Securities Industry Act
(Chapter 289, Sections 2(2), 29, 49, 55, 63 and 69)
Securities Industry Regulations
Rg 1
REVISED EDITION 1990
(25th March 1992)
[15th August 1986]
Citation
1.  These Regulations may be cited as the Securities Industry Regulations.
Definitions
2.—(1)  In these Regulations, unless the context otherwise requires —
“accounts” means profit and loss accounts and balance-sheets and includes notes (other than auditor’s reports) attached to or intended to be read with those profit and loss accounts or balance-sheets;
“accredited investor” means —
(a)an individual whose net personal assets exceed $5 million or its equivalent in foreign currencies; or
(b)a corporation with net assets exceeding $10 million in value or its equivalent in foreign currencies as determined in accordance with the most recent audited balance-sheet of the corporation;
“adjusted net capital”, in relation to a member company, has the same meaning as in regulation 18(5);
“average adjusted net capital”, in relation to a member company, has the same meaning as in regulation 21(4);
“arbitrage transaction” means —
(a)a purchase or sale of a security in one market together with an offsetting sale or purchase of the same security 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; or
(b)a purchase or sale of a security in one market together with an offsetting sale or purchase of the same security in the same market at as nearly the same time as practicable for the purpose of taking advantage of a difference in prices in that security transacted on two different bases, namely, ready and delayed;
“bank” means any body corporate licensed to carry on banking business under the Banking Act [Cap. 19];
“cash accounts”, in relation to clients’ accounts carried by a dealer, means accounts against which, in the case of a purchase of securities, the clients will promptly make full cash payment for the securities before selling them and in the case of a sale of securities, the clients will promptly deliver the securities;
“client” means any person from whom, or on whose behalf, a dealer has received or acquired or holds moneys or securities for the account of such person, but shall not include the dealer itself, directors of a member company and their connected persons;
“connected person”, in relation to a director of a member company, includes —
(a)his spouse, son, adopted son, step-son, daughter, adopted daughter, step-daughter, father, mother, brother or sister; and
(b)a firm, corporation or company in which any of the persons mentioned in paragraph (a) or the director is in a position to control not less than 20% of the voting power in the firm, corporation or company, whether such control is exercised individually or jointly;
“Government securities” means securities issued or proposed to be issued by the Government and includes —
(a)debentures, stocks, Treasury Bills, notes and bonds issued or proposed to be issued by the Government;
(b)any right or options in respect of any such debentures, stocks, Treasury Bills, notes or bonds; and
(c)book-entry Government securities and book-entry Treasury Bills, as defined in the Development Loan (1987) Act, the Government Securities Act [Cap. 121A] and the Local Treasury Bills Act [Cap. 167], respectively;
“insurer” has the meaning assigned to that expression in the Insurance Act [Cap. 142];
“management company” means a management company as defined in section 107 of the Companies Act [Cap. 50];
“margin accounts”, in relation to clients’ accounts carried by a dealer, means accounts to which the dealer extends or has extended credit for the purchase or carrying of securities, and the credit is or has been extended pursuant to margin agreements already made between the dealer and its clients;
“market value”, in relation to securities, means —
(a)their last transacted price on the preceding business day;
(b)if there was no trading in those securities on the preceding business day, then subject to paragraph (c), the lower of the last transacted price or bid price; or
(c)if there was no trading in those securities in the preceding 30 days, then their estimated value subject to prior agreement with the Authority;
“member company” means a company which carries on a business of dealing in securities and is recognised as a member company by the Stock Exchange of Singapore Ltd;
“net head office funds” means the net liability of the Singapore branch to its head office and any other branches outside of Singapore;
“open purchase contracts” means contracts to purchase securities which are not yet due for settlement in accordance with the rules of a stock exchange or the terms of the contracts;
“open sale contracts” means contracts to sell securities which are not yet due for delivery in accordance with the rules of a stock exchange or the terms of the contracts;
“paid-up capital” means ordinary shares and non-redeemable preference shares that have been fully paid for;
“recognised stock exchange” means a body of persons specified in the Third Schedule as a recognised stock exchange;
“repurchase agreement” means an agreement to sell Government securities, subject to a commitment to repurchase from the same person at a later date, Government securities of the same quantity, issue and maturity;
“reverse-repurchase agreement” means an agreement to purchase Government securities subject to a commitment to resell to the same person at a later date Government securities of the same quantity, issue and maturity;
“Rules and Market Practices” means the Rules and Market Practices (including any amendments and modifications thereto) of the Government Securities Market, as promulgated from time to time by the Market Committee of the Government Securities Market, so long as the Market Committee is recognised as such by the Authority;
“shareholders’ funds” means the paid-up capital and reserves after deduction of any debit balance appearing in the profit and loss account of the corporation;
“single client”, in relation to a member company, means —
(a)a person or a firm and such group of persons or firms which the first-mentioned person or firm is able to control or influence;
(b)a corporation and any other corporation or group of corporations which is or are deemed to be related to the first-mentioned corporation pursuant to section 6 of the Companies Act [Cap. 50]; or
(c)a corporation whose issued share capital is 50% or more owned by those persons or firms mentioned in paragraph (a) or whose composition of board of directors is controlled by those persons or firms mentioned in that paragraph; and for this purpose the composition of the board of directors shall be deemed to be controlled by those persons or firms, if they, by the exercise of some power exercisable by them without the consent or concurrence of any other person, can appoint or remove all or a majority of the directors of that corporation,
but shall not include the member company itself;
“single security” includes ordinary and preference shares, loan stocks, warrants, transferable subscription rights, bonds, debentures, depository receipts, options and any other debt instruments or equity securities issued by a corporation;
“trustees”, in relation to a superannuation scheme, includes any person responsible for the administration or management of the scheme.
(2)  Where the name of a body corporate referred to in these Regulations is changed pursuant to the Companies Act (Cap. 50), the change of name shall not affect the identity of that body corporate or the application of the relevant provisions of these Regulations to that body corporate.
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Forms
3.  Unless otherwise provided, the forms to be used for the purposes of those provisions set out in the first column of the First Schedule shall be in accordance with the forms set out in the Second Schedule, the numbers of which are specified in the third column of the First Schedule.
Particulars prescribed by forms
4.  Where a form prescribed by these Regulations requires completion by the insertion of, or the attachment to the form of, a document containing particulars or other matters referred to in the form, those particulars or other matters are prescribed as the particulars or other matters required under the provisions of the Act or of these Regulations for the purposes of which the form or document is prescribed.
Directions in forms
5.  A form prescribed by these Regulations shall be completed in accordance with such directions as are specified in the form as so prescribed.
Manner of application for licence
6.—(1)  An application for a licence or renewal of a licence in the form prescribed together with any relevant annexures shall be enclosed in a sealed envelope and lodged with the Authority. Where the applicant is a body corporate, each application for a dealer’s or an investment adviser’s licence or renewal thereof shall be accompanied by a copy certified by a director or the secretary of the body corporate to be a true copy of the last balance-sheet and of the last profit and loss account which have respectively been audited by the body corporate’s auditors (including every document required by law to be annexed or attached thereto) together with a copy of the report of the auditors thereon (certified as aforesaid).
(2)  An application for a licence or renewal of a licence shall be accompanied by a self-addressed envelope (of the applicant) affixed with a postage stamp of a value sufficient for registered mail. The self-addressed envelope shall be of a size not less than 229 millimetres x 324 millimetres.
Manner of application for approval of a stock exchange
(3)  An application for approval as a stock exchange shall be made in the prescribed form and shall be accompanied by a copy of the rules, certified to be a true copy thereof, by the person signing the application and shall be lodged with the Authority.
Fees
7.  The following fees shall be payable to the Authority:
(a) on every application for a licence by a natural person or a body corporate as an investment adviser, whether for a new licence or for the renewal thereof
$1,500
(b) on every application for a licence by a body corporate as a dealer who is a member of the Stock Exchange of Singapore Ltd or any other stock exchange approved by the Minister, whether for a new licence or for the renewal thereof
$15,000
(c) on every application for a licence by a body corporate as a dealer who is not a member of the Stock Exchange of Singapore Ltd or any other stock exchange approved by the Minister, whether for a new licence or for the renewal thereof
$1,500
(d) on every application for a licence by a natural person as an investment representative, whether for a new licence or for the renewal thereof
$200
(e) on every application for a licence by a natural person as a dealer’s representative of a dealer who is a member of the Stock Exchange of Singapore Ltd or any other stock exchange approved by the Minister, whether for a new licence or for the renewal thereof
$1,000
(f) on every application for a licence by a natural person as a dealer’s representative of a dealer who is not a member of the Stock Exchange of Singapore Ltd or any other stock exchange approved by the Minister, whether for a new licence or for the renewal thereof
$200
(g) for perusal of the register kept under section 37(1) of the Act
$20
(h) on lodging an application for approval as a stock exchange
$2,000
(i) on lodging an application for approval as an approved securities organisation
$2,000.
Application of deposit
8.—(1)  A deposit lodged with the Authority pursuant to section 34 of the Act shall be applied by the Authority for the purpose of compensating persons who suffer pecuniary loss by reason of any defalcation committed by a dealer to whom section 34 applies or by an employee of such a dealer in the course of his employment in relation to any money or other property which, whether before or after 15th August 1986, in the course of or in connection with a business of dealing in securities —
(a)was entrusted to or received by the dealer or an employee of that dealer in the course of his employment, for or on behalf of any other person; or
(b)(the dealer being, in respect of the money or other property, either the sole trustee or a trustee with another person) was entrusted to or received by the dealer or an employee of that dealer in the course of his employment, for or on behalf of the trustees of the said money or property.
(2)  Subject to these Regulations, every person who suffers pecuniary loss as provided in paragraph (1) shall be entitled to claim compensation in relation to the relevant deposit lodged with the Authority.
(3)  The amount which any claimant shall be entitled to claim as compensation shall be the amount of actual pecuniary loss suffered by him (including the reasonable cost of and disbursements incidental to the making and proof of his claim) less the amount or value of all moneys or other benefits received or receivable by him from any source, other than the Authority, in reduction of the loss.
(4)  The Authority may cause to be published in a daily newspaper published and circulating generally in Singapore a notice in the prescribed form specifying a date, not being earlier than 3 months after publication of the notice, on or before which claims for compensation in relation to the deposit lodged by the person specified in the notice may be made.
(5)  A claim for compensation shall be made in writing to the Authority —
(a)where a notice under paragraph (4) has been published, on or before the date specified in the notice; or
(b)where no such notice has been published, within 6 months after the claimant became aware of the defalcation,
and any claim which is not so made shall be barred unless the Authority otherwise determines.
(6)  The Authority may, subject to these Regulations and after such enquiry as it thinks fit —
(a)allow and settle any proper claim made in accordance with paragraph (5) at any time after the commission of the defalcation in respect of which the claim arose and determine the amount payable as compensation; or
(b)disallow any improper claim.
