder. [S 667/2018 wef 08/10/2018] |
|
| Interest arising from trust account, etc. |
| 22.—(1) Subject to any agreement between the holder of a capital markets services licence and its customer, all interest earned from the maintenance of the moneys received on account of the customer in a trust account, and all returns from the investment of moneys received on account of the customer in accordance with regulation 20, shall accrue to the customer. [S 709/2010 wef 26/11/2010] | (2) The holder of a capital markets services licence shall take all reasonable steps to ensure that the interest and returns accrued to the customer under paragraph (1) are paid to or held for the benefit of the customer, as the case may be. [S 709/2010 wef 26/11/2010] |
|
| Placement of licensee’s own money in trust account |
23.—(1) Notwithstanding regulation 16(1), the holder of a capital markets services licence may from time to time advance sufficient money to a customer’s trust account from its own funds —| (a) | to prevent the customer’s trust account from being under-margined or under-funded; or | | (b) | to ensure the continued maintenance of that account in a case where it is maintained with —| (i) | a financial institution specified in regulation 17(1); or | | (ii) | a custodian specified in regulation 17(2). [S 373/2005 wef 01/07/2005] |
|
| (2) The holder may retain any interest earned and return arising on the moneys which it has so advanced to the account. |
| (3) Subject to regulation 21(1)(e), any money belonging to the holder that is deposited into a customer’s trust account may be used for the purpose of payment to the customer. [S 667/2018 wef 08/10/2018] |
|
| No effect on lawful claims or liens |
| 24. Nothing in this Division shall be construed as avoiding or affecting any lawful claim or lien which any person has in respect of any money held in a trust account in accordance with this Division or any money belonging to a customer before the money is paid into a trust account. |
| Division 3 — Customer’s Assets |
| Application of this Division |
25.—(1) This Division shall apply to customer’s assets received by the holder of a capital markets services licence to be held on account of the customer or as collateral for any amount owed by the customer to the holder.| (2) In this Division, “custodian” means a person referred to in regulation 27(1), (2) or (3), as the case may be. |
|
| Duties of holder on receipt of customer’s assets |
26.—(1) The holder of a capital markets services licence shall —| (a) | deposit a customer’s assets —| (i) | in the case of a retail customer —| (A) | in a custody account held on trust for the customer that is maintained in accordance with regulation 27; or | | (B) | in any other account —| (AA) | into which the customer directs that the assets are to be deposited; | | (BB) | to which the customer has legal and beneficial title; and | | (CC) | which is maintained with a specified custodian; and |
|
| | (ii) | in the case of any other customer —| (A) | in a custody account held on trust for the customer; or | | (B) | in any other account into which the customer directs that the assets be deposited; [S 667/2018 wef 08/10/2018] |
|
| | (b) | ensure that the customer’s assets are not commingled with any other assets; and [S 709/2010 wef 26/11/2010] | | (c) | make arrangements for a custodian to maintain the custody account. |
(2) The holder must, no later than the business day immediately following the day on which the holder receives customer’s assets or is notified of the receipt of such assets, whichever is later —| (a) | deposit the assets in a custody account or other account in accordance with paragraph (1)(a); | | (b) | return the assets to the customer; or | | (c) | deposit the assets in accordance with regulation 30. [S 667/2018 wef 08/10/2018] |
|
| (3) In paragraph (2), “business day” means the business day of the holder or, if the custodian with whom the custody account is maintained is closed for business on that day and the holder is unable to deposit the assets in the account, the next business day of the custodian. |
| (4) A customer’s assets may be commingled with the assets of another customer and deposited in the same custody account. |
(5) Where a holder who is a member of an approved clearing house or a recognised clearing house receives from a customer any assets deposited or paid for in relation to an OTC derivatives contract, the holder must —| (a) | inform the customer that the customer may request the holder to separate the books for any assets deposited or paid for or in relation to the contracts of the customer from the books for assets deposited or paid for or in relation to the contracts of any other customer or customers of the holder, subject to additional costs that may be imposed by the holder on the customer; | | (b) | inform the customer of the additional costs that the holder will impose on the customer if the customer makes the request mentioned in sub-paragraph (a); and | | (c) | inform the customer of —| (i) | the consequences of the holder becoming insolvent if the customer makes the request mentioned in sub-paragraph (a); | | (ii) | the consequences of the holder becoming insolvent if the customer does not make the request mentioned in sub-paragraph (a); and | | (iii) | the differences between the consequences mentioned in sub-paragraphs (i) and (ii). [S 667/2018 wef 08/10/2018] |
