Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licences) Regulations

Securities and Futures Act

(Chapter 289, Sections 86(3), 95(1)(c), 100, 337, 341 and 2890)

Rg 13

G.N. No. S 498/2002

REVISED EDITION 2004

(29th February 2004)

[29th February 2004]

PART I

PRELIMINARY

Citation

1. These Regulations may be cited as the Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licences) Regulations.

Definitions

2. In these Regulations, unless the context otherwise requires —

“adjusted net head office funds” has the same meaning as in paragraph 2 of the Second Schedule;

“aggregate indebtedness”, in relation to the holder of a licence, means the total liabilities of the holder, but does not include any contingent liability of the holder or any of the following liabilities of the holder:

(a)	any amount payable on open contracts;
(b)	any amount payable to a customer of the holder in connection with moneys or assets received on account of the customer and maintained in a trust account;
(c)	any deferred income tax payable;
(d)	any liability that is fully secured by assets that are not included as the financial resources of the holder under paragraph 1 of the Second Schedule, if the sole recourse of the creditor for non-payment of such liability is to such assets only; [S 507/2006 wef 28/08/2006]
(e)	any qualifying subordinated loan as defined in paragraph 4 of the Second Schedule; and [S 507/2006 wef 28/08/2006]
(f)	any financial liability that has been included in the computation of financial resources under paragraph 1 of the Second Schedule; [S 507/2006 wef 28/08/2006]

“aggregate resources” means —

(a)	in relation to the holder of a licence incorporated in Singapore, the sum of the financial resources of the holder and qualifying letters of credit less the total risk requirement of the holder; and
(b)	in relation to the holder of a licence that is a foreign company, the sum of the adjusted net head office funds of the holder and qualifying letters of credit less the total risk requirement of the holder;

“base capital”, in relation to a corporation or the holder of a licence, means the sum of —

(a)

the following items in the latest account of the corporation or the holder (as the case may be):

(i)	paid-up ordinary share capital;
(ii)	irredeemable and non-cumulative preference share capital; and [S 507/2006 wef 28/08/2006]
(iii)	reserve fund maintained under regulation 19; and [S 507/2006 wef 28/08/2006]

(b)

any unappropriated profit or loss in the latest audited accounts of the corporation or the holder (as the case may be),

less any interim loss in the latest accounts of the corporation or the holder (as the case may be) and any dividend that has been declared since the latest audited accounts of the corporation or the holder (as the case may be);

“broad-based index” means an index that satisfies the following conditions:

(a)	the index shall contain shares of at least 20 corporations;
(b)	the weighting of the largest constituent share is not greater than 20% of the index; and
(c)	the total weighting of the largest 5 constituent shares is not greater than 60% of the index;

“commodity”, in relation to a derivative, means —

(a)	a financial instrument; or
(b)	gold, freight, any class of oil or any other physical commodity;

“counterparty”, in relation to the holder of a licence, means any person who has a financial obligation to the holder (including a financial obligation to be performed at a specified future time), and includes any customer of the holder;

“counterparty risk weight”, in relation to a counterparty, means the percentage that applies to the counterparty in Table 1 of the Fourth Schedule;

“customer” means a person —

(a)	on whose behalf the holder of a licence carries on any regulated activity; or
(b)	with whom the holder of a licence enters or will enter into a transaction as principal for the sale or purchase of securities or futures contracts;

“debt security” includes any debenture stock, bond and note;

“derivative” includes any warrant, convertible security, forward contract, futures contract, swap, contract for differences and option;

“equity security” includes any stock, share, depository receipt and unit in a collective investment scheme;

“financial resources” has the same meaning as in paragraph 1 of the Second Schedule;

“forward contract” means a contract the effect of which is that one party to the contract agrees to deliver a specified commodity, or a specified quantity of a specified commodity, to another party to the contract at a specified future time and at a specified price payable at that time, and includes an option on a forward contract but does not include a futures contract;

“futures contract” means a contract the effect of which is that —

(a)

one party to the contract agrees to deliver a specified commodity, or a specified quantity of a specified commodity, to another party to the contract at a specified future time and at a specified price payable at that time under the terms and conditions set out in the business rules or practices of the futures exchange, recognised trading system provider, or overseas futures exchange at which the contract is made; or

[S 677/2006 wef 20/12/2006]

(b)

the parties to the contract will discharge their obligations under the contract by settling the difference between the value of a specified quantity of a specified commodity at the time of the making of the contract and at a specified future time, such difference being determined in accordance with the business rules or practices of the futures exchange, recognised trading system provider , or overseas futures exchange at which the contract is made,

[S 677/2006 wef 20/12/2006]

and includes an option on a futures contract;

“government securities” means debt securities issued or proposed to be issued by any government of any country or territory;

“guideline issued by the Authority” means a guideline or other document issued by the Authority under section 321(1) of the Act;

“investment grade” means —

(a)	a credit rating set out in Table 13 of the Fourth Schedule issued by the corresponding credit rating agency in that Table or any better credit rating; or
(b)	such credit rating issued by such credit rating agency as may be specified in a guideline issued by the Authority from time to time;

“licence” means a capital markets services licence granted under the Act;

“market index of a recognised group A exchange” means a broad-based index of shares listed on the recognised group A exchange;

“market index of a recognised group B exchange” means a broad-based index of shares listed on the recognised group B exchange;

“money market debt securities” means short-term debt securities, and includes banker’s acceptances, commercial papers, certificates of deposits, government or treasury bills, and notes with a maturity of one year or less;

“net head office funds”, in relation to a foreign company, means the net liability of the Singapore branch of that foreign company to its head office and any other branches outside of Singapore;

“open contract” means any open purchase contract or open sale contract;

“open purchase contract” means any contract to purchase securities which is not yet due for payment in accordance with the business rules of a securities exchange, a recognised trading system provider or an overseas securities exchange, or the terms of the contract (as the case may be);

[S 677/2006 wef 20/12/2006]

“open sale contract” means any contract to sell securities which is not yet due for delivery in accordance with the business rules of a securities exchange, a recognised trading system provider or an overseas securities exchange, or the terms of the contract (as the case may be);

[S 677/2006 wef 20/12/2006]

“physical commodity” means any goods, article or item other than cash;

“public authority” means any body corporate constituted under any Act or under the law of any other country or territory;

“qualifying letter of credit” has the same meaning as in paragraph 3 of the Second Schedule;

“recognised group A exchange” means an overseas securities exchange or an overseas futures exchange regulated by a financial services regulatory authority of a country or territory specified in Table 4 of the Fourth Schedule;

[S 445/2007 wef 27/02/2008]

“recognised group B exchange” means an overseas securities exchange or an overseas futures exchange regulated by a financial services regulatory authority of a country or territory specified in Table 4 of the Fourth Schedule;

“Singapore Government securities” means securities issued or proposed to be issued by the Government, and includes —

(a)	any debenture, stock or bond issued or proposed to be issued by the Government;
(b)	any right or option in respect of any debenture, stock or bond referred to in paragraph (a);
(c)	book-entry Government securities as defined in section 2 of the Development Loan (1987) Act (Cap. 81A) or section 2 of the Government Securities Act (Cap. 121A); and
(d)	book-entry Treasury Bills as defined in section 2 of the Local Treasury Bills Act (Cap. 167);

“total risk requirement” has the same meaning as in the Third or Sixth Schedule, as the case may be.

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