(7)  The Authority, if satisfied that the defalcation on which a claim is founded was actually committed, may allow the claim and act accordingly notwithstanding that the person who committed the defalcation has not been convicted or prosecuted therefor or that the evidence on which the Authority acts would not be sufficient to establish the guilt of that person upon a trial in respect of the defalcation.
(8)  Nothing in these Regulations shall require the Authority to settle a claim in full or in part where the relevant deposit lodged with the Authority is insufficient to meet the aggregate amount of the claims for compensation.
Return of deposit
9.—(1)  If any dealer who has lodged with the Authority a deposit as required by section 34 of the Act ceased to carry on the business of a dealer, the Authority may release to him the deposit or, where any part thereof has previously been paid to a judgment creditor or to the Official Assignee in bankruptcy or liquidator or where any claim in respect thereof has previously been allowed, the balance (if any) of the deposit so lodged —
(a)on the expiration of 3 months after service on the Authority of a notice in writing duly signed by or on behalf of the dealer stating that the dealer has ceased to carry on such business in Singapore;
(b)on the Authority being satisfied that the dealer has not from the date of service of the notice carried on such business in Singapore; and
(c)on the Authority being satisfied that all the liabilities of the dealer in Singapore in respect of such business are fully liquidated or provided for.
(2)  The Authority may cause every notice served on him under this regulation, and also his decision with regard to the proposed release, to be published at the cost of the applicant in such manner as the Authority thinks fit.
Profit and loss account and balance-sheet
10.—(1)  An investment adviser who is a natural person shall cause accounts in the prescribed form in respect of each financial year to be prepared in relation to his business as an investment adviser.
(2)  The assets and liabilities of the business shall be brought into account in the balance-sheet at such amounts to be classified and described therein in such manner that the balance-sheet gives a true and fair view of the state of affairs of the business as at the date to which it is made up.
(3)  Each account prepared pursuant to paragraph (1) shall be signed by the investment adviser.
(4)  A dealer or an investment adviser which is a body corporate shall prepare accounts in accordance with the provisions of the Companies Act [Cap. 50] in respect of each financial year and shall attach to such accounts a statement in the prescribed form. The statement shall be signed by a director or the secretary of the body corporate.
Time for document to be lodged
11.  Where a document is by the Act or these Regulations required to be lodged with the Authority but a period of time within which the document is to be lodged is not prescribed, the document shall be lodged within 14 days after the happening of the event to which the document relates.
Offences
12.  Any person who contravenes or fails to comply with any provision of these Regulations shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000.
Form of auditor’s report
13.  The auditor’s report required to be lodged under section 69(1) of the Act shall be in or to the effect of the appropriate prescribed form and shall contain the documents necessary for due completion of the form.
Security deposit
14.  Section 34 of the Act shall not have effect in relation to a dealer which is a member company.
Section 24, Parts V and VII of Act not to apply to an insurer or a trustee of a superannuation scheme
15.—(1)  Subject to compliance with paragraph (2), section 24, Parts V and VII of the Act shall not have effect in relation to an insurer or a trustee of a superannuation scheme which or who is a dealer within the meaning of the Act by reason only of occasionally dealing in securities incidentally to the management and administration of insurance business or a superannuation scheme, as the case requires.
(2)  Section 25 and Part V of the Act shall not have effect in relation to any person employed by an insurer or a trustee of a superannuation scheme to whom paragraph (1) applies if the Act would not apply to him but for that employment.
Section 52 of Act not to apply to a management company in certain circumstances
16.  Section 52 of the Act shall not have effect in relation to a management company if the management company carries on the business of dealing in securities by reason only of issuing and repurchasing interests made available pursuant to Division 6 of Part IV of the Companies Act.
Minimum capital requirements
17.—(1)  Subject to this regulation, a person shall not be granted or permitted to hold a dealer’s licence unless —
(a)in the case of a dealer which is a member of a securities exchange, its paid-up capital is not less than $15 million; or
(b)in the case of a dealer which is not a member of a securities exchange, its shareholders’ funds are not less than $2 million, or where the dealer is a branch, its net head office funds are not less than $2 million.
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(6)  A dealer shall not reduce its paid-up capital without the prior approval of the Authority.
(7)  Paragraph (1) ( b) shall not apply to a dealer which is a merchant bank approved as a financial institution under section 28 of the Monetary Authority of Singapore Act [Cap. 186].
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Adjusted net capital requirements for a member company
18.—(1)  The dealer’s licence of a member company shall lapse in accordance with section 29(2) of the Act where —
(a)its aggregate indebtedness exceeds 1000% of its adjusted net capital; or
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(b)its adjusted net capital falls below $5 million,
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for 4 consecutive weeks.
(2)  If a member company’s aggregate indebtedness is more than 800% of its adjusted net capital, or its adjusted net capital is less than $8 million—
(a)it shall notify the Authority and the Stock Exchange of Singapore Ltd of such state of affairs as soon as practicable, but not later than the next business day; and
(b)where such state of affairs continues for 5 consecutive business days thereafter the member company shall —
(i)immediately operate its business in such manner and on such conditions as the Committee of the Stock Exchange of Singapore Ltd may decide. The Committee shall notify the Authority immediately of such conditions, and the Authority may review, affirm, modify or set aside the conditions stipulated by the Committee and may in addition issue such directions to the member company as it thinks fit and that member company shall comply with the directions; and
(ii)submit its statements of assets and liabilities, adjusted net capital and aggregate indebtedness in Form 22 to the Authority and the Stock Exchange of Singapore Ltd on a weekly basis until its aggregate indebtedness falls below 800% of its adjusted net capital, and its adjusted net capital exceeds $8 million for 8 consecutive weeks. The weekly statements required to be submitted in this sub-paragraph shall be lodged with the Authority not later than 3 business days after the end of each week.
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(3)  No member company shall redeem any preference share, make any unsecured loan or advance, or pay any dividend or director’s fees or increase any director’s remuneration when any one or more of the events described in paragraph (2) exist, or if such redemption, loan or advance, or payment would result in the contravention of paragraph (1).
(4)  Notwithstanding paragraph (3), the Authority may on the application of a member company permit such redemption, loan or advance, or payment as it thinks fit.
(5)  For the purposes of these Regulations, “adjusted net capital” means the shareholders’ funds of a member company, adjusted by —
(a)deducting non-current assets and prepaid expenses;
(b)deducting deposits made by the member company (other than deposits placed by the member company with financial institutions and such other deposits as the Authority may determine);
(c)deducting all unsecured loans and advances made by the member company that are included as current assets;
(d)deducting all unsecured amounts due from each director and his connected persons that are included as current assets;
(e)deducting in clients’ accounts deficits and such other amounts as are specified in this sub-paragraph, less any provisions for bad and doubtful debts already made in the accounts, and such deductions shall be computed as follows:
(i)for purchase contracts transacted in cash accounts which remain fully or partially unpaid after the due date and where the securities have not been delivered to the clients, the greater of —
(A)the excess of amounts owed by each client over the market value of securities purchased by the client and any additional securities lodged by him with the member company as collateral; or
(B)so long as the contract remains fully or partially unpaid by the client —
(i)immediately after the due date, 5% of the contract value;
(ii)immediately upon the expiry of 2 calendar days after the due date, 15% of the contract value;
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(iii)immediately upon the expiry of 4 calendar days after the due date, 40% of the contract value;
(ii)for purchase contracts transacted in cash accounts which remain fully or partially unpaid after the due date and where the securities have been delivered to the clients — 100% of the contract value less the market value of any securities of the clients held by the member company as collateral;
(iii)for sale contracts transacted in cash accounts where after the due date the securities have not been delivered by the client — the excess of the market value of the securities sold over the contract value of each client’s sale contracts and the market value of any collateral that may have been lodged by the client with the member company;
(iv)for sale contracts transacted in cash accounts where the securities have been delivered by the client and the member company has delivered such securities to the purchaser (other than where the delivery is made through the clearing and settlement facilities of a clearing house of the Stock Exchange of Singapore Ltd) but has not received payment from the purchaser — on the date of delivery, 100% of the contract value less the market value of any securities of the purchaser held by the member company as collateral and any amount due and payable by the member company to the purchaser;
(v)where the contracts referred to in sub-paragraph (i), (ii) or (iii) have been offset by a contra transaction on or before the due date, the computation of the deductions shall not include the amounts specified in those sub-paragraphs but shall instead include the amount of the contra loss, if any, on the date on which the contra transaction takes effect, and for the purposes of this sub-paragraph, the amount of the contra loss may be reduced by the moneys of the dealer’s representative of the client which have been retained by the member company specifically for the purpose of securing the contra loss of the client;
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(vi)where the contracts referred to in sub-paragraph (i), (ii) or (iii) have been offset by a forced-sale or buying-in transaction after the due date, the computation of the deductions shall not include the amounts specified in those sub-paragraphs in respect of such contracts but shall instead include the amount of the loss, if any, arising from the forced-sale or buying-in transaction on the date on which the transaction takes effect;
(vii)for margin accounts — the amounts of margin deficiency in each client’s account determined in accordance with the prescribed margin requirement;
(viii)for interest charged on amounts owed by clients to the extent that such interest is brought into the accounts of the member company as income, unsecured and outstanding more than 14 calendar days for the date it arises — its full amount;
(ix)for securities borrowed by clients, the excess of the amount of the market value of the securities borrowed over the amount of the market value of the collateral and cash deposited by clients;
(x)for securities lent by clients, the excess of the amount of the market value of the collateral and cash deposited with clients over the amount of the market value of the securities lent;
(f)for the purposes of paragraph (5)(b), “financial institutions” means a bank licensed by the Authority, a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act [Cap. 186], a finance company licensed by the Authority and such other financial institutions as the Authority may, on application by the member company, approve;
(g)for the purposes of sub-paragraph (e) —
(i)a contract is deemed to be carried in a client’s cash account on the contract date specified in the contract note or on the exercise date specified in the exercise notice in respect of an option in that security which has been exercised;
(ii)where partial payment has been received from the client or purchaser, as the case may be, the amount of such partial payment shall be deducted from the contract value in computing the value to be deducted;
(h)deducting the excess of the contract value over the market value of each client’s open purchase contracts, and the excess of the market value over the contract value of each client’s open sale contracts, but such contracts shall not include securities quoted on the Stock Exchange of Singapore Ltd or on the main board of a recognised stock exchange;
(i)deducting the excess of the book value of securities carried in the member company’s own account over their market value or such percentage of the market value as determined by the Singapore Exchange Securities Trading Limited if the securities are quoted on a stock exchange in Singapore or elsewhere;
