Rule 5 — Financial/Capital Requirements

5.1 Minimum Capital and Financial Requirements of Clearing Members Incorporated in Singapore

5.1.1

Each General Clearing Member incorporated in Singapore shall at all times:—

(1) Base Capital Requirement

(a) maintain a base capital of not less than S$5,000,000; or

(b) in the case of a General Clearing Member who is also a clearing member of SGX-DC, maintain a base capital of not less than S$8,000,000;

(2) Financial Resources Requirement not cause or permit its financial resources to fall below its total risk requirement;

(3) Aggregate Indebtedness Requirement not cause or permit its aggregate indebtedness to exceed 1,200% of its aggregate resources; and

(4) Other Requirements comply with the accounting, reporting, book-keeping and any other financial and operational requirements prescribed by CDP.

Amended on 1 July 2008 1 July 2008.

5.1.1A

Each Bank Clearing Member incorporated in Singapore shall at all times:—

(1) Base Capital Requirement

(a) maintain a base capital of not less than S$5,000,000; or

(b) in the case of a Bank Clearing Member who is also a clearing member of SGX-DC, maintain a base capital of not less than S$8,000,000;

(2) RRA Financial Requirement
comply with all applicable RRA Financial Requirements; and

(3) Other Requirements
comply with the accounting, reporting, book-keeping and any other financial and operational requirements prescribed by CDP in relation to the Bank Clearing Member's business governed by this Clearing Rules.

Added on 1 July 2008 1 July 2008. and amended on 22 April 2019 22 April 2019.

5.1.1B

A Clearing Member shall immediately notify CDP if it fails to comply with the minimum capital and financial requirements prescribed in the preceding paragraphs or becomes aware that it will fail to comply with such requirements.

Added on 1 July 2008 1 July 2008.

5.1.1C

If CDP is notified by a Clearing Member under Rule 5.1.1B or becomes aware (whether or not there has been any notification by the Clearing Member under Rule 5.1.1B) that such Clearing Member has failed to comply with the minimum capital and financial requirements prescribed in the preceding paragraphs, CDP may direct the Clearing Member to do one (1) or more of the following actions:—

(1) liquidate or cease any increase in positions for any account carried by the Clearing Member;

(2) liquidate or transfer all or part of any customer's positions, securities margins, collateral, assets and accounts to one (1) or more other Clearing Members. For the avoidance of doubt, reference to "customer's positions, securities margins, collateral, assets and accounts" in relation to a Bank Clearing Member, shall refer to customer's positions, securities margins, collateral, assets and accounts falling within the Bank Clearing Member's business governed by this Clearing Rules;

(3) operate its business or in the case of a Bank Clearing Member, its business governed by this Clearing Rules, in such manner and on such conditions as CDP may impose.

5.1A Early Warning Financial Requirements of Clearing Members Incorporated in Singapore

5.1A.1

Each General Clearing Member incorporated in Singapore shall immediately notify CDP:—

(1) if its financial resources fall below 120% of its total risk requirement; or

(2) if its aggregate indebtedness exceeds 600% of its aggregate resources.

Added on 1 July 2008 1 July 2008 and amended on 22 April 2019 22 April 2019.

5.1A.2

If CDP is notified by a Clearing Member under Rule 5.1A.1(1) or becomes aware (whether or not there has been any notification by the Clearing Member under Rule 5.1A.1(1)) that such Clearing Member's financial resources have fallen below 120% of its total risk requirement, CDP may direct such Clearing Member to comply with one (1) or more of the directions prescribed under Regulation 7(3) of the SFR (Financial and Margin Requirements).

Added on 1 July 2008 1 July 2008 and amended on 22 April 2019 22 April 2019.

5.1A.3

If CDP is notified by a Clearing Member under Rule 5.1A.1(2) or becomes aware (whether or not there has been any notification by such Clearing Member under Rule 5.1A.1(2)) that such Clearing Member's aggregate indebtedness has exceeded 600% of its aggregate resources, CDP may direct such Clearing Member to comply with one (1) or more of the directions prescribed under Regulation 17(2) of the SFR (Financial and Margin Requirements).

Added on 1 July 2008 1 July 2008 and amended on 22 April 2019 22 April 2019.

5.1B Notification Requirements of Clearing Members Incorporated in Singapore

5.1B.1

Each Clearing Member incorporated in Singapore shall:

(a) In the case of a General Clearing Member, immediately notify CDP if its financial resources fall below 150% of its total risk requirement.

