Practice Note 4.6.21; 12.1.1; 12.3.6; 12.6.4; 12.7.2; 12.10A.2: Operational Requirements for Trading Members Who Do Not Conduct Business in Singapore
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|Issue Date||Cross Reference||Enquiries|
|Added on 19 May 2014 and amended on 1 July 2016.||
Please contact Member Supervision:—
Facsimile No : 6538 8273
1.1. SGX-ST requires a Trading Member that does not hold a licence administered by the Monetary Authority of Singapore to meet the following operational requirements set out in the SGX-ST Rules:
a. maintain complete and accurate records pursuant to Rule 12.1.1(1);
b. send its customer a risk disclosure document setting out the risks associated with holding and trading of securities and Futures Contracts pursuant to Rule 12.3.6;
c. send its customer a contract note for the purchase or sale of securities or Futures Contracts pursuant to Rule 12.6.1;
d. send its customer a statement of account on a regular basis pursuant to Rule 12.7.1;
e. segregate customer's money and assets pursuant to Rule 12.10A.1.
A Trading Member that does not hold a licence administered by the Monetary Authority of Singapore may meet the above operational requirements by complying with the applicable comparable requirements prescribed by its Relevant Regulatory Authority.
1.2. This Practice Note sets out the factors that SGX-ST considers relevant when it reviews the requirements that the Trading Member is already subject to at the point of application, and on an ongoing basis, in the overseas market which it is carrying on business ("overseas market").
2. Factors that SGX-ST considers relevant
2.1. Complete and accurate records Pursuant to Rule 12.1, the Trading Member referred to in paragraph 1.1 should:
a. keep, or cause to be kept, such books as will sufficiently explain the transactions and financial position of its business and enable true and fair financial statements to be prepared from time to time;
b. keep, or cause to be kept, such books in such a manner as will enable them to be conveniently and properly audited; and
c. retain such books required by the Relevant Regulatory Authority.
2.2. Contract note Pursuant to Rule 12.6 the Trading Member referred to in paragraph 1.1 should issue to its customer a contract note which should contain the following information:
a. name of the customer;
b. date on which the purchase or sale of securities or Futures Contracts is entered into;
c. the price, amount and description of the securities or Futures Contracts;
d. settlement amounts;
e. fees charged by the Trading Member; and
f. fees charged by any other party(ies) and borne by the customer in addition to the fees charged by the Trading Member.
In addition, the contract note should be sent to the customer within a reasonable period from the execution of the trade.
2.3. Statement of account Pursuant to Rule 12.7, the Trading Member referred to in paragraph 1.1 should send to its customer a statement of account which should contain the following information:
a. the price, amount and description of the securities or Futures Contracts;
b. the status and movements of every asset in the Trading Member's custody held for the customer, including any asset deposited with a third party; and the date, reasons of the movement and amount of the asset involved;
c. the movement and balance of money received on account of the customer; and
d. any charges and credits to the customer's account carried on the books of the Trading Member..
2.4. Risk disclosure statement Pursuant to Rule 12.3.6, the Trading Member referred to in paragraph 1.1 should provide its customer a risk disclosure statement which should clearly state the features of securities and Futures Contracts and risks associated with holding and trading these instruments.
2.5. Customer's money and assets Pursuant to Rule 12.10A, the Trading Member referred to in paragraph 1.1 should:
a. segregate customers' monies and assets from the Trading Member's monies and assets; and
b. separately account for the monies and assets of each customer.
3. Determination of Comparability of Operational Requirements Set Out in Paragraph 1.1
3.1. SGX-ST may direct the Trading Member to comply with the requirements of the Securities and Futures Act and SGX-ST Rules if the operational requirements referred to in paragraph 1.1 above are deemed to be of insufficient comparability.
3.2. SGX-ST has the discretion to prescribe additional requirements where SGX-ST is of the opinion that there is insufficient comparability between the SGX-ST Rules, and the requirements prescribed by the Relevant Regulatory Authority.
4. Business Continuity Requirements
4.1. In addition to meeting the operational requirements referred to in paragraph 1.1 above, SGX-ST also requires the Trading Member referred to in paragraph 1.1 to meet any applicable business continuity plan requirements which are prescribed by the Relevant Regulatory Authority. The Trading Member may further adopt the recommended features in a business continuity plan set out in Practice Note 4.6.21.
Emergency Contact Persons
4.2. Rule 4.6.21(5) requires a Trading Member to appoint emergency contact persons and furnish the contact information of such persons to SGX-ST. Members may appoint an emergency contact person and up to two (2) alternates. A template for the notification to SGX-ST of contact information of such emergency contact persons (postal address, email, telephone, mobile telephone and facsimile numbers) is attached as Appendix A to this Practice Note.
4.3. Trading Members are to ensure that the contact information provided to SGX-ST is updated on a semi-annual basis. Nonetheless, where there are changes to a Trading Member's emergency contact persons and contact information, the Trading Member should notify SGX-ST immediately in writing.
4.4. A Trading Member's authorized emergency contact person should immediately notify SGX-ST in the event where:
a. A Trading Member's business operations are or will be significantly disrupted; and/or
b. A Trading Member's business continuity plan is activated.