PART I | 1. These Regulations may be cited as the Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licences) Regulations. |
2.—(1) In these Regulations, unless the context otherwise requires —“adjusted net head office funds”, in relation to the holder of a licence, means its net head office funds after deducting the applicable items specified in —| (a) | an MAS notice that applies to the holder; and | | (b) | if a notice referred to in regulation 2C is given to the holder, that notice; [S 192/2013 wef 03/04/2013] |
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“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; [S 372/2005 wef 01/07/2005] | | (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, if the sole recourse of the creditor for non-payment of such liability is to such assets only; [S 192/2013 wef 03/04/2013] | | (e) | any qualifying subordinated loan; and [S 192/2013 wef 03/04/2013] | | (f) | any financial liability that has been included in the computation of financial resources; [S 507/2006 wef 28/08/2006] [S 192/2013 wef 03/04/2013] |
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“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; |
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“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) | paid-up irredeemable and non-cumulative preference share capital; and [S 192/2013 wef 03/04/2013] | | (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); |
[S 372/2005 wef 01/07/2005] |
“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; |
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| [Deleted by S 192/2013 wef 03/04/2013] |
| [Deleted by S 192/2013 wef 03/04/2013] |
| [Deleted by S 192/2013 wef 03/04/2013] |
“customer” means a person —| (a) | on whose behalf the holder of a licence carries on or will carry on any regulated activity; or | | (b) | with whom the holder of a licence enters or will enter into a transaction as principal —| (i) | for the sale or purchase of securities; | | (ii) | for the sale or purchase of futures contracts; or | | (iii) | in connection with leveraged foreign exchange trading; [S 192/2013 wef 03/04/2013] |
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| “debt security” includes any debenture stock, bond and note; |
| [Deleted by S 192/2013 wef 03/04/2013] |
| [Deleted by S 192/2013 wef 03/04/2013] |
| “financial resources” has the meaning given to that expression in regulation 2A; [S 192/2013 wef 03/04/2013] |
| [Deleted by S 192/2013 wef 03/04/2013] |
“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 market operator, 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 market operator, or overseas futures exchange at which the contract is made, |
| and includes an option on a futures contract; |
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| [Deleted by S 192/2013 wef 03/04/2013] |
| [Deleted by S 192/2013 wef 03/04/2013] |
“irredeemable and non-cumulative preference share capital” means preference share capital consisting of preference shares that satisfy all of the following requirements:| (a) | the principal of the shares is perpetual; | | (b) | the shares are not callable at the initiative of the issuer of the shares or the shareholders, and the principal of the shares is never repaid outside of liquidation of the issuer, except in the case of a repurchase or other manner of reduction of share capital that is initiated by the issuer and permitted under written law; and | | (c) | the issuer has full discretion to cancel dividend payments, and —| (i) | the cancellation of dividend payments is not an event of default of the issuer under any agreement; | | (ii) | the issuer has full access to cancelled dividend payments to meet its obligations as they fall due; and | | (iii) | the cancellation of dividend payments does not result in any restriction being imposed on the issuer under any agreement, except in relation to dividend payments to ordinary shareholders; [S 192/2013 wef 03/04/2013] |
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| [Deleted by S 192/2013 wef 03/04/2013] |
| “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; |
| [Deleted by S 192/2013 wef 03/04/2013] |
| [Deleted by S 192/2013 wef 03/04/2013] |
| “MAS notice” means a notice issued by the Authority under regulation 2B; [S 192/2013 wef 03/04/2013] |
| “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 market operator 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 market operator or an overseas securities exchange, or the terms of the contract (as the case may be); [S 677/2006 wef 20/12/2006] |
| [Deleted by S 192/2013 wef 03/04/2013] |
| “public authority” means any body corporate constituted under any Act or under the law of any other country or territory; |