(b) In the case of a Bank Clearing Member, immediately notify the Clearing House of any event in relation to its regulatory capital and liquidity ratios that is required to be reported to its Relevant Regulatory Authority.

Added on 1 July 2008 1 July 2008 and amended on 22 April 2019 22 April 2019.

5.1B.2

CDP may from time to time prescribe other notification requirements and conditions for exemptions or exceptions therefrom on all or any of the Clearing Members.

Added on 1 July 2008 1 July 2008.

5.1B.3

If CDP is notified by a Clearing Member under Rule 5.1B.1 or becomes aware (whether or not there has been any notification by the Clearing Member under Rule 5.1B.1) that such Clearing Member's financial resources have fallen below 150% of its total risk requirement or that a reportable event in relation to its regulatory capital and liquidity ratios has occurred, CDP may direct such Clearing Member to do one (1) or more of the following actions:—

(1) submit (where applicable), the statements of assets and liabilities, financial resources, total risk requirement, aggregate indebtedness, and such other statements as required by CDP at such interval and for such time frame as determined by CDP;

(2) operate its business, or in the case of a Bank Clearing Member, its business governed by this Clearing Rules, in such manner and on such conditions as CDP may impose.

Added on 1 July 2008 1 July 2008 and amended on 22 April 2019 22 April 2019.

5.1C Qualifying Letter of Credit

5.1C.1

For the purpose of Rules 5.1 and 5.1A, a Clearing Member may include one (1) or more Qualifying Letter(s) of Credit deposited with CDP or SGX-DC in its calculation of aggregate resources, subject to the total amount payable under the Qualifying Letter(s) of Credit or 50% of its total risk requirement, whichever is lower. In the case of a Clearing Member admitted as a clearing member of CDP and SGX-DC, and which has deposited such Qualifying Letter(s) of Credit with SGX-DC, pursuant to the corresponding provision in the SGX-DC Clearing Rules, it need not deposit another Qualifying Letter(s) of Credit with CDP.

Added on 1 July 2008 1 July 2008 and amended on 25 August 2009 25 August 2009 and 29 December 2014 29 December 2014.

5.1C.2

For the purpose of Rule 5.1C.1, a qualifying letter of credit is a legally enforceable and irrevocable letter of credit that:—

(1) is made in favour of CDP;

(2) is issued by a bank approved by, and in a form acceptable to CDP; and

(3) does not include any letters of credit provided by the Clearing Member to satisfy any other requirement imposed by CDP.

Added on 1 July 2008 1 July 2008.

5.1C.3

CDP reserves the right to call on any of the qualifying letters of credit furnished pursuant to this Clearing Rules and apply the proceeds thereof in respect of the Clearing Member's default to CDP. In the case of a Clearing Member admitted as a clearing member of CDP and SGX-DC, CDP shall have the discretion to apportion in any manner, the use of the proceeds between CDP and SGX-DC. In deciding on the apportionment, CDP may, in consultation with SGX-DC, take into account factors, including but not limited to, the amount owed by the Clearing Member to CDP and SGX-DC respectively.

Added on 1 July 2008 1 July 2008.

5.1D Minimum Capital and Financial Requirements of Clearing Members Incorporated Outside Singapore

5.1D.1

Each General Clearing Member incorporated outside Singapore shall at all times:—

(1) Base Capital Requirement

(a) maintain net head office funds of not less than S$5,000,000; or

(b) in the case of a General Clearing Member who is also a clearing member of SGX-DC, maintain net head office funds of not less than S$8,000,000;

(2) Adjusted Net Head Office Funds Requirement

not cause or permit its adjusted net head office funds to fall below its total risk requirement;

(3) Aggregate Indebtedness

not cause or permit its aggregate indebtedness to exceed 1,200% of its aggregate resources; and

(4) Other Requirements

comply with the accounting, reporting, book-keeping and any other financial and operational requirements prescribed by CDP.

Added on 1 July 2008 1 July 2008.

5.1D.2

Each Bank Clearing Member incorporated outside Singapore shall at all times:—

(1) Base Capital Requirement

(a) maintain a base capital of not less than S$5,000,000; or

(b) in the case of a Bank Clearing Member who is also a clearing member of SGX-DC, maintain a base capital of not less than S$8,000,000;

(2) RRA Financial Requirement

comply with all applicable RRA Financial Requirements; and

(3) Other Requirements

comply with the accounting, reporting, book-keeping and any other financial and operational requirements prescribed by CDP in relation to the Bank Clearing Member's business governed by this Clearing Rules.