|
|
(6) In paragraph (1), “specified custodian” means —| (a) | a bank that holds a licence under section 7 or 79 of the Banking Act 1970; [S 464/2021 wef 01/07/2021] [S 226/2023 wef 31/12/2021] | | (b) | a merchant bank that holds a merchant bank licence, or is treated as having been granted a merchant bank licence, under the Banking Act 1970; [S 464/2021 wef 01/07/2021] [S 226/2023 wef 31/12/2021] | | (c) | a finance company licensed under the Finance Companies Act 1967; [S 226/2023 wef 31/12/2021] | | (d) | a depository agent within the meaning of section 81SF of the Act for the custody of securities listed for quotation or quoted on the Singapore Exchange Securities Trading Limited or deposited with the Central Depository (Pte) Ltd; | | (e) | an approved trustee for a collective investment scheme within the meaning of section 289 of the Act; | | (f) | any person licensed under the Act to provide custodial services; or | | (g) | a custodian outside Singapore which is licensed, registered or authorised to act as a custodian in the country or territory where the account is maintained. [S 667/2018 wef 08/10/2018] |
|
|
| Maintenance of custody account with specified custodians |
27.—(1) Subject to regulation 30, the holder of a capital markets services licence shall maintain a custody account in which it deposits a customer’s assets with —| (a) | a bank that holds a licence under section 7 or 79 of the Banking Act 1970; [S 464/2021 wef 01/07/2021] [S 226/2023 wef 31/12/2021] | | (b) | a merchant bank that holds a merchant bank licence, or is treated as having been granted a merchant bank licence, under the Banking Act 1970; [S 464/2021 wef 01/07/2021] [S 226/2023 wef 31/12/2021] | | (c) | a finance company licensed under the Finance Companies Act 1967; [S 226/2023 wef 31/12/2021] | | (d) | a depository agent within the meaning of section 81SF of the Act for the custody of capital markets products listed for quotation or quoted on the Singapore Exchange Securities Trading Limited or deposited with the Central Depository (Pte) Ltd; [S 667/2018 wef 08/10/2018] | | (e) | an approved trustee for a collective investment scheme within the meaning of section 289 of the Act; or | | (f) | any person licensed under the Act to provide custodial services. [S 667/2018 wef 08/10/2018] |
| (2) Without prejudice to paragraph (1), the holder may maintain the custody account itself where it is licensed under the Act to provide custodial services. [S 667/2018 wef 08/10/2018] |
| (3) Without prejudice to paragraph (1) and subject to the customer’s prior written consent, the holder may, for the purpose of the safe custody of the customer’s assets denominated in a foreign currency, maintain the custody account with a custodian outside Singapore which is licensed, registered or authorised to act as a custodian in the country or territory where the account is maintained. |
|
| Disclosure to customers in relation to assets received on account of customers |
27A. A holder of a capital markets services licence must, before depositing assets received on account of a retail customer in a custody account mentioned in regulation 27, disclose in writing to the retail customer —| (a) | that the retail customer’s assets will be held on behalf of the customer in accordance with regulation 27; | | (b) | that the holder may withdraw the retail customer’s assets from the custody account and deposit the assets with an approved clearing house, a recognised clearing house, a member of a clearing facility or a member of an organised market for any of the purposes specified in regulation 30; | | (c) | whether or not the retail customer’s assets will be deposited in a custody account with, and commingled with, the assets of the holder’s other customers; | | (d) | if the retail customer’s assets will be deposited in a custody account together with, and commingled with, the assets of the holder’s other customers, the risks of such commingling; | | (e) | the consequences for the retail customer’s assets if the custodian with which the custody account is maintained becomes insolvent; and | | (f) | if the custody account will be maintained with a custodian outside Singapore in accordance with regulation 27(3) —| (i) | the fact that the laws and practices relating to custody accounts in the jurisdiction under which the custodian is licensed, registered or authorised may be different from the laws and practices in Singapore relating to custody accounts; and | | (ii) | the fact that any such differences may affect the ability of the customer to recover the assets deposited in the custody account. [S 667/2018 wef 08/10/2018] |