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(j)deducting the full book value of securities carried in the member company’s own account or such other amount determined in accordance with such basis as may be adopted by the Singapore Exchange Securities Trading Limited if the securities are not quoted on a stock exchange in Singapore or elsewhere;
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(k)deducting the book value of securities carried in the member company’s own account on the date of delivery of the securities if the securities sold by the member company have been delivered by the member company to the purchaser (other than where the delivery is made through the clearing and settlement facilities of a clearing house of the Stock Exchange of Singapore Ltd) but the member company has not received payment from the purchaser unless a deduction in respect of the same transaction has been made under sub-paragraph (e)(ii);
(l)deducting all current assets doubtful of collection less any provisions already made in the accounts;
(m)deducting all amounts arising by way of service fees, reimbursable expenses and other similar liabilities that are due and owing by a related company;
(n)deducting diminution in the value of securities underwritten or sub-underwritten by or placed with the member company;
(o)deducting deficits arising from options transactions —
(i)the excess of the amount owed by each client in his options trading account over the market value of the options held by him;
(ii)the amount of the margin shortfall in each client’s options margin account and in the member company’s options margin account; and
(iii)the excess of the book value of options held by the member company over the market value of such options;
(p)
(A)deducting a percentage of the difference between the contract sum for resale of the Government securities under a reverse-repurchase agreement and the market value of those securities (if less than the contract sum), determined on the basis of the date to maturity of the reverse-repurchase agreement, as at the date of adjusted net capital computation, as follows:
7 days or less
:
0%;
8 days to 14 days
:
5%;
15 days to 30 days
:
10%;
31 days to 60 days
:
25%;
61 days to 90 days
:
50%;
91 days or more
:
100%;
(B)notwithstanding sub-paragraph (p) (a), if the market value of the securities subject to the reverse-repurchase agreement declines to below 50% of the contract sum for resale under that agreement, the applicable deduction shall equal 100% of the difference between the contract sum for resale of the securities under the agreement and the market value of those securities;
(C)notwithstanding sub-paragraphs (p) (a) and (b), a deduction on account of a reverse-repurchase agreement may be offset by any margin or other deposits held by the member company on account of the reverse-repurchase agreement or by any excess of the market value of the securities over the contract sum for the resale of those securities under any other reverse-repurchase agreement with the same person;
(D)notwithstanding sub-paragraph (p) (a), the member company shall deduct an amount equal to the excess of the difference between the contract sum for resale of the securities under reverse-repurchase agreements and the market value of the securities (if less than the contract sum) in the account or accounts of any single client if in the aggregate the differences exceed 5% of the member company’s adjusted net capital;
(q)including subordinated loans;
(r)for the purpose of sub-paragraph (q), a “subordinated loan” means a loan granted by a lender (referred to in this regulation as the subordinated creditor) to the member company which, apart from complying with such other terms as the Authority may from time to time require, shall comply with the following terms:
(i)it shall not exceed 100% of the member company’s paid-up capital;
(ii)it shall ensure that the claims of the subordinated creditor are fully subordinated to the claims of all unsubordinated creditors;
(iii)it shall have two years or more to maturity at the time of adjusted net capital computation;
(iv)it shall not be redeemed before the maturity of the loan without the approval of the Authority;
(v)it shall not be subject to cross-default and negative pledges or contain any clause which would enable the subordinated creditor to demand early or accelerated repayment of the subordinated loan;
(vi)it shall have the option for the member company to defer interest payment on the subordinated loan;
(vii)it shall automatically be converted into capital to provide a cushion for losses arising from bad and doubtful debts if an appropriate reconstruction of the capital of the member company, which is acceptable to the Authority, has not been undertaken;
(viii)the subordinated creditor shall not claim or receive from the member company by set-off or in any other manner, any subordinated debt unless all senior debts have been paid or unless the Authority otherwise gives written approval;
(ix)in the event of any payment or distribution of assets of the member company, in cash, in kind or in securities (referred to in this regulation as a distribution), upon any dissolution, winding-up, liquidation or re-organisation of the member company, the senior creditors shall first be entitled to receive payment in full of the senior debt before the subordinated creditor receives any payment in respect of the subordinated debt notwithstanding any contrary provision in the subordinated loan agreement; and
(x)if, notwithstanding sub-paragraphs (viii) and (ix), any distribution is received by the subordinated creditor in respect of the subordinated debt, such distribution shall be paid over to the senior creditors for application rateably against their senior debt until the senior debt has been paid in full (taking into account other distributions to the senior creditors) and until such payment in full shall be held in trust for the senior creditors; and
(s)in sub-paragraph (r) —
“senior creditors” means those creditors who for the time being hold or are entitled to the senior debt;
“senior debt” means the unpaid claims of all the creditors for the time being of the member company;
“subordinated loan agreement” means a loan agreement entered into between a subordinated creditor and a member company, and which includes the terms specified in that sub-paragraph.
(6)  For the purposes of this regulation, “aggregate indebtedness” means the total liabilities (excluding contingent liabilities, but including the contract sum for repurchase of Government securities under repurchase agreements and the market value of securities borrowed to the extent to which no equivalent value is paid or credited to the lenders) of the member company, adjusted by deducting —
(a)deferred income taxes;
(b)amounts due to each director and his connected persons;
(c)non-current liabilities fully secured by non-current assets or other assets which are excluded from adjusted net capital, provided the sole recourse of the creditors for non-payment of such liabilities is to such assets; and
(d)subordinated loans specified in paragraph (5)(r).
(7)  A member company which is unable to comply with paragraph (2) on 15th April 1994 shall be given a period of 6 months, or such further period as the Authority may allow and subject to such conditions as the Authority may impose, to comply with paragraph (2); so long as throughout that period the member company’s adjusted net capital does not fall below or the ratio of its aggregate indebtedness to its adjusted net capital does not exceed the level existing on 15th April 1994.
Limits for unsecured credit and credit facilities
19.—(1)  No member company shall grant, whether directly or indirectly, any unsecured advance, unsecured loan or unsecured credit facility to any of its directors other than a director who is its employee, whether or not such advance, loan or credit facility is obtained by its directors jointly or severally, which in the aggregate and outstanding at any one time exceed the sum of $5,000.
(2)  No member company shall grant, whether directly or indirectly, any unsecured advance, unsecured loan or unsecured credit facility to any of its officers or employees (including a director who is its employee) which in the aggregate and outstanding at any one time exceed one year’s emoluments of that office or employee.
(3)  In paragraphs (1) and (2), “unsecured advance”, “unsecured loan” or “unsecured credit facility” includes —
(a)any advance, loan or credit facility made without security or, in respect of any advance, loan or credit facility made with security, any part thereof which at any time exceeds the market value of the assets constituting that security, or where the Authority is satisfied that there is no established market value, on the basis of a valuation approved by the Authority;
(b)any guarantee or performance bond entered into by the member company or provision of any security by the member company in connection with a loan, advance or credit facility made to such a director, officer or employee;
(c)any other debt owned by a director, officer or employee of the member company, in his personal capacity, arising from any securities transaction for such director’s, officer’s or employee’s own account and for this purpose, a debt is deemed to have been owed, in the case of a securities transaction effected by a director, officer or employee for his own account, on the day such transaction is due for settlement in accordance with the rules of the applicable securities exchange, and in any other case, when the debt is due for repayment, whether by way of instalment, in one lump sum or otherwise; and
(d)without prejudice to sub-paragraph (c), any credit facility provided by the member company to its director, officer or employee without security whether they have been drawn-down or not.
(4)  A reference to a “director” in this regulation includes a reference to his connected person.
Non-member company’s dealer’s licence to lapse if adjusted net capital requirements not met
20.—(1)  The dealer’s licence of a dealer which is not a member company (referred to in this regulation as a non-member dealer) shall lapse in accordance with section 29(2) of the Act if, throughout a period of 4 consecutive weeks, its adjusted net capital falls below $250,000.
(2)  If the adjusted net capital of a non-member dealer is less than $400,000 —
(a)it shall notify the Authority of such state of affairs as soon as practicable, but not later than the next business day;
(b)where such state of affairs continues for 5 consecutive business days from the date on which the adjusted net capital first falls below $400,000, the non-member dealer shall immediately operate its business in such manner and on such conditions as the Authority may decide;
(c)it shall submit its statements of assets and liabilities and adjusted net capital in Form 23 to the Authority on a weekly basis until its adjusted net capital exceeds $400,000 for 8 consecutive weeks; and
(d)it shall cause the weekly statements required to be submitted in sub-paragraph (c) to be lodged with the Authority not later than 3 business days after the end of each week.
(3)  For the purposes of paragraphs (1) and (2), “adjusted net capital” means the shareholders’ funds or net head office funds, as the case may be, of the non-member dealer, adjusted by deducting —
(a)non-current assets and prepaid expenses and deposits made by the non-member dealer (including the security deposit lodged with the Authority pursuant to section 34 of the Act and such other deposits as the Authority may determine) other than deposits placed by the non-member dealer with financial institutions;
(b)all unsecured loans and advances made by the non-member dealer that are included as current assets;
(c)deficits in clients’ accounts, less any provision for bad and doubtful debts already made in the accounts;
(d)
(i)a percentage of the difference between the contract sum for resale of the Government securities under a reverse-repurchase agreement and the market value of those securities (if less than the contract sum), determined on the basis of the date to maturity of the reverse-repurchase agreement, as at the date of adjusted net capital computation, as follows:
7 days or less
:
0%;
8 days to 14 days
:
5%;
15 days to 30 days
:
10%;
31 days to 60 days
:
25%;
61 days to 90 days
:
50%;
91 days or more
:
100%;
(ii)notwithstanding sub-paragraph (d)(i), if the market value of the securities subject to the reverse-repurchase agreement declines to below 50% of the contract sum for resale under that agreement, the applicable deduction shall equal 100% of the difference between the contract sum for resale of the securities under the agreement and the market value of those securities;
(iii)notwithstanding sub-paragraphs (d)(i) and (ii), a deduction on account of a reverse-repurchase agreement may be offset by any margin or other deposits held by the dealer on account of the reverse-repurchase agreement or by any excess of the market value of the securities over the contract sum for the resale of those securities under any other reverse-repurchase agreement with the same person; and
(iv)notwithstanding sub-paragraph (d)(i), the non-member dealer shall deduct an amount equal to the excess of the difference between the contract sum for resale of the securities under reverse-repurchase agreements and the market value of the securities (if less than the contract sum) in the account or accounts of any single client if in the aggregate the differences exceed 5% of the non-member dealer’s adjusted net capital;
(e)the excess of the book value of the securities carried in the dealer’s own account over their market value;
(f)all current assets doubtful of collection less any provisions already made in the accounts;
(g)the diminution in the value of securities under written or sub-underwritten by or placed with the dealer; and
(h)all amounts arising by way of service fees, reimbursable expenses and other similar liabilities that are due and owing by a related company.