Added on 1 July 2008 1 July 2008 and amended on 25 August 2009 25 August 2009 and 22 April 2019 22 April 2019.

5.1D.3

A Clearing Member shall immediately notify CDP if it fails to meet the minimum capital and financial requirements prescribed in the preceding paragraphs or becomes aware that it will fail to comply with such requirements.

Added on 1 July 2008 1 July 2008.

5.1D.4

If CDP is notified by a Clearing Member under Rule 5.1D.3 or becomes aware (whether or not there has been any notification by the Clearing Member under Rule 5.1D.3) that such Clearing Member has failed to comply with the minimum capital and financial requirements prescribed in the preceding paragraphs, CDP may direct the Clearing Member to do one (1) or more of the following actions:—

(1) liquidate or cease any increase in positions for any account carried by the Clearing Member;

(2) liquidate or transfer all or part of any customer's positions, securities margins, collateral, assets and accounts to one (1) or more other Clearing Members. For the avoidance of doubt, reference to "customer's positions, securities margins, collateral, assets and accounts" in relation to a Bank Clearing Member, shall refer to customer's positions, securities margins, collateral, assets and accounts falling within the Bank Clearing Member's business governed by this Clearing Rules;

(3) operate its business or in the case of a Bank Clearing Member, its business governed by this Clearing Rules, in such manner and on such conditions as CDP may impose.

Added on 1 July 2008 1 July 2008.

5.1DA Liquidity Resource Requirement

Each Bank Clearing Member incorporated outside Singapore shall deposit liquidity resources with CDP upon CDP's request, if CDP determines that any conditions exist which may threaten the ability of the Bank Clearing Member to satisfy its obligations to CDP and/or SGX-DC under this Clearing Rules and the SGX-DC Clearing Rules respectively. Such liquidity resources shall be an amount up to S$5,000,000, or S$8,000,000 in the case of a Bank Clearing Member who is also a clearing member of SGX-DC, and shall be paid in cash and/or acceptable government securities within such time as determined by CDP.

Added on 22 April 2019 22 April 2019.

5.1E Early Warning Financial Requirements of Clearing Members Incorporated Outside Singapore

5.1E.1

Each General Clearing Member incorporated outside Singapore shall immediately notify CDP:—

(1) if its adjusted net head office funds fall below 120% of its total risk requirement; or

(2) if its aggregate indebtedness exceeds 600% of its aggregate resources.

Added on 1 July 2008 1 July 2008 and amended on 25 August 2009 25 August 2009 and 22 April 2019 22 April 2019.

5.1E.2

If CDP is notified by a Clearing Member under Rule 5.1E.1(1) or becomes aware (whether or not there has been any notification by the Clearing Member under Rule 5.1E.1(1)) that such Clearing Member's adjusted net head office funds have fallen below 120% of its total risk requirement, CDP may direct such Clearing Member to comply with one (1) or more of the directions prescribed under Regulation 7(3) of the SFR (Financial and Margin Requirements).

Added on 1 July 2008 1 July 2008 and amended on 25 August 2009 25 August 2009 and 22 April 2019 22 April 2019.

5.1E.3

If CDP is notified by a Clearing Member under Rule 5.1E.1(2) or becomes aware (whether or not there has been any notification by such Clearing Member under Rule 5.1E.1(2)) that such Clearing Member's aggregate indebtedness has exceeded 600% of its aggregate resources, CDP may direct such Clearing Member to comply with one (1) or more of the directions prescribed under Regulation 17(2) of the SFR (Financial and Margin Requirements).

Added on 1 July 2008 1 July 2008 and amended on 22 April 2019 22 April 2019.

5.1F Notification Requirements of Clearing Members Incorporated Outside Singapore

5.1F.1

Each Clearing Member incorporated outside Singapore shall:

(a) In the case of a General Clearing Member, immediately notify CDP if its adjusted net head office funds fall below 150% of its total risk requirement; and

(b) In the case of a Bank Clearing Member, immediately notify CDP of any event in relation to its regulatory capital and liquidity ratios that is required to be reported to its Relevant Regulatory Authority.

Added on 1 July 2008 1 July 2008 and amended on 25 August 2009 25 August 2009 and 22 April 2019 22 April 2019.