|
|
| Notification and acknowledgment from specified custodians |
28. Where the holder of a capital markets services licence opens a custody account with a custodian specified in regulation 27(1), the holder shall, before depositing a customer’s assets in the account, give written notice to the custodian, and obtain an acknowledgment from the custodian that —| (a) | all assets deposited in the custody account are held on trust by the holder for its customer; and | | (b) | the account is designated as a trust account, or a customer’s or customers’ account, which shall be distinguished and maintained separately from any other account in which the holder deposits its own assets. |
|
29.—(1) The holder of a capital markets services licence which maintains its customer’s assets in a custody account under regulation 27(1) or (3) must —| (a) | before opening the custody account, assess the custodian’s suitability for the holder’s customer or class of customers; and | | (b) | periodically assess the custodian’s suitability for as long as the custody account is maintained with that custodian. |
| (2) The holder must keep, for the period specified in section 102(3) of the Act, records of the grounds on which the holder satisfied itself of the custodian’s suitability at each assessment under paragraph (1)(a) or (b). [S 667/2018 wef 08/10/2018] |
(3) Despite paragraphs (1) and (2) and regulation 64(1) of the Securities and Futures (Licensing and Conduct of Business) (Amendment No. 2) Regulations 2018 (G.N. No. S 667/2018), this regulation as in force immediately before 8 October 2018 continues to apply to a person who —| (a) | was, immediately before 8 October 2018, a holder of a capital markets services licence to carry on business in any regulated activity other than dealing in capital markets products that are specified OTC derivatives contracts; and | | (b) | is a holder of a capital markets services licence to carry on business in any regulated activity other than dealing in capital markets products that are specified OTC derivatives contracts, |
[S 832/2020 wef 30/09/2020] |
|
| Customer’s assets held with approved clearing house, etc. |
30. Despite regulations 26 and 27, the holder of a capital markets services licence to deal in capital markets products may deposit its customer’s assets with an approved clearing house, a recognised clearing house, a member of an organised market or a member of a clearing facility —| (a) | for the purpose of entering into, facilitating the continued holding of a position in, or facilitating a transaction in, any capital markets products on behalf of the customer on the organised market; | | (b) | for the purpose of the clearing or settlement of any capital markets products on the clearing facility for the customer; or | | (c) | for any other purpose specified under the business rules and practices of the approved clearing house, recognised clearing house, organised market or clearing facility, as the case may be. [S 667/2018 wef 08/10/2018] |
|
| 31.—(1) Where the holder of a capital markets services licence is licensed to provide custodial services, the holder shall, before providing custodial services for its customer’s assets, notify the customer of the terms and conditions that would apply to the safe custody of the customer’s assets. [S 667/2018 wef 08/10/2018] (2) The terms and conditions that apply to the provision of custodial services by such a holder to its customer shall include —| (a) | the arrangements for the giving and receiving of instructions by or on behalf of the customer in respect of the services to be provided including, where applicable, the arrangements for the giving of authority by the customer to another person and the extent of that authority and any limitation thereto; | | (b) | any lien over or security interest in the assets by the holder or a third party; | | (c) | the circumstances under which the holder may realise the assets held as collateral to meet the customer’s liabilities to the holder; | | (d) | where the customer’s assets are to be held with a custodian other than the holder, the liability of the holder in the event of default by the custodian; | | (e) | where the holder intends to commingle the customer’s assets with those of other customers and maintain such assets with a custodian other than itself, a statement that the customer’s interest in the assets may not be identifiable by separate certificates, or other physical documents or equivalent electronic records, and a condition that the holder shall maintain records of the customer’s interest in the assets that have been commingled; | | (f) | the person in whose name the assets are registered; | | (g) | the arrangements in relation to claiming and receiving dividends, interest payments and other entitlements accruing to the customer, and the exercise of any right and power arising from ownership of the assets; | | (h) | the arrangements for the provision of information relating to the custody of the asset to the customer; and | | (i) | all applicable fees and costs for the custody of the assets. [S 667/2018 wef 08/10/2018] |