(4)  For the purposes of paragraph (3), “deficits in clients’ accounts” means —
(a)in relation to each client’s cash account, the excess of amount owed by the client over the market value of the underlying securities of which the client had failed to take delivery more than 7 calendar days after the due date and of any additional securities lodged by the client with the non-member dealer as collateral;
(b)in relation to each client’s margin account, the amount of margin deficiency determined in accordance with the margin maintenance requirement provided in the non-member dealer’s margin agreement with the client; and
(c)in relation to interest and other receivables arising from securities transactions, the amount which is not secured and which is outstanding more than 14 calendar days.
(5)  This regulation shall not apply to a non-member dealer which is a merchant bank approved as a financial institution under section 28 of the Monetary Authority of Singapore Act [Cap. 186].
(6)  A non-member dealer which is unable to comply with paragraph (2) on 15th April 1994 shall be given a period of one year, or such further period as the Authority may allow and subject to such conditions as the Authority may impose, to comply with paragraph (2); so long as throughout that period the non-member dealer’s adjusted net capital does not fall below the level existing on 15th April 1994.
Limit on a member company’s exposure to a single client
21.—(1)  No member company shall permit its exposure to a single client to exceed 20% of its average adjusted net capital.
(2)  In paragraph (1), “exposure to a single client” means —
(a)in the case of securities carried in a client’s account (other than a margin account) —
(i)for purchase contracts that remain unpaid —
(A)where the securities purchased have not been delivered to the client, the excess of the contracted price of the securities purchased by the single client over the aggregate market value of the securities purchased and such other securities held by the member company as collateral less any amount due and payable by the member company to him; or
(B)where the securities purchased have been delivered to the client, the excess of the contracted price of the securities purchased over the aggregate market value of all his securities held by the member company as collateral less any amount due and payable by the member company to him;
(ii)for sale contracts for which delivery has not been made, the excess of the amount of the market value of the securities sold by the single client over the aggregate of the market value of any of his securities held by the member company as collateral and the contracted sale price less any amount due and payable by the member company to him;
(iii)where the contracts referred to in sub-paragraph (a)(i) or (ii) have been offset by a contra transaction on or before the due date, the exposure shall not include those amounts specified in sub-paragraph (a)(i) or (ii) in respect of such contracts but shall instead include the amount of the contra loss, if any, on the date on which the contra transaction takes effect;; and
(iv)where the contracts referred to in sub-paragraph (a)(i) or (ii) have been offset by a forced-sale or buying-in transaction after the due date, the exposure shall not include those amounts specified in sub-paragraph (a)(i) or (ii) in respect of such contracts but shall instead include the amount of the loss, if any, arising from the forced-sale or buying-in transaction, on the date on which the transaction take effect;
(b)the amount of margin deficiency in the single client’s margin account as determined in accordance with regulation 26;
(c)the amount of margin deficiency in the single client’s options margin account as determined in accordance with the option margin requirements specified by the Stock Exchange of Singapore Ltd;
(d)the excess of the amount owed by the single client in his options trading account over the market value of options held;
(e)the amount of any unsecured interest owed by the single client;
(f)the amount of any unsecured loan, advance and credit facility granted to the single client;
(g)where the member company has lent securities to the single client or is acting as guarantor for the return of securities lent to the single client, the excess of the amount of the market value of the securities lent to the single client over the amount of the market value of collateral and cash deposited by the single client; and
(h)where the member company has deposited collateral with the single client in respect of securities lent by the single client or is acting as guarantor for the return of collateral deposited with the single client in respect of any securities lent by him, the excess of the amount of the market value of collateral and cash deposited with the single client over the amount of the market value of securities lent by him.
(3)  For the purposes of paragraph (2), a security is deemed to be carried in a client’s account (other than a margin account) on the contract date specified in the contract note in respect of the transaction in that security or on the exercise date specified in the exercise notice in respect of any option in that security which has been exercised.
(4)  For the purposes of these Regulations, “average adjusted net capital” means the average of the adjusted net capital on the last day of each of the 3 months preceding the previous month.
(5)  In this regulation, “client” includes a director of a member company and the connected persons of that director any any other person with whom a member company has entered into a contract to sell securities to or purchase securities from but excludes —
(a)the Securities Clearing and Computer Services (Pte) Ltd;
(b)the Central Depository (Pte) Limited;
(c)the Options Clearing Company (Pte) Limited; and
(d)any other person approved by the Authority and which is established for the purposes of providing clearing or settlement facilities in respect of any dealing in securities.
(6)  Notwithstanding paragraph (1), where a member company’s exposure to a single client has exceeded 20% of its average adjusted net capital on 15th April 1994, the member company shall not permit the exposure to that single client to be increased in monetary value above the level subsisting on that date; and shall cause such exposure to be reduced to 20% of its average adjusted net capital within 6 months of that date.
Limit on a member company’s exposure to a single security
22.—(1)  No member company shall permit its exposure to a single security to exceed —
(a)300% of its average adjusted net capital if the security is quoted on the Stock Exchange of Singapore Ltd or the main board of any recognised stock exchange;
(b)100% of its average adjusted net capital if the security is quoted other than as specified in sub-paragraph (a);
(c)if the security is approved for quotation on the Stock Exchange of Singapore Ltd or the main board of any recognised stock exchange but has not, as yet, been so quoted —
(i)100% of the average adjusted net capital of the member company if its adjusted net capital is less than $75 million; or
(ii)150% of the average adjusted net capital of the member company if its adjusted net capital is $75 million or more,
provided that the exposure under this paragraph together with the exposure, if any, to securities already quoted shall not exceed the limit specified in sub-paragraph (a); and
(d)10% of its average adjusted net capital if the security is unquoted, but excludes any security issued by —
(i)any subsidiary of the member company which is established solely for the purpose of providing research, nominee, custodian or trustee services;
(ii)the Stock Exchange of Singapore Ltd or its subsidiaries;
(iii)the Securities Clearing and Computer Services (Pte) Ltd; and
(iv)any other company which the Authority may approve.
(2)  In paragraph (1), “exposure to a single security” means —
(a)that amount of the single security if underwritten or sub-underwritten by or placed with the member company, after deducting the amount which the member company has sub-underwritten or placed with —
(i)a financial institution regulated by the Authority under any written law; or
(ii)a financial institution outside Singapore which is licensed or regulated by a central bank, a securities commission or a government authority and which has established operations in Singapore;
(b)the book value of the single security carried long or the market value of the single security carried short in the member company’s own account;
(c)for outstanding options in the single security carried in the company’s own options trading account —
(i)the book value of options bought for the account;
(ii)the excess of the market value of the underlying security over the exercise price of uncovered call options written for the account; and
(iii)the excess of the exercise price of put options written for the account over the market value of the underlying security;
(d)in relation to the single security carried in client’s cash accounts, the contract value of the single security to the extent that such amounts have not been paid for or the market value of the single security to the extent that such securities have not been delivered, whichever is the higher;
(e)for outstanding options in the single security carried in a client’s options trading account —
(i)the contract value of the options bought by the client to the extent that such amounts have not been paid for;
(ii)the excess of the market value of the underlying security over the exercise price of uncovered call options written by the client; and
(iii)the excess of the exercise price of put options written by the client over the market value of the underlying security;
(f)the net amount of the single security borrowed or lent, as the case may be, by the member company;
(g)the amount of credit extended to clients for the purchase of the single security in accordance with regulation 26;
(h)the amount of interest receivable secured by the single security;
(i)the amount of loans and advances secured by the single security; and
(j)the amount under subscription by the member company for its own account in relation to a single security which is approved for quotation on the Stock Exchange of Singapore Ltd or the main board of any recognised stock exchange but has not, as yet, been so quoted.
(3)  For the purposes of paragraph (2), a security is deemed to be carried in a client’s cash account or a member company’s own account on the contract date specified in the contract note in respect of the transaction in that security or on the exercise date specified in the exercise notice in respect of an option in that security which has been exercised.
(4)  Paragraph (1) shall not apply to —
(a)securities issued by the Government or its agencies; and
(b)the member company’s arbitrage transaction.
(5)  For the purposes of this regulation, where a security quoted on the Stock Exchange of Singapore Ltd or the main board of any recognised stock exchange has been suspended for more than 30 consecutive days, a member company shall not permit its exposure to the security to be increased in monetary value above the level subsisting on the 30th consecutive day of suspension until such time that the suspension has been lifted.
(6)  In this regulation, a reference to “client”, in relation to a member company, includes a reference to a directors of that company and the connected persons of that director but excludes —
(a)the Securities Clearing and Computer Services (Pte) Ltd;
(b)the Central Depository (Pte) Limited;
(c)the Options Clearing Company (Pte) Limited; and
(d)any other person approved by the Authority and which is established for the purposes of providing clearing or settlement facilities in respect of any dealing in securities.
Limit on a member company’s investment in securities
23.—(1)  No member company shall permit the value of its investments in securities to exceed at any time —
(a)where its adjusted net capital is $75 million or more, 300% of its average adjusted net capital; or
(b)where its adjusted net capital is less than $75 million, 150% of its average adjusted net capital.
(2)  In paragraph (1), “value of investment in securities” means —
(a)the cost of purchase of all securities carried long and the market value of all securities carried short in the member company’s own account;
(b)in the case of outstanding options carried in the member company’s own account —
(i)the cost of options carried in the account;
(ii)the excess of the market value of the underlying security over the exercise price of uncovered call options written; and
(iii)the excess of the exercise price of put options written over the market value of the underlying security;
(c)the value of unmatched open contracts that is any client’s contract to —
(i)sell securities for which there is no corresponding purchaser other than the member company itself; or
(ii)buy securities for which there is no corresponding seller other than the member company itself and to the extent that such contract cannot be fulfilled by the member company’s existing stocks, held on its own account;
(d)the amount of all securities underwritten or sub-underwritten by or placed with the member company after deducting the amount which the member company has sub-underwritten or placed with —
(i)a financial institution regulated by the Authority under any written law; or
(ii)a financial institution outside Singapore which is licensed or regulated by a central bank, securities commission or a government authority and which has established operations in Singapore; and
(e)the amount under subscription by the member company for its own account in relation to securities which are approved for quotation on the Stock Exchange of Singapore Ltd or the main board of any recognised stock exchange but has not, as yet, been so quoted.
(3)  Paragraph (1) shall not apply to —
(a)securities issued by the Government or its agencies;
(b)the member company’s arbitrage transactions; and
(c)securities of the Stock Exchange of Singapore Ltd or its subsidiaries and the Securities Clearing and Computer Services (Pte) Ltd and any other company which the Authority may, by order, approve from time to time.
(4)  Where a member company whose adjusted net capital is less than $75 million but whose investment in securities has exceeded 150% of its average adjusted net capital on 15th April 1994, the member company shall not permit the value of its investment in securities to be increased in monetary value above the level subsisting on that date; and shall cause such investments to be reduced to 150% of its average adjusted net capital within 6 months of that date.
Exemption of international members in respect of foreign securities
24.—(1)  Regulations 21, 22 and 23 shall not apply to a member company which is an international member in relation to its transactions, whether as agent or principal, in securities other than those listed or quoted on the Stock Exchange of Singapore Ltd which are denominated in Singapore dollar.