5.1F.2

CDP may from time to time prescribe other notification requirements and conditions for exemptions or exceptions therefrom on all or any of the Clearing Members.

Added on 1 July 2008 1 July 2008.

5.1F.3

If CDP is notified by a Clearing Member under Rule 5.1F.1 or becomes aware (whether or not there has been any notification by the Clearing Member under Rule 5.1F.1) that such Clearing Member's adjusted net head office funds have fallen below 150% of its total risk requirement, or that a reportable event in relation to its regulatory capital and liquidity ratios has occurred, CDP may direct such Clearing Member to do one (1) or more of the following actions:—

(1) submit (where applicable), the statements of assets and liabilities, adjusted net head office funds, cash and/or acceptable government securities deposited with CDP or SGX-DC, aggregate indebtedness, total risk requirement, and such other statements as required by CDP at such interval and for such time frame as may be determined by CDP; and

(2) operate its business, or in the case of a Bank Clearing Member, its business governed by this Clearing Rules, in such manner and on such conditions as CDP may impose.

Added on 1 July 2008 1 July 2008 and amended on 25 August 2009 25 August 2009 and 22 April 2019 22 April 2019.

5.1G Qualifying Letter of Credit

5.1G.1

For the purpose of Rules 5.1D and 5.1E, a Clearing Member may include one (1) or more Qualifying Letter(s) of Credit deposited with CDP or SGX-DC in its calculation of aggregate resources subject to the total amount payable under the Qualifying Letter(s) of Credit or 50% of its total risk requirement, whichever is lower. In the case of a Clearing Member admitted as a clearing member of CDP and SGX-DC, and which has deposited such Qualifying Letter(s) of Credit with SGX-DC, pursuant to the corresponding provision in the SGX-DC Clearing Rules, it need not deposit another Qualifying Letter(s) of Credit with CDP.

Amended on 1 July 2008 1 July 2008, 25 August 2009 25 August 2009 and 29 December 2014 29 December 2014.

5.1G.2

For the purpose of Rule 5.1G.1, a qualifying letter of credit is a legally enforceable and irrevocable letter of credit that:—

(1) is made in favour of CDP;

(2) is issued by a bank approved by, and in a form acceptable to CDP; and

(3) does not include any letters of credit provided by the Clearing Member to satisfy any other requirement imposed by CDP.

Amended on 1 July 2008 1 July 2008.

5.1G.3

CDP reserves the right to call on any of the Qualifying Letter of Credit furnished pursuant to this Clearing Rules and apply the proceeds thereof in respect of the Clearing Member's default to CDP. In the case of a Clearing Member admitted as a clearing member of CDP and SGX-DC, CDP shall have the discretion to apportion in any manner, the use of the proceeds between CDP and SGX-DC. In deciding on the apportionment, CDP may, in consultation with SGX-DC, take into account factors, including but not limited to, the amount owed by the Clearing Member to CDP and SGX-DC respectively.

Amended on 1 July 2008 1 July 2008 and 29 December 2014 29 December 2014.

5.1H [Rule has been deleted.]

Deleted on 29 December 2014 29 December 2014.

5.1H.1 [Rule has been deleted.]

Deleted on 29 December 2014 29 December 2014.

5.1I Total Risk Requirement

5.1I.1

(1) Total risk requirement shall be calculated in the same manner as prescribed in the Notice on Risk Based Capital Adequacy Requirements for Holders of Capital Markets Services Licences.

(2) For the purposes of calculating total risk requirement under rule 5.1I.1(1):

(a) structured warrants must be treated according to their classification under the SFA;

(b) "margin deficiency" referred to in the Notice on Risk Based Capital Adequacy Requirements for Holders of Capital Markets Services Licences is the amount required for the Customer Asset Value to meet the Variation Margin and Maintenance Margin, and in the case where Customer Asset Value is not sufficient to meet Variation Margin, the margin deficiency is the amount of Maintenance Margin; and

(c)"negative equity" referred to in the Notice on Risk Based Capital Adequacy Requirements for Holders of Capital Markets Services Licences is the amount required for the Customer Asset Value to meet the Variation Margin.

Amended on 3 April 2008 3 April 2008, 1 July 2008 1 July 2008, 23 January 2009 23 January 2009 and 29 December 2014 29 December 2014.