|
|
32.—(1) Subject to paragraph (3) and without affecting regulation 28, before placing its customer’s assets in a custody account with a custodian, the holder of a capital markets services licence shall agree with the custodian, in writing, to the following:| (a) | that the account shall be designated as that of the customer or customers; | | (b) | that the custodian shall hold and record the assets in accordance with the holder’s instructions; and the records shall identify the assets as belonging to the holder’s customer and the assets shall be kept separate from any asset belonging to the holder or to the custodian; | | (c) | that the custodian shall not claim any lien, right of retention or sale over any asset standing to the credit of the custody account, except —| (i) | where the holder has obtained the customer’s written consent and notified the custodian in writing of the written consent; or | | (ii) | in respect of any charges as agreed upon in the terms and conditions relating to the administration or custody of the asset; |
| | (d) | that the custodian shall provide sufficient information to the holder in order that the holder may comply with its record-keeping obligations under the Act or these Regulations or under any other law; | | (e) | the person in whose name the assets are registered; | | (f) | that the custodian shall not permit any withdrawal of the assets from the custody account, except for delivery of the assets to the holder or on the holder’s written instructions; | | (g) | the arrangements for dealing with any entitlement arising from the assets in the custody account, such as coupon or interest payment; | | (h) | the extent of the custodian’s liability in the event of any loss of the assets maintained in the custody account caused by fraud or negligence on the part of the custodian or any of the custodian’s agents; and | | (i) | the applicable fees and costs for the custody of the assets. [S 709/2010 wef 26/11/2010] [S 667/2018 wef 08/10/2018] |
| (2) The holder of a capital markets services licence referred to in paragraph (1) shall, before depositing its customer’s assets in a custody account, disclose to the customer the terms and conditions agreed with the custodian. |
| (3) Paragraph (1) shall not apply to the holder of a capital markets services licence who is licensed to provide custodial services in relation to its provision of such services for its customer’s assets. [S 709/2010 wef 26/11/2010] |
|
| Lending of customer’s specified products |
| 33.—(1) Notwithstanding regulations 26 and 27, the holder of a capital markets services licence may, subject to the other provisions of this regulation, lend or arrange for a custodian to lend its customer’s assets which are specified products. [S 667/2018 wef 08/10/2018] (2) The holder of a capital markets services licence shall not lend or arrange for a custodian to lend the specified products of a customer, unless it has —| (a) | explained the risks involved to the customer; and | | (b) | obtained the customer’s written consent to do so. [S 667/2018 wef 08/10/2018] |
|
| (3) Paragraph (2)(a) shall not apply to a holder of a capital markets services licence which lends or arranges for a custodian to lend the specified products of a customer who is an accredited investor, expert investor or institutional investor. [S 667/2018 wef 08/10/2018] |
| (4) The holder of a capital markets services licence which lends its customer’s specified products shall, before the commencement of such lending, enter into an agreement with that customer setting out the terms and conditions for such lending with the customer whose specified products are to be lent. [S 667/2018 wef 08/10/2018] |
(5) The holder of a capital markets services licence which arranges for a custodian to lend specified products of the holder’s customer shall, before the commencement of such lending —| (a) | enter into an agreement with the custodian setting out the terms and conditions for the lending; and | | (b) | disclose these terms and conditions to the customer. [S 667/2018 wef 08/10/2018] |
|
|
| Mortgage of customer’s assets |
34.—(1) Despite regulations 26 and 27 and subject to paragraphs (2), (3) and (4) and any agreement between the holder of a capital markets services licence and its customer, where the holder is owed money by its customer, the holder may mortgage, charge, pledge or hypothecate the customer’s assets but only for a sum not exceeding the amount owed by the customer to the holder.(2) The holder of a capital markets services licence must, before mortgaging, charging, pledging or hypothecating a retail customer’s assets —| (a) | inform the retail customer that the holder may mortgage, charge, pledge or hypothecate the retail customer’s assets but only for a sum not exceeding the amount owed by the customer to the holder; | | (b) | explain to the retail customer the risks of mortgaging, charging, pledging or hypothecating the retail customer’s assets; and | | (c) | obtain the retail customer’s written consent to mortgage, charge, pledge or hypothecate the retail customer’s assets. |