(2)  For the purposes of this regulation, “international member” means a member company in which —
(a)the whole of its issued ordinary share capital is owned whether legally or beneficially by persons who are —
(i)individuals who are not citizens or permanent residents of Singapore; or
(ii)corporations, whether incorporated or unincorporated and wherever incorporated or constituted, in which citizens or permanent residents of Singapore do not have an aggregate interest in shares thereof of more than 20% of the issued share capital; and
(b)its ultimate holding company or any subsidiary of the holding company —
(i)has shareholders’ funds of not less than $500 million;
(ii)is licensed, regulated or supervised in the jurisdiction in which it has its principal place of business; and
(iii)has given an undertaking to the Authority to provide adequate funds upon demand by the Authority to fulfil all obligations and liabilities of the member company.
Maintenance of reserve fund by a member company
25.—(1)  Subject to regulation 18(3), every member company shall maintain a reserve fund to which shall be transferred out of the net profits of each year after due provision has been made for taxation —
(a)a sum not less than 50% of the net profits, so long as the aggregate of the paid-up capital and the amount standing in the reserve fund is less than $10 million; or
(b)a sum not less than 30% of the net profits, so long as the aggregate of the paid-up capital and the amount standing in the reserve fund is not less than $10 million but less than $30 million.
[S 579/99 wef 01/01/2000]
(2)  In paragraph (1), “paid-up capital” means that portion of paid-up ordinary share capital and non-redeemable preference share capital which has not been reduced by losses.
(3)  If the Authority is satisfied that the reserve fund of a member company is adequate for its business, the Authority may, by order in writing, exempt that member company from the requirements of paragraph (1).
(4)  If the Authority is satisfied that the reserve fund of a member company is adequate for its business, the Authority may, by order in writing and on such conditions as the Authority may determine, allow such amount in the reserve fund of that member company as the Authority may specify to be available for distribution as dividends.
[S 579/99 wef 01/01/2000]
Margin requirement for a member company
26.—(1)  A member company shall not permit the sum of margin and market value of securities bought or carried in a client’s margin account, net of the cash collateral deposited by him, to fall below 130% of the debit balance in that client’s margin account.
[S 579/99 wef 01/01/2000]
(1A)  A member company shall not permit the aggregate margin exposure in its clients’ margin accounts to exceed 300% of its average adjusted net capital, provided that the aggregate margin exposure in respect of securities quoted on the main board of any recognised stock exchange does not exceed 100% of its average adjusted net capital.
[S 579/99 wef 01/01/2000]
(1B)  A member company shall not permit the debit balance in the margin account of a single client to exceed 20%, or such other percentage as the Authority may determine from time to time, of its average adjusted net capital.
[S 579/99 wef 01/01/2000]
(1C)  A member company shall not permit the aggregate number of shares or other securities in a single security bought or carried, or deposited as collateral in all margin accounts to exceed 5% of the issued shares or other securities, as the case may be, of the corporation issuing the security.
[S 579/99 wef 01/01/2000]
(1D)  For the purpose of paragraph (1C), the issued shares or other securities, as the case may be, shall be based on the latest audited accounts of the corporation issuing the security.
[S 579/99 wef 01/01/2000]
(2)  A margin call shall be made forthwith upon the margin deficiency arising and shall be satisfied within 2 market days.
[S 579/99 wef 01/01/2000]
(3)  Margins deposited by clients with the member company in compliance with this regulation shall be in the form of cash, securities issued by the Government or its agencies, marginable securities and such other instruments as the Authority may from time to time determine.
(4)  Nothing in this regulation shall apply to cash accounts and options margin accounts.
(5)  For the purposes of this regulation —
“debit balance” means the amount owed by a client in his margin account and shall include —
(a)amounts to be financed by the member company in respect of outstanding purchases made in the margin account of the client, net of the cash collateral and sales proceeds receivable from outstanding sales made in the margin account of the client; and
(b)all commission charges, interest expenses and all other related expenses;
[S 579/99 wef 01/01/2000]
“margin” means the aggregate amount of cash and market value of securities deposited by a client into his margin account, but shall not include securities which are bought or carried in the margin accounts and cash attributable to him for securities carried short in his margin account;
“margin exposure” means the debit balance in a client’s margin account as determined in accordance with the basis adopted by the Singapore Exchange Securities Trading Limited;
[S 579/99 wef 01/01/2000]
“marginable securities” means securities permitted by the Stock Exchange of Singapore Ltd to be bought and carried in margin accounts;
“margin call” means a demand for deposit of additional margin to eliminate or reduce margin deficiency.
Retention period for register of securities
27.  A person to whom section 42 of the Act applies shall retain a register of securities in which he has an interest for a period of not less than 6 years.
Books and records to be kept by an investment adviser
28.—(1)  An investment adviser shall be deemed not to have complied with section 63 of the Act in relation to books and records unless they are kept in sufficient detail to show —
(a)the particulars of all clients, including their names and addresses;
(b)the particulars of securities transactions for or on behalf of clients;
(c)copies of each confirmation of the transactions mentioned in sub-paragraph (b), each purchase and sale contract note and each statement received from a dealer;
(d)all powers of attorney and other documents, or signed copies thereof, authorising the investment adviser to operate that client’s account on a discretionary basis;
(e)all other written agreements, or copies thereof entered into by the investment adviser with any of his clients;
(f)the original or a copy of each report, letter, circular, memorandum, publication, writing, advertisement or other literature or advice distributed or caused to be distributed by the investment adviser to any existing or prospective client, showing the first date of distribution if not otherwise shown on the document;
(g)particulars in detail of every securities transaction of the investment adviser, showing the name of security, transaction date, quantity, price and delivery date;
(h)each confirmation of a securities transaction, each purchase and sale contract note and each statement furnished by a dealer to the investment adviser relating to the personal account of the investment adviser, or each director of the investment adviser relating to a personal account of such director;
(i)books and records of all other transactions in all other business dealings in trading securities in which the investment adviser and each director thereof engages; and
(j)a separate record to be maintained for each client showing —
(i)the date and amount of each receipt of money or property received from that client, and the date and amount paid into the trust account maintained with the custodian; and
(ii)the date and amount of each withdrawal of that client’s money or property from the trust account and the date, amount and purpose of its application.
(2)  All books and records specified in this regulation shall be retained for a period of not less than 6 years.
Statements of assets and liabilities, adjusted net capital and aggregate indebtedness for a member company
29.—(1)  A member company shall cause statements in the prescribed form in respect of each quarter to be prepared in relation to its business as a dealer.
(2)  The assets and liabilities of the business shall be brought into account in the statements at such amounts to be classified and described therein in such manner that the statements give a true and fair view of the state of affairs of the business as at the date to which they are made up.
(3)  Each statement prepared pursuant to paragraph (1) shall be signed by a director or the secretary of the member company and shall be lodged with the Authority not later than 14 calendar days or such longer period as the Authority may allow, after the end of each quarter.
Statements of assets and liabilities and adjusted net capital for a dealer which is not a member company
30.—(1)  A dealer, not being a member company, shall cause statements in the prescribed form in respect of every 6 months to be prepared in relation to its business as a dealer.
(2)  The assets and liabilities of the business shall be brought into account in the statements at such amounts to be classified and described therein in such manner that the statements give a true and fair view of the state of affairs of the business as at the date to which they are made up.
(3)  Each statement prepared pursuant to paragraph (1) shall be signed by a director or the secretary of the dealer and shall be lodged with the Authority not later than 14 calendar days or such longer period as the Authority may allow, after the end of every 6 months.
(4)  This regulation shall not apply to a dealer (not being a member company) which is a merchant bank approved as a financial institution under section 28 of the Monetary Authority of Singapore Act [Cap. 186].
Clients’ securities and property
31.—(1)  A dealer shall segregate clients’ securities or property held for safe custody or fully paid for by them from other securities or property and, subject to paragraph (2), shall not mortgage, charge, pledge or hypothecate such clients’ securities or property.
(2)  A dealer may mortgage, charge, pledge or hypothecate a client’s securities or property for a sum not exceeding the amount owed by the client to that dealer.
(3)  Paragraph (2) shall not be deemed to be violated by reason of an excess arising on any day through the reduction of the debt of clients on that day, if moneys or securities or property of an amount sufficient to eliminate such excess are paid or transferred to the mortgagees, chargees or pledgees concerned for the purpose of reducing the sum of the claims to which securities or property of clients are subjected as promptly as practicable after such reduction occurs, but not later than the next business day.
(4)  Where a dealer mortgages, charges, pledges or hypothecates clients’ securities or property pursuant to paragraph (2) on a pool basis, the sum of the claims to which such securities or property are so subjected shall not exceed the aggregate amounts owed by the clients concerned.
Stock borrowing and lending
32.—(1)  A licensee, which borrows securities from an owner of those securities (referred to in this regulation as the lender) or lends securities to a person (referred to in this regulation as the borrower) in the ordinary course of its business for which it is licensed, shall ensure that the borrowing or lending transaction, as the case may be, is recorded in a prior written agreement entered into between the lender or borrower or their duly authorised agent, as the case may be, and the licensee.
(2)  A licensee shall deposit with the lender collateral for the purpose of borrowing securities from the lender.
(3)  A licensee shall obtain from the borrower collateral for the purpose of lending securities to the borrower.
(4)  For the purposes of paragraphs (2) and (3), such collateral deposited with the lender or obtained from the borrower, as the case may be, shall throughout the period the securities are borrowed or lent, as the case may be, have a value equal to 100% (or such higher percentage agreed between the lender or borrower, as the case may be, and the licensee) of the market value of the securities borrowed or lent, computed at the close of the preceding market day.
(5)  Collateral deposited with the lender or obtained from the borrower, as the case may be, shall be in the form of cash, securities issued by the Government or its agencies, marginable securities and such other instruments as the Authority may from time to time determine.
(6)  This regulation shall not apply —
(a)to securities which are neither listed nor quoted on a securities exchange in Singapore; or
(b)when a licensee borrows securities from or lends securities to a person who is an accredited investor, in so far as these transactions are concerned.
(7)  In this regulation, “licensee” means a dealer or an investment adviser.
Time stamping of orders
33.  Where transactions, relating to securities listed or quoted on the Stock Exchange of Singapore Ltd, are to be executed by or through a member company, that member company shall, at the time of receipt of each order from its client, enter its client’s order forthwith onto an order form. The order shall forthwith be dated and time-stamped when received and upon execution or cancellation. The order form shall be in accordance with the format established by the Stock Exchange of Singapore Ltd.
Register of securities
34.  Whenever an investment adviser or his investment representative purchases securities on behalf of any fund which the investment adviser manages, he or his investment representative shall ensure that these securities are recorded in the register required under section 42 of the Act in such a manner as to be separately identified as transactions relating to the fund and distinguished from other securities purchased by the investment adviser or his investment representative.