5.1J Notification of Reduction in Capital

5.1J

Every Clearing Member shall:—

5.1J.1 except in the case of a Bank Clearing Member, report to CDP within 48 hours of occurrence of any reduction in excess of 20% in its financial resources or adjusted net head office funds, as the case may be, from the previously submitted financial statement; or

5.1J.2 in the case of a Bank Clearing Member, report to CDP within 48 hours of occurrence of any reduction in excess of 20% in its regulatory capital from the previously submitted financial statement.

Added on 22 April 2019 22 April 2019.

5.1.2 [Rule has been deleted.]

Deleted on 1 July 2008 1 July 2008.

5.1.3 [Rule has been deleted.]

Deleted on 1 July 2008 1 July 2008.

5.1.4 [Rule has been deleted.]

Deleted on 1 July 2008 1 July 2008.

5.2 [Rule has been deleted.]

Amended on 3 April 2008 3 April 2008 and deleted on 1 July 2008 1 July 2008.

5.3 [Rule has been deleted.]

Deleted on 1 July 2008 1 July 2008.

5.4 Powers to Impose Other Requirements

5.4.1

If CDP is notified by the Clearing Member or becomes aware that the Clearing Member has failed to comply with the minimum capital and financial requirements prescribed in these Rules, CDP may exercise any of the powers described in Rules 6A.9A and 6.10.

Added on 23 January 2009 23 January 2009 and amended on 21 January 2013 21 January 2013.

5.4.2

CDP may prescribe for 1 or more Clearing Members, capital, financial and other requirements in excess of the minimum prescribed under Rule 5 herein on the basis of volume, risk exposure of positions carried, risk concentration, margin policies, nature of business conducted or to be conducted or its membership in any exchange or market and such other criteria as deemed necessary by CDP.

Amended on 23 January 2009 23 January 2009.

5.5 Reserve Fund Requirement

5.5.1

A General Clearing Member shall maintain a reserve fund to which a sum of not less than 30% of the audited net profits of each year shall be transferred out of its net profits after due provision has been made for taxation, so long as:—

(1) where it is incorporated in Singapore, the base capital less unappropriated profits in its latest audited accounts; or

(2) where it is incorporated outside Singapore, its net head office funds, is less than S$15,000,000.

Amended on 1 July 2008 1 July 2008.

5.5.2

The reserve fund shall not be available for declaration of dividends without the prior approval of CDP.

5.6 Exposure to Single Customer

5.6.1

A General Clearing Member shall immediately notify CDP if the General Clearing Member's exposure to a single customer exceeds 20% of its average aggregate resources. To reduce the General Clearing Member's risk exposure to a single customer, CDP shall have the right to impose on the General Clearing Member such risk management measures as it deems necessary.

Amended on 1 July 2008 1 July 2008.

5.6.2

For the purpose of Rule 5.6.1, the full amount of the letter(s) of credit or any part thereof deposited pursuant to Rules 5.1C or 5.1G may be taken into account for the calculation of aggregate resources.

Amended on 1 July 2008 1 July 2008.

5.6.3

In Rule 5.6.1, "exposure to a single customer" means:—

(1) in the case of securities positions carried in a customer's account (other than a margin financing account) carried on the books of the General Clearing Member:—

(a) for purchase contracts that remain unpaid:—

(i) where the securities purchased have not been delivered to the customer, the excess of the contracted price of the securities purchased by the single customer over the aggregate market value of the securities purchased and such other collateral held by the General Clearing Member less any amount due and payable by the General Clearing Member to him; and

(ii) where the securities purchased have been delivered to the customer, the excess of the contracted price of the securities purchased by the single customer over the aggregate market value of all his collateral held by the General Clearing Member less any amount due and payable by the General Clearing Member to him;

(b) 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 customer over the aggregate of the market value of any of his collateral held by the General Clearing Member and the contracted sale price less any amount due and payable by the General Clearing Member to him;

(c) where the contracts referred to in Rule 5.6.3(1)(a) or (b) have been offset by a contra transaction on or before the due date, the exposure shall not include those amounts specified in Rule 5.6.3(1)(a) or (b) 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

(d) where the contracts referred to in Rule 5.6.3 (1)(a) or (b) have been offset by a force-sale after the due date or buying-in transaction on or after the due date, the exposure shall not include those amounts specified in Rule 5.6.3(1)(a) or (b) in respect of such contracts but shall instead include the amount of the loss, if any, arising from the force-sale or buying-in transaction, on the date on which the transaction takes effect;