|
| (3) For the purposes of paragraph (1), a sum for which a customer’s assets are mortgaged, charged, pledged or hypothecated does not exceed the amount owed by the customer to the holder by reason only of an excess arising on any day through the reduction of the amount owed by the customer to the holder on that day, if the holder pays or transfers to the mortgagee, chargee or pledgee concerned money or assets of an amount sufficient to reduce such excess as promptly as practicable after the excess occurs and, in any event, no later than the next business day. |
(4) The holder of a capital markets services licence may mortgage, charge, pledge or hypothecate the assets of multiple customers together if and only if —| (a) | the sum of the claims to which such customers’ assets are subject as a result of such mortgage, charge, pledge or hypothecation does not exceed the aggregate amounts owed by the customers to the holder; and | | (b) | the claim to which each customer’s assets are subject as a result of such mortgage, charge, pledge or hypothecation does not exceed the amount owed by the customer to the holder. [S 667/2018 wef 08/10/2018] |
|
|
| Assets received from retail customer |
34A. The holder of a capital markets services licence must not, in relation to any assets received from its retail customer, enter into any contract, arrangement or transaction of which the purpose or effect is to transfer any right, interest, benefit or title in those assets to itself or any other person, unless —| (a) | the contract, arrangement or transaction is entered into in connection with borrowing or lending of the retail customer’s specified products; and | | (b) | the holder complies with regulation 45(1), (3) and (4) in relation to the borrowing or lending (as the case may be) of the retail customer’s specified products. [S 667/2018 wef 08/10/2018] |
|
| Withdrawal of customer’s assets |
35.—(1) The holder of a capital markets services licence shall not withdraw any of its customer’s assets from a custody account except for the purpose of —| (a) | transferring the asset to any person entitled thereto; | | (b) | meeting the customer’s obligation arising from any dealing in capital markets products by the holder for the customer; [S 667/2018 wef 08/10/2018] | | (c) | transferring the asset to any person or account in accordance with the customer’s written directions; | | (d) | lending of specified products in accordance with regulation 33; [S 667/2018 wef 08/10/2018] | | (e) | mortgaging, charging, pledging or hypothecating the assets in accordance with regulation 34; | | (f) | making a deposit in accordance with regulation 30; or | | (g) | making a transfer that is authorised by law. |
| (2) Despite paragraph (1)(c), the holder of a capital markets services licence must not transfer any retail customer’s assets to meet any obligation of the holder in relation to any transaction, arrangement or contract entered into by the holder for the benefit of the holder. [S 667/2018 wef 08/10/2018] |
|
| No effect on lawful claims or liens |
| 36. Nothing in this Division shall be construed as avoiding or affecting any lawful claim or lien which any person has in respect of any asset held in a custody account in accordance with this Division or any asset belonging to a customer before the asset is paid into a custody account. |
| Division 4 — Miscellaneous |
| Computation for trust accounts and custody accounts |
37.—(1) For the purposes of Division 2, a holder of a capital markets services licence to carry on business in any regulated activity must, no later than noon of every business day, complete a computation of —| (a) | the total amount of moneys deposited in its customers’ trust accounts; | | (b) | the total amount of its customers’ moneys required under Part 5 of the Act and these Regulations to be deposited in trust accounts; and [S 226/2023 wef 31/12/2021] | | (c) | the amounts of the holder’s residual interest in the trust accounts, |
| as at the end of the previous business day. |
(2) For the purposes of Division 3, a holder of a capital markets services licence to carry on business in dealing in capital markets products that are futures contracts, FX OTC derivatives contracts or spot foreign exchange contracts for purposes of leveraged foreign exchange trading must, no later than noon of every business day, complete a computation of —| (a) | the total amount of assets deposited in its customers’ custody accounts; and | | (b) | the total amount of its customers’ assets required under Part 5 of the Act and these Regulations to be deposited in custody accounts, |
| as at the end of the previous business day. |
[S 226/2023 wef 31/12/2021] |