Transactions in prescribed circumstances
35.  For the purposes of section 49(5)(b) of the Act, a transaction takes place in prescribed circumstances if the transaction takes place on the trading floor at an official meeting of the Stock Exchange of Singapore Ltd between member companies.
Advertisement
36.—(1)  In this regulation —
“advertisement” means any notification or intimation relating to the business of a licensee —
(a)published in any newspaper, journal or magazine or in the form of a brochure or in any other form; or
(b)conveyed by any audio or visual means;
“licensee” means a dealer or an investment adviser licensed by the Authority under the Act and includes a representative of a dealer or an investment adviser.
(2)  No licensee shall, directly or indirectly, publish, circulate or distribute any advertisement —
(a)which refers, directly or indirectly, to past specific recommendations of the licensee which were or would have been profitable to any person except that a licensee may furnish a list of all recommendations made by him within the immediately preceding period of not less than one year of the advertisement, and the list if it is furnished separately —
(i)shall state the name of each such security recommended, the date and nature of each such recommendation, the market price at that time, the price at which the recommendation was to be acted upon, and the market price of each such security as of the most recent practicable date; and
(ii)shall state in as large as the largest print or type used in the body or context that “it should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list”;
(b)which represents, directly or indirectly, that any graph, chart, formula or other device being offered can, in and of itself, be used to determine which securities to buy or sell, or when to buy or sell them; or which represents, directly or indirectly, that any graph, chart, formula or other device being offered will assist any person in making his own decisions as to which securities to buy or sell, or when to buy or sell them, without prominently disclosing in the advertisement the limitations thereof and the difficulties with respect to its use;
(c)which contains any statement to the effect that any report, analysis, or other service will be furnished free or without charge unless such report, analysis or other service actually is or will be furnished entirely and without any condition or obligation, directly or indirectly; or
(d)which contains any irresponsible or exaggerated statements or presentation that is calculated to mislead or exploit an individual’s lack of experience and knowledge.
(3)  No licensee shall directly or indirectly authorise another person to advertise on his or its behalf.
Exemption in bond dealings
37.—(1)  Parts IV, V, VI and VII and section 98(3) of the Act shall not have effect in relation to dealings in bonds entered into by a corporation with, or giving of advice or analysis on bonds by a corporation to —
(a)an accredited investor; or
(b)a person whose business involves the acquisition and disposal of or holding of securities (whether as principal or as agent).
(2)  In paragraph (1), “bonds” includes —
(a)notes and bonds and Treasury Bills;
(b)options in respect of any note, bond or Treasury Bill referred to in sub-paragraph (a); and
(c)such other securities or class of securities as the Authority may from time to time specify by notification in the Gazette.
(3)  Notwithstanding anything in paragraph (1), section 49 of the Act shall not have effect in relation to any transaction in bonds.
Exemption for stabilising action during initial public offer
37A.—(1)  Sections 97 and 98 of the Act shall not have effect in relation to stabilising action to which this regulation applies and which is carried out by a stabilising manager or a dealer referred to in paragraph (10) in accordance with the provisions of this regulation.
[S 397/99 wef 15/09/1999]
(2)  This regulation shall apply where —
(a)there is an initial public offer of securities;
(b)the securities are to be listed on the Exchange;
[S 397/99 wef 15/09/1999]
(c)provision has been made in the prospectus for an over-allotment option, in respect of the initial public offer of the securities, not exceeding 15% of the total number of securities offered for subscription or sale in the initial public offer before any over-allotment;
(d)the prospectus states that the securities may be subject to stabilising action and specifies the maximum period during which stabilising action may be taken; and
(e)a public announcement has been made through the Exchange not later than the day immediately following the closing date of the initial public offer of securities on the total number of securities which is the subject of the over-allotment option in accordance with the prospectus.
(3)  The stabilising manager shall comply with the conditions set out in paragraphs (4) to (14).
(4)  The stabilising manager may take stabilising action only after he is reasonably satisfied that the price on the Exchange of the relevant securities is not already false and may continue with the stabilising action only if he is reasonably satisfied that the price of the relevant securities has not become false other than by reason of the stabilising action.
(5)  The stabilising manager shall before taking stabilising action ensure that by the closing date of the initial public offer it has been agreed that an over-allotment of securities may be made in accordance with the prospectus.
[S 397/99 wef 15/09/1999]
(6)  Stabilising action shall not be effected after the earlier of the following dates:
(a)the date expiry of a period of 30 calendar days commencing from the date of commencement of dealing in the relevant securities on the Exchange; or
(b)the date when the over-allotment of the relevant securities as announced in accordance with paragraph (2)(e) has been fully covered either through the purchase of the relevant securities on the Exchange or the exercise of the over-allotment option by the stabilising manager, or through both.
(7)  No stabilising action is to be effected at a price higher than any price specified in the second column of the Fourth Schedule corresponding to the circumstances specified in the first column of that Schedule.
(8)  The stabilising manager shall not effect or cause to effect, either directly or indirectly, sell orders prior to the commencement of each stabilising of action and during the period in which stabilising action is permitted.
(8A)  Paragraph (8) shall not prohibit —
(a)the stabilising manager; or
(b)an associate of the stabilising manager, in the associate’s capacity as a dealer,
from executing any sell order for a person who is not an associate of the issuer.
(9)  The particulars of each stabilising action including the price, quantity and names of the dealers in Singapore in relation to the transactions entered into for this purpose shall be recorded before the end of the day on which the transaction was effected in a register to be maintained by the stabilising manager and the register shall be kept in such form as the Exchange may require and shall be available for inspection by the Exchange.
(10)  Prior to the closing date of the initial public offer, the stabilising manager shall inform the Exchange of the names of the dealers in Singapore through which the stabilising action will be effected and thereafter the stabilising manager shall inform the Exchange immediately of any subsequent changes.
(11)  The stabilising manager shall make a public announcement through the Exchange on the total number of the relevant securities purchased by the stabilising manager and the price range, not later than 12 noon on the next trading day of the Exchange after the transactions were effected.
(12)  The stabilising manager shall make a public announcement through the Exchange on the cessation of stabilising action and the amount of the over-allotment option that has been exercised, not later than 8.30 am on the next trading day of the Exchange after the cessation of stabilising action.
(13)  No stabilising action shall be taken after the public announcement of the cessation.
(14)  In this regulation —
“closing date”, in relation to an initial public offer, means the date specified in the prospectus as the last date for the submission of applications for subscription or purchase of the securities;
“Exchange” means the Stock Exchange of Singapore Ltd;
“initial public offer”, in relation to securities, means the first public offer for subscription or sale of securities of a corporation in conjunction with the listing of its securities on the Exchange;
“issuer”, in relation to an initial public offer, means the corporation the shares of which are being issued and listed or where the shares have been issued, the person making the offer to sell those shares;
“over-allotment”, in relation to an initial public offer of securities, means the allotment or sale of securities to subscribers or purchasers in excess of the securities offered in the initial public offer for subscription or sale as specified in the prospectus;
“relevant securities” means the securities in respect of which stabilising action has been or will be taken;
“stabilising action” refers to the action a stabilising manager of an issue of securities takes in going into the market to buy or agreeing to buy the relevant securities in order to stabilise or maintain the market price of the relevant securities in accordance with this regulation;
“stabilising manager” means such manager as may be designated in writing by the issuer of an initial public offer of securities and notified to the Exchange before the closing date of the initial public offer.
[S 433/95 wef 22/09/1995]
(15)  For the purposes of this regulation, whether a person is an associate of another person shall be ascertained in accordance with section 4(4) of the Act.
Exemption for providers of credit facilities
38.  Parts IV, V and VII and section 49 of the Act shall not have effect in relation to —
(a)the acquisition or disposal of or an agreement to acquire or dispose of, securities or documents of title to securities; or
(b)a mortgage or charge in respect of securities or documents of title to securities,
effected or entered into by a person whose ordinary business includes the lending of money and effected or entered into principally by way of security for the purposes of a transaction entered into in the ordinary course of business in connection with the lending of money or the provision of credit.
Exemption from section 49 for dealers in certain circumstances
39.  Section 49 of the Act shall not have effect in relation to —
(a)a transaction of sale or purchase of securities effected by a dealer as agent for another person through a member company if the dealer forthwith gives to the other person the contract note, or a copy of the contract note, given by the member company under that section;
(b)a transaction of sale or purchase of securities not listed on the Stock Exchange of Singapore Ltd effected by a dealer as agent for another person through a member of a recognised stock exchange if the dealer forthwith gives to the other person the contract note, or a copy of the contract note given by that member which is issued in accordance with the rules of that recognised stock exchange or any written laws governing the issue of contract notes by that member; and
(c)transactions in Government securities.
Exemption for insurance companies and investment companies
40.—(1)  Parts IV, V and VII and section 49 of the Act shall not have effect in relation to a transaction entered into by an insurance company or an investment company as an underwriter or sub-underwriter of an issue of securities that relates only to underwriting or sub-underwriting of the issue and for its own account.
(2)  In this regulation, “insurance company” means a company or society registered under the Insurance Act [Cap. 142]; and “investment company” has the same meaning as is assigned to that expression in section 355 of the Companies Act [Cap. 50].
Exemption from investment adviser’s licence for advising selected persons
41.—(1)  Subject to paragraphs (2) to (7), section 26, Parts V, VI and VII 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 securities to, or the management of a portfolio of securities on behalf of, clients for investment purposes but only to the extent that such provision of advice or management of the portfolio of securities are 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;
[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 securities or the management of a portfolio of securities only to the extent that the provision of investment advice or the management of the portfolio of securities 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;
(c)a corporation which gives advice concerning securities to, or manages a portfolio of securities for or on behalf of, any of its related corporations (referred to in this sub-paragraph as the second-mentioned corporation), so long as in the management of securities, none of the securities being managed is —
(i)held on trust for another person by the second-mentioned corporation;
(ii)the result of any investment contract entered into by the second-mentioned corporation; or
(iii)beneficially owned by any person other than the first or second-mentioned corporation;
(d)a person who gives advice concerning securities to, or manages a portfolio of securities for or on behalf of, any of its connected persons (referred to in this paragraph as the second-mentioned person), so long as in the management of securities, none of the securities being managed is —
(i)held on trust for another person by the second-mentioned person;
(ii)the result of any investment contract entered into by the second-mentioned person; or
(iii)beneficially owned by any person, other than the first or second-mentioned person; or
(e)a person resident in Singapore who acts, whether directly or indirectly, as an investment adviser to not more than 30 accredited investors.