“qualifying letter of credit” means any legally enforceable and irrevocable letter of credit that is —| (a) | made in favour of the approved exchange or approved clearing house (as the case may be) of which the holder of the licence concerned is a member; [S 463/2013 wef 01/08/2013] | | (b) | issued by a bank approved by, and in a form acceptable to, the approved exchange or approved clearing house; and [S 463/2013 wef 01/08/2013] | | (c) | subject to such conditions or restrictions as the Authority, or the approved exchange or approved clearing house, may impose on the holder, [S 463/2013 wef 01/08/2013] |
| but does not include any letter of credit provided by the holder to the approved exchange or approved clearing house to satisfy the business rules or other requirements of the approved exchange or approved clearing house; |
[S 192/2013 wef 03/04/2013] [S 463/2013 wef 01/08/2013] |
“qualifying subordinated loan” means a subordinated loan the terms of which are evidenced by a subordinated loan agreement between the holder of the licence concerned and a lender (referred to in this definition as the subordinated creditor) which expressly provides all of the following:| (a) | the subordinated loan has not less than 2 years to maturity at the time the loan is first drawn down; | | (b) | that the subordinated creditor shall not claim or receive from the holder, by way of set-off or in any other manner, any subordinated loan repayment until after every senior debt has been paid or unless the holder has obtained the prior written approval of the Authority; | | (c) | that the claims of the subordinated creditor are fully subordinated to the claims of all senior creditors; | | (d) | an option for the holder to defer interest payment on the principal amount of the subordinated loan; | | (e) | that the subordinated loan shall automatically be converted into capital to provide a cushion for losses to creditors if an appropriate reconstruction of the capital of the holder which is acceptable to the Authority has not been undertaken; | | (f) | that, in the event of any payment or distribution of assets of the holder, whether in cash, in kind or in securities (referred to in this definition as a distribution), upon any dissolution, winding-up, liquidation or reorganisation of the holder —| (i) | the senior creditors shall first be entitled to receive payment in full of the senior debts before the subordinated creditor receives any payment in respect of the subordinated debt; and | | (ii) | any distribution to which the subordinated creditor would be entitled but for the provisions of the subordinated loan agreement shall be made by the liquidator, Official Assignee in bankruptcy or any other person making the distribution directly to the senior creditors rateably according to their senior debts until they have been paid in full (taking into account other distributions to the senior creditors); |
| | (g) | a term that if, notwithstanding paragraphs (b) to (f), any distribution is received by the subordinated creditor in respect of the subordinated debt, the distribution shall be paid over to the senior creditors for application rateably according to their senior debts until they have been paid in full (taking into account other distributions to the senior creditors) and, until such payment has been made in full, the distribution shall be held in trust for the senior creditors; | | (h) | such terms as may be specified in the business rules of an approved exchange or approved clearing house of which the holder is a member; [S 463/2013 wef 01/08/2013] | | (i) | that no subordinated creditor may demand the early or accelerated repayment of the subordinated loan; | | (j) | that the subordinated loan agreement is not subject to any cross-default or negative pledge; | | (k) | such other criteria as may be specified in or imposed by —| (i) | an MAS notice applicable to the holder; | | (ii) | any notice given to the holder by the Authority; and | | (iii) | an approved exchange or approved clearing house of which the holder is a member; [S 463/2013 wef 01/08/2013] [S 192/2013 wef 03/04/2013] |
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| “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, or the corporation known as Singapore Commodity Exchange Ltd; [S 445/2005 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; |
| “senior creditor”, in relation to a qualifying subordinated loan, means a creditor to whom a senior debt is owed; [S 192/2013 wef 03/04/2013] |
| “senior debt”, in relation to a qualifying subordinated loan, means a debt of the holder of the licence concerned that is outstanding at any time during the period in which the qualifying subordinated loan is outstanding; [S 192/2013 wef 03/04/2013] |
| [Deleted by S 192/2013 wef 03/04/2013] |