(3) For the purposes of Division 3, a holder of a capital markets services licence to carry on business in any regulated activity (other than dealing in capital markets products that are futures contracts, FX OTC derivatives contracts or spot foreign exchange contracts for purposes of leveraged foreign exchange trading) who is a member of the Central Depository System must —| (a) | in respect of assets deposited with the Central Depository System, no later than noon of every business day, complete a computation of —| (i) | the total amount of assets deposited in its customers’ custody accounts; and | | (ii) | the total amount of its customers’ assets required under Part 5 of the Act and these Regulations to be deposited in custody accounts, |
| as at the end of the previous business day; and |
[S 226/2023 wef 31/12/2021] | | (b) | in respect of assets that are not deposited with the Central Depository System, no later than noon of the first business day after the last day of each month, complete a computation of —| (i) | the total amount of assets deposited in its customers’ custody accounts; and | | (ii) | the total amount of its customers’ assets required under Part 5 of the Act and these Regulations to be deposited in custody accounts, |
| as at the end of that month. |
[S 226/2023 wef 31/12/2021] |
|
(4) For the purposes of Division 3, a holder of a capital markets services licence to carry on business in any regulated activity (other than dealing in capital markets products that are futures contracts, FX OTC derivatives contracts or spot foreign exchange contracts for purposes of leveraged foreign exchange trading) who is not a member of the Central Depository System must, no later than noon of the first business day after the last day of each month, complete a computation of —| (a) | the total amount of assets deposited in its customers’ custody accounts; and | | (b) | the total amount of its customers’ assets required under Part 5 of the Act and these Regulations to be deposited in custody accounts, |
| as at the end of that month. |
[S 226/2023 wef 31/12/2021] |
| (5) The holder must keep the result of each computation required under paragraph (1), (2), (3)(a) or (b) or (4), and all data that supports each such computation, for the period specified in section 102(3) of the Act. |
| (6) Despite paragraphs (3)(b) and (4), if a holder is unable to obtain information on the total amount of assets deposited in its customers’ custody accounts before noon of the first business day after the last day of any month, the holder need not compute the amounts required to be computed under paragraph (3)(b) or (4) (as the case may be) before that time, but must compute those amounts no later than noon of the business day after the day on which the information is obtained by the holder. |
(6A) Despite paragraphs (1), (2), (3), (4), (5) and (6) and regulation 64(1) of the Securities and Futures (Licensing and Conduct of Business) (Amendment No. 2) Regulations 2018, this regulation as in force immediately before 8 October 2018 continues to apply to a person who —| (a) | was, immediately before 8 October 2018, a holder of a capital markets services licence to carry on business in any regulated activity other than dealing in capital markets products that are specified OTC derivatives contracts; and | | (b) | is a holder of a capital markets services licence to carry on business in any regulated activity other than dealing in capital markets products that are specified OTC derivatives contracts, |
[S 832/2020 wef 30/09/2020] |
| (7) In this regulation, “Central Depository System” has the meaning given in section 81SF of the Act. [S 667/2018 wef 08/10/2018] |
|
| Customer’s moneys and assets held by approved clearing house or recognised clearing house |
38.—(1) The holder of a capital markets services licence which is a member of an approved clearing house or a recognised clearing house shall, in respect of such market contracts as may be specified by the approved clearing house or recognised clearing house (as the case may be), inform the approved clearing house or recognised clearing house (as the case may be) in the manner determined by the approved clearing house or recognised clearing house (as the case may be) —| (a) | whether a market contract that is being cleared by the approved clearing house or recognised clearing house (as the case may be) is a customer’s contract; and [S 667/2018 wef 08/10/2018] | | (b) | whether any money or asset being deposited with or paid to the approved clearing house or recognised clearing house (as the case may be) is deposited or paid in respect of or in relation to the customer’s contract. [S 667/2018 wef 08/10/2018] |
(2) In this regulation —“customer’s contract” means —| (a) | a contract to which a customer of the holder is a party; or | | (b) | a contract to which any other holder of a capital markets services licence to deal in capital markets product is a party and which is cleared through the first-mentioned holder; [S 667/2018 wef 08/10/2018] |
|
| “market contract” has the same meaning as in section 48(1) of the Act. [S 709/2010 wef 26/11/2010] |
|
|
|