(2)  For the purposes of paragraph (1) —
(a)a person shall not be exempted or shall cease to be exempted under paragraph (1)(a), (b), (c), (d) or (e), as the case may be, from section 26, Parts V, VI and VII of the Act, if he acts as an investment adviser to persons other than those persons in respect of whom he is granted exemption under paragraph (1)(a), (b), (c), (d) or (e), as the case may be;
(b)a person who is exempted under paragraph (1)(a), (b), (c) or (d) from section 26, Parts V, VI and VII of the Act, and who is also exempted under paragraph (1)(e) may, in ascertaining whether the number of accredited investors exceed the limit of 30 investors under paragraph (1)(e), exclude those persons for whom he manages funds under paragraph (1)(a), (b), (c) or (d).
(3)  Notwithstanding paragraph (1)(e), an individual shall not be exempted or shall cease to be exempted from section 26, Parts V, VI and VII of the Act, if —
(a)he is or becomes an employee of a holder of an investment 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 Futures Trading Act, the Money-changing and Remittance Businesses Act [Cap. 187], 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) or (6).
(4)  Notwithstanding paragraph (1), a corporation shall not be exempted or shall cease to be exempted from section 26, Parts V, VI and VII of the Act, if —
(a)it is being or will be would 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, the Finance Companies Act, the Futures Trading Act, the Money-changing and Remittance Businesses Act, the Insurance Act or the Penal Code, or any subsidiary legislation made under any of those Acts; or
(f)it fails to comply with paragraph (5) or (6).
(5)  A person who is exempted under regulation 1(e) shall lodge with the Authority —
(a)a notice of commencement of business in the prescribed form containing such particulars as may be required of commencement of businessnot later than 14 business days after the commencement of his business as an investment adviser;
(aa)a notice of change of particulars in the prescribed form providing any change in the particulars required to be notified under sub-paragraph (a), not later than 14 business days after the date of the change; and
[S 579/99 wef 01/01/2000]
(b)a notice of cessation of business in the prescribed form containing such particulars as may be required of cessation of business not later than 14 business days after the cessation of his business as an investment adviser.
(6)  Every person who carries on such business as an investment adviser as is referred to in paragraph (1)(a), (b) or (e) shall 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.
(7)  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];
“connected person”, in relation to the person claiming exemption under this regulation, means —
(a)his spouse, son, adopted son, step-son, daughter, adopted daughter, step-daughter, father, mother, brother or sister; and
(b)a firm or corporation in which any of the persons referred to in sub-paragraph (a) or the person seeking exemption under this regulation is in a position to control not less than 50% of the voting power in the firm, corporation or company, whether such control is exercised individually or jointly;
“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;
“investment contract” has the same meaning as in section 107 of the Companies Act [Cap. 50];
“related corporation” has the same meaning as in the Companies Act.
Exemption for merchant banks
42.  Parts IV, V, sections 50 and 51 of the Act shall not have effect in relation to a merchant bank which is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act [Cap. 186] but only in regard to that part of its business which is concerned with advising others in respect of securities and if, and only if, the advice is given in connection with schemes of takeovers, mergers or reconstruction of corporations or in connection with acquisition or disposal of assets of corporations where circulars are required by law or by the rules of the Stock Exchange of Singapore Ltd to be issued to the shareholders of the corporations concerned.
Exemption from dealer’s licence for nominee company
43.  Parts IV, V, VI and VII of the Act shall not apply to a company which subscribes for the issue of securities on behalf of a client as a nominee provided that such company —
(a)has no interest in the securities subscribed for other than as a bare trustee; and
(b)is a wholly-owned subsidiary of a bank, merchant bank or dealer.
Exemption from sections 50 and 51 for professional participants
44.  Sections 50 and 51 of the Act shall not have effect where a dealer or his representative or an investment adviser or his representative —
(a)sends a circular or other similar written communication in which a recommendation is made in relation to securities; or
(b)offers securities for subscription or purchase, to —
(i)a person whose business involves the acquisition and disposal of or holding of securities (whether as principal or as agent);
(ii)an accredited investor; or
(iii)any person or corporation where the transactions relate to securities issued by the Government or an agency of the Government.
Sections 50 and 51 to apply only to securities quoted on Stock Exchange of Singapore Ltd
45.  Sections 50 and 51 of the Act shall have effect only in relation to recommendations made by a dealer, investment adviser, dealer’s representative or investment representative with respect to securities of companies, incorporated in Singapore or Malaysia, which are quoted on the Stock Exchange of Singapore Ltd.
Exemption for Stock Exchange of Singapore Ltd and Securities Clearing and Computer Services Pte Ltd
46.  Parts IV, V, VI and VII of the Act shall not have effect in relation to securities transactions effected by the Stock Exchange of Singapore Ltd or the Securities Clearing and Computer Services Pte Ltd, or any other company which the Authority may approve from time to time, only in so far as these transactions are made pursuant to and in order to give effect to By-law II of the Rules and By-laws of the Stock Exchange of Singapore Ltd or any amendments, including any modifications, to that By-law.
Exemption for official Assignee, etc.
47.  Sections 49 and 50 of the Act shall not have effect in relation to a person who carries on a business of dealing in securities by reason only of his being —
(a)an Official Assignee appointed under the Bankruptcy Act [Cap. 20];
(b)a receiver or receiver and manager or a judicial manager; or
(c)a Public Trustee exercising his powers under the Public Trustee Act [Cap. 260].
Exemption from sections 49 and 50 in certain circumstances
48.  Sections 49 and 50 of the Act shall not have effect in relation to the sale or purchase of securities or interests as defined in section 107 of the Companies Act [Cap. 50] by a corporation by which the securities or interests were made available in accordance with Division 1 or 6, as the case may be, of Part IV of the Companies Act.
Exemption for market-makers
49.—(1)  Section 50 of the Act shall not have effect in relation to recommendations with respect to particular securities made by a dealer as market-maker in those particular securities.
(2)  Section 52 of the Act shall not have effect in relation to a transaction entered into by a dealer as market-maker.
(3)  A reference to a “market-maker” in this regulation and regulation 52 is a reference to a person who enters into a securities transaction for its own account and who regularly publishes bona fide competitive bid and offer quotations in respect of that security and is ready, willing and able to effect transactions at its quoted prices with other persons in respect of that security and is recognised where the person is a dealer, by the Stock Exchange of Singapore Ltd or the Authority.
Exemption from section 51 for an adviser in certain circumstances
50.  Section 51 of the Act shall not apply to an adviser in respect of the publication by way of general circulation, of a research report that recommends a sale or purchase of securities where the publication does not have regard (and it is so stated in the publication) to the specific investment objectives, financial situation and the particular needs of any specific person who may receive the report.
Exemption from section 103 (1), (3) and (6) in certain circumstances
51.—(1)  Section 103 (1), (3) and (6) of the Act shall not have effect in relation to —
(a)the obtaining by a director of a share qualification in accordance with section 147 of the Companies Act;
(b)the subscription for and acquisition pursuant to that subscription of securities of a corporation by, or by a trustee for, employees of the corporation, or of a corporation that is deemed to be related to the first-mentioned corporation by reason of section 6 of the Companies Act, under a superannuation scheme, pension fund or other scheme established solely or primarily for the benefit of such employees;
(c)a transaction entered into by a person in accordance with his obligations under an underwriting agreement;
(d)a transaction entered into by a manager of an issue of securities in accordance with his obligations solely as such under an agreement with the issuer or corporation; or
(e)a transaction entered into by a person as a market-maker in securities to which that transaction relates.
(2)  In this regulation —
“introductory circular” means a circular or other notices or documents prepared in accordance with the listing rules of a securities exchange for the purpose of listing the securities of a corporation on that exchange but not as an offer for sale;
“manager of an issue of securities” means a person who was a party to the preparation of the prospectus or an introductory circular or any relevant portion thereof, but does not include any person by reason only of his acting in a professional capacity;
“prospectus” has the same meaning as is assigned to that expression in the Companies Act [Cap. 50].
Exemption from section 103 (1), (2), (3) and (6) in certain circumstances
52.  Section 103 (1), (2), (3) and (6) of the Act shall not apply to or in relation to —
(a)a personal representative of a deceased person, a liquidator or a person holding the office of Official Assignee under the Bankruptcy Act [Cap. 20] in respect of any transaction entered into by him in good faith in the performance of the functions of his office as such a representative, liquidator or Official Assignee;
(b)a transaction by way of, or arising out of, a mortgage or charge of securities or a mortgage, charge, pledge or lien of documents of title to securities;
(c)the acquisition of securities by a person under a will or on the intestacy of another person; or
(d)a dealing in securities which consists only of the transfer of the legal estate in those securities from one trustee to another trustee.
Change of principal
53.  A dealer’s representative or an investment representative shall not change his principal in relation to which his licence was issued unless he has lodged a notice in Form 13 with the Authority.
Transitional provisions
54.—(1)  Regulations 18 and 33 shall not apply to any member company, which was incorporated and carrying on the business of dealing in securities before 15th August 1986, until 12 months after that date.
(2)  Subject to paragraph (4), regulations 19, 21, 22 and 23 shall not apply to any member company, which was incorporated and carrying on the business of dealing in securities before 15th August 1986, until 6 months after that date.
(3)  Regulation 20 shall not apply to any dealer (not being a member company) which was incorporated and carrying on the business of dealing in securities before 15th August 1986, until 6 months after that date.
(4)  The Authority may, in any particular case, extend the period provided in paragraph (2) and impose such conditions as it thinks fit, where a member company satisfies the Authority that it is unable to comply with one or more of the regulations mentioned in that paragraph within the period specified therein.
Exemption in part of merchant bank business concerned with dealing in Government securities
55.—(1)  Notwithstanding regulation 37 and subject to paragraph (2), Parts IV, V, VI, VII and VIII of the Act shall not apply to that part of the business of a merchant bank which is concerned with dealing in Government securities.
(2)  A merchant bank whose business includes dealing in Government securities shall, however, be subject to the relevant directives and notices applicable to that aspect of its business.
(3)  A reference in this regulation to a “merchant bank” is a reference to a merchant bank which is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act [Cap. 186].
Exemption for certain financial institutions dealing in Government securities as primary or registered dealer
56.—(1)  Notwithstanding regulation 37, Parts IV, V, VI, VII and VIII of the Act shall not apply to a financial institution which is approved by the Authority pursuant to section 28 of the Monetary Authority of Singapore Act to carry on a business of dealing in Government securities as a primary or registered dealer whether it carries on any other business or not.
(2)  In paragraph (1), a reference to a “primary or registered dealer” means the financial institution referred to in that paragraph which has been designated and approved as a primary or registered dealer, as the case may be, by the Authority.
(3)  Nothing in paragraph (1) exempts the financial institution from holding a dealer’s licence or an investment adviser’s licence where it carries on in addition a business of dealing in any other securities for which a dealer’s licence or an investment adviser’s licence is required under the Act.
Time stamping of orders for Government securities
57.  In relation to each transaction of Government securities, a dealer shall, at the time of receipt of each order from his client, enter forthwith onto an order form his client’s order. The order shall forthwith be dated and time-stamped when received and upon execution or cancellation. The order form shall be in accordance with the form set out in the Rules and Market Practices.