“total risk requirement” means the amount required to address risks arising from the activities of the holder of a licence, being —| (a) | such amount as specified in or computed in accordance with an MAS notice that applies to the holder; | | (b) | if a notice referred to in regulation 2C is given to the holder to substitute the amount referred to in paragraph (a) with another amount specified in or computed in accordance with that notice, the second-mentioned amount; or | | (c) | if a notice referred to in regulation 2C is given to the holder to supplement the amount referred to in paragraph (a) with another amount specified in or computed in accordance with that notice, the aggregate of both those amounts; [S 192/2013 wef 03/04/2013] [S 588/2017 wef 20/10/2017] |
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| “venture capital fund” has the same meaning as in regulation 14(8) of the Securities and Futures (Licensing and Conduct of Business) Regulations (Rg 10); [S 588/2017 wef 20/10/2017] |
| “venture capital fund manager” means a holder of a licence for fund management who does not carry on business in any regulated activity other than the management of portfolios of securities on behalf of venture capital funds. [S 588/2017 wef 20/10/2017] |
| (2) For the purposes of regulations 16, 17, 21(2)(b)(ii), 22(2)(b)(ii) and 23(a)(iii) and (b)(iii), where the total amount payable under qualifying letters of credit exceeds 50% of the total risk requirement of the holder, the amount in excess shall not be taken into account for determining the aggregate resources of the holder. [S 192/2013 wef 03/04/2013] |
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2A.—(1) In these Regulations, a reference to the financial resources of the holder of a licence is a reference to the sum of the following items in the latest available accounts of the holder, after deducting from those items such other items as may be specified in the MAS notice that applies to the holder and, if a notice referred to in regulation 2C is given to the holder, in that notice:| (a) | base capital; | | (b) | paid-up irredeemable and cumulative preference share capital; | | (c) | paid-up redeemable preference share capital; | | (d) | revaluation reserves; | | (e) | other reserves; | | (f) | interim unappropriated profit; and | | (g) | collective impairment allowances. |
| (2) Without prejudice to the definition of any of those items in regulation 2, the items in paragraph (1)(a) to (g) are those items in the latest available accounts of the holder that meet such criteria as may be specified in the MAS notice that applies to the holder. |
| (3) If the sum of the items in paragraph (1)(b) and (c) is more than the item in paragraph (1)(a), the excess amount shall be disregarded in determining the financial resources of the holder for any purpose under these Regulations. |
(4) Notwithstanding paragraphs (1) and (3) and subject to paragraph (5), the total of the excess amount referred to in paragraph (3), and the amounts of all qualifying subordinated loans of the holder that remain outstanding during a temporary period (referred to in this regulation as the total amount) may be included in the financial resources of the holder for that temporary period for any purpose under these Regulations, if (and only if) —| (a) | each temporary period in which the inclusion is made, and the aggregate of all the temporary periods in each calendar year in which the inclusion is made, do not exceed 90 days; and | | (b) | immediately after the inclusion, the holder notifies the Authority and the approved exchange or approved clearing house of which the holder is a member (if applicable) of that fact. [S 463/2013 wef 01/08/2013] |
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| (5) For the purposes of paragraph (4), where the total amount exceeds the amount of the item in paragraph (1)(a), the total amount shall be deemed to be the amount of the item in paragraph (1)(a). [S 192/2013 wef 03/04/2013] |
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| 2B. The Authority may from time to time issue notices for the purposes of these Regulations, which shall be published on the Authority’s Internet website at http://www.mas.gov.sg (under “Regulations and Financial Stability”, “Regulations, Guidance and Licensing”, “Securities, Futures and Fund Management”). [S 192/2013 wef 03/04/2013] |
| Variation of adjusted net head office funds, financial resources or total risk requirement |
2C. The Authority may, for the purpose of addressing the risks applicable to a particular holder of a licence, by notice in writing to the holder —| (a) | specify an amount of or a formula for computing the total risk requirement that is in substitution for or that supplements the amount specified in or computed in accordance with the MAS notice applicable to the holder; | | (b) | specify items to be deducted from the items referred to in regulation 2A(1)(a) to (g) that are additional to those set out in the MAS notice applicable to the holder; or | | (c) | specify items to be deducted from the adjusted net head office funds of the holder that are additional to those set out in the MAS notice applicable to the holder. [S 192/2013 wef 03/04/2013] |
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