Dealer in Government securities to comply with Rules and Market Practices
58.—(1)  Subject to paragraph (2), a dealer whose business is or includes dealing in Government securities shall comply with the Rules and Market Practices.
(2)  Where any provision of these Regulations conflicts with any provision set out in the Rules and Market Practices the former shall prevail.
Moneys, securities or property received by dealers in Government securities to be paid into trust account
59.—(1)  A dealer whose business is or includes dealing in Government securities shall —
(a)treat and deal with all moneys, securities or property —
(i)received by him from a client for the purchase of Government securities;
(ii)received from or on account of the client from the sale of Government securities; or
(iii)held on behalf of or for the account of the client in relation to Government securities transactions,
as belonging to and held in trust for that client;
(b)account, in one or more separate trust accounts designated or evidenced as such, for all the moneys, securities or property received from the client or accruing to the client pursuant to sub-paragraph (a);
(c)pending the application of the moneys, securities or property or payment of the moneys or delivery of the securities or property to the client, as the case may be, pay or deposit the moneys, securities or property into the separate trust account by the next bank business day; and
(d)not commingle those moneys, securities or property with the moneys, securities or property of the dealer or use them to guarantee, pledge, hypothecate, charge or mortgage or extend the credit of any client exceeding the sum owed by the client to that dealer.
Purposes for which moneys, securities or property may be withdrawn from trust account
(2)  A dealer shall not withdraw any moneys, securities or property from a trust account except for the purpose of making a payment or delivery —
(a)to the person entitled thereto;
(b)defraying brokerage and other proper charges; or
(c)that is otherwise authorised by law.
Moneys, securities or property in trust accounts not available in payment of debts
(3)  Subject to this regulation, moneys, securities or property held in a trust account shall not be available for payment of the debts of a dealer or be liable to be paid or taken in execution under an order or process of any court.
Claims and liens not affected
(4)  Nothing in this regulation shall take away or affect a lawful claim or lien which any person has against or upon any moneys, securities or property held in trust account or against or upon any moneys, securities or property received from the purchase of Government securities or from the sale of Government securities before such moneys, securities or property are paid into the trust account.
Secondary dealer to maintain two securities accounts with primary or registered dealer in book-entry Government securities transactions
(5)  A secondary dealer shall establish and maintain two Government securities accounts with a primary or registered dealer in relation to book-entry Government securities transactions as follows:
(a)a Government securities account for the secondary dealer’s own transactions; and
(b)a client’s Government securities account designated as a trust account for transactions in book-entry Government securities entered into by the secondary dealer on behalf of and for the account of his clients.
Application of paragraphs (1) to (4) to clients’ Government securities trust account
(6)  Paragraphs (1) to (4) shall apply with the necessary modifications to a clients’ Government securities trust account referred to under paragraph (5)(b), as if the book-entry Government securities were issued by the Authority in the form of engraved or printed certificates and any transfer, delivery or pledge of the book-entry Government securities shall have effect in the same manner as if they are in engraved or printed certificates.
Segregation of moneys, securities or property held for safe-custody, etc.
(7)  A dealer shall segregate and separately account for moneys, securities or property held for safe-custody or fully paid for by others from other moneys, securities or properties.
Exemption from section 58 for dealer in Government securities
(8)  Section 58 of the Act shall not have effect in relation to a dealer in respect to that part of its business of dealing in Government securities.
Interpretation
(9)  In this regulation —
“primary dealer” means a body corporate which carries on a business of dealing in Government securities whether it carries on any other business or not and which has been designated and approved as a primary dealer by the Authority;
“registered dealer” means a body corporate which carries on a business of dealing in Government securities whether it carries on any other business or not and which has been designated and approved as a registered dealer by the Authority;
“secondary dealer” means a body corporate which carries on a business of dealing in Government securities whether it carries on any other business or not and which is licensed as a dealer under the Act and approved by the Authority as a secondary dealer but does not include a primary or a registered dealer;
“securities” includes Government securities.
Authority to approve dealers licensed under the Act as dealer in Government securities
(10)  No person who is licensed as a dealer under the Act before or after 18th December 1987 shall carry on or continue to carry on a business of dealing in Government securities, whether as a primary, registered or secondary dealer, unless prior approval has been obtained from the Authority.
Transitional
(11)  Notwithstanding paragraph (10), a dealer who is licensed under the Act before 18th December 1987 may continue to carry on a business of dealing in Government securities without the approval of the Authority —
(a)until the expiration of the period of 3 months next succeeding 18th December 1987; or
(b)where, before the expiration of that period, it applies for approval to carry on a business of dealing in Government securities, until —
(i)its application is approved; or
(ii)its application is refused.
Dealer in Government securities to send confirmation note to client
60.  A dealer shall in respect of a transaction of sale or purchase of Government securities forthwith but in any event not later than the next business day send a confirmation note of the transaction to the person with whom or for whom the dealer has entered into the transaction.
Dealer in Government securities to enter into repurchase agreements only with certain financial institutions
61.  A dealer whose business is or includes dealing in Government securities shall only enter into repurchase agreements only where the other party to the agreements is —
(a)a bank licensed under the Banking Act [Cap. 19];
(b)a finance company licensed under the Finance Companies Act [Cap. 108];
(c)a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act [Cap. 186];
(d)the Post Office Savings Bank of Singapore established under the Post Office Savings Bank of Singapore Act;
(e)a company or society registered under the Insurance Act;
(f)a dealer licensed under the Act;
(g)a primary dealer; or
(h)a registered dealer.
Interpretation
62.—(1)  In this regulation —
“exempt Government securities dealer” means a dealer licensed under the Act which carries on or includes as part of its business dealing in Government securities solely for its own account with an exempt financial institution and is neither a primary, registered or secondary dealer;
“exempt financial institution” means —
(a)a bank licensed under the Banking Act;
(b)a finance company licensed under the Finance Companies Act;
(c)a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act;
(d)the Post Office Savings Bank of Singapore established under the Post Office Savings Bank of Singapore Act;
(e)a company or society registered under the Insurance Act [Cap. 142];
(f)a dealer licensed under the Act;
(g)a primary dealer; and
(h)a registered dealer.
(2)  Notwithstanding anything in these Regulations, an exempt Government securities dealer may, without approval from the Authority, carry on or include as part of its business dealing in Government securities for its own account with an exempt financial institution subject to paragraphs (3) to (5).
(3)  Regulation 59 relating to the establishment and maintenance of trust accounts shall, with necessary modifications, apply to an exempt Government securities dealer where it acts, whether expressly or impliedly, as custodian for the securities belonging to the counterparty to a securities transaction and for this purpose, a reference in regulation 59 to —
(a)“dealer” shall be construed as a reference to an exempt Government securities dealer;
(b)“secondary dealer” shall be construed as a reference to an exempt Government securities dealer; and
(c)“client”, unless the context otherwise requires, shall be construed as a reference to the counterparty to the securities transaction.
(4)  An exempt Government securities dealer shall enter into a repurchase agreement only when the other party to the agreement is —
(a)a bank licensed under the Banking Act [Cap. 19];
(b)a finance company licensed under the Finance Companies Act [Cap. 108];
(c)a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act [Cap. 186];
(d)the Post Office Savings Bank of Singapore established under the Post Office Savings Bank of Singapore Act;
(e)a company or society registered under the Insurance Act [Cap. 142];
(f)a dealer licensed under the Act;
(g)a primary dealer; and
(h)a registered dealer.
(5)  An exempt Government securities dealer shall comply with and observe this regulation in so far as its business of dealing in Government securities as an exempt Government securities dealer is concerned but nothing in this regulation shall exempt an exempt Government securities dealer from any of the provisions of the Act and the Regulations to which an exempt Government securities dealer is subject as a dealer in other securities or as a dealer in Government securities where it is not an exempt Government securities dealer.
Parts IV to VIII not to apply to dealings in Linkage securities by NASDAQ market-makers
63.—(1)  Parts IV to VIII of the Act and any corresponding regulations shall not have effect in relation to dealings in Linkage securities by NASDAQ market-makers who are participants in the NASD-SES Market Linkage provided that nothing herein shall be construed as permitting NASDAQ market-makers to solicit business in Singapore in relation to securities, including Linkage securities, other than by way of provision of Linkage Information.
(2)  In this regulation —
“Linkage Information” includes —
(a)the unique identifiers of NASDAQ and SES market-makers and their individual closing price quotations in each of the Linkage securities;
(b)the closing inside quotations of each of the Linkage securities;
(c)the last sale prices of each of the Linkage securities where applicable; and
(d)the cumulative daily volume of each of the Linkage securities;
“Linkage securities” means securities which have been identified for the purposes of the NASD-SES Market Linkage as agreed upon between NASD and the SES from time to time;
“NASD” means the National Association of Securities Dealers, Inc., a corporation organised under the laws of the State of Delaware in the United States of America;
“NASDAQ market-makers” means the NASD member firms that are registered to make a market in Linkage securities by entering quotations in the NASDAQ System operated by NASDAQ, Inc.;
“NASD-SES Market Linkage” means the programme and stock market facilities through which Linkage Information compiled from data originating from market-makers in Linkage securities (including NASDAQ market-makers and SES market-makers) is exchanged between NASD and the SES for utilisation within their respective markets, which facilities include the facilities of NASDAQ, Inc. and NASD Market Services, Inc.;
“SES” means the Stock Exchange of Singapore Ltd;
“SES market-makers” means Members or Associates of SES that are approved to make market in Linkage securities.
Exemption for Asian Development Bank
64.—(1)  Division 1 of Part II, Parts IV, V, VI and VII of the Act shall not have effect in relation to the Asian Development Bank.
(2)  In this regulation, the reference to the “Asian Development Bank” is a reference to the Asian Development Bank established pursuant to an International Agreement of which Singapore is a signatory. That Agreement has been given effect to by way of the Asian Development Bank Act [Cap. 15].
Exemption for approved persons dealing in shares of special purpose corporation
65.—(1)  Parts IV, V, VI and VII of the Act shall not have effect in relation to any person approved by the Authority if, pursuant to the establishment and promotion of an aircraft leasing business in Singapore, that approved person deals in the shares of a special purpose corporation with —
(a)a bank, merchant bank or other financial institution; or
(b)a corporation with total net assets exceeding $10 million or its equivalent in foreign currencies,
(referred to hereinafter as a designated institution) and if, and only if, such dealing in shares is subject to a prohibition that that designated institution may not subsequently dispose of the shares of the special purpose corporation except to another designated institution.
(2)  In this regulation, “special purpose corporation” means a corporation established to acquire and own an aircraft which is to be leased out.
Exemption for remote members
66.  Parts IV, V, VI and VII of the Act shall not have effect on a member of the Singapore Exchange Securities Trading Limited who does not at any time deal in securities in Singapore.
[S 579/99 wef 01/01/2000]
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