(1A) for the purposes of Rule 5.6.3(1) "securities" includes structured warrants listed on foreign exchanges;

(2) the amount of margin deficiency in the single customer's margin financing account carried on the books of the General Clearing Member as determined in accordance with the margin financing requirements specified by SGX-ST;

(3) the amount of deficiency in relation to margins required in any account carried on the books of the General Clearing Member of the single customer as determined in accordance with the margin requirements prescribed by the relevant exchange, clearing house or such other relevant financial institution;

(4) the excess of the amount owed by the single customer in his options trading account carried on the books of the General Clearing Member over the market value of options held;

(5) the amount of any unsecured interest owed by the single customer;

(6) the amount of any unsecured loan, advance and credit facility granted to the single customer;

(7) where the General Clearing Member has lent securities to the single customer or is acting as guarantor for the return of securities lent to the single customer, the excess of the amount of the market value of the securities lent to the single customer over the amount of the market value of collateral and cash deposited by the single customer; and

(8) where the General Clearing Member has deposited collateral with the single customer in respect of securities lent by the single customer or is acting as guarantor for the return of collateral deposited with the single customer 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 customer over the amount of the market value of securities lent by him.

Amended on 3 April 2008 3 April 2008, 1 July 2008 1 July 2008, 23 January 2009 23 January 2009, 20 November 2009 20 November 2009 and 1 July 2016 1 July 2016.

5.6.4

For the purposes of Rule 5.6.3, a security or futures contract is deemed to be carried in a customer's account (other than a margin financing account) carried on the books of the General Clearing Member on the contract date specified in the contract note in respect of the transaction in that security or futures contract or on the exercise date specified in the exercise notice in respect of an option in that security which has been exercised.

Amended on 1 July 2008 1 July 2008, 23 January 2009 23 January 2009 and 1 July 2016 1 July 2016.

5.6.5

In Rule 5.6, "single customer" means, in relation to a customer who is:—

(1) a person, that person and such group of persons whom the first-mentioned person is able to control or influence;

(2) a corporation, that 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 4(1) of the Companies Act; or

(3) a person, that person

(a) and any corporation whose issued share capital is 50% or more owned by those persons mentioned in Rule 5.6.5(1) or those corporations mentioned in Rule 5.6.5(2); or

(b) and any corporation whose composition of board of directors is controlled by those persons mentioned in Rule 5.6.5(1); and for this purpose the composition of the board of directors shall be deemed to be controlled by those persons, if they, by the exercise of some power exercisable by them without the consent or concurrence or any other person, can appoint or remove all or a majority of the directors of that corporation,

but shall not include the General Clearing Member itself.

Provided always that a single customer of a General Clearing Member shall not include the end customers of any Trading Member who is qualified by the General Clearing Member.

Amended on 1 July 2008 1 July 2008.

5.7 Exposure to Single Security

5.7.1

A General Clearing Member shall immediately notify CDP if the General Clearing Member's exposure to a single security (including in respect of any Exchange Trade of any Trading Member qualified by the General Clearing Member) exceeds:—

(1) in the case where the security is quoted on SGX-ST or any recognised group A securities exchange specified in the SFR (Financial and Margin Requirements), 300% of its average aggregate resources;

(2) in all where the security is quoted other than as specified in Rule 5.7.1(1), 100% of its average aggregate resources;

(3) in the case where the security is approved for quotation on SGX-ST or any recognised group A securities exchange but has not, as yet, been so quoted:—

(a) 100% of the average aggregate resources of the General Clearing Member if its aggregate resources is less than $75 million; or

(b) 150% of the average aggregate resources of the General Clearing Member if its aggregate resources is $75 million or more,

provided that the exposure under Rule 5.7.1(3) together with the exposure, if any, to securities already quoted, shall not exceed the limit specified in Rule 5.7.1(1); and

(4) 10% of its average aggregate resources if the security is unquoted, but shall not include any security issued by:—

(a) any subsidiary of the General Clearing Member which is established solely for the purpose of providing research, nominee, custodian or trustee services; or

(b) any other company which CDP may approve.

Amended on 1 July 2008 1 July 2008.

5.7.2

To reduce the General Clearing Member's risk exposure to a single security, CDP shall have the right to impose on the General Clearing Member such risk management measures as it deems necessary.

Amended on 1 July 2008 1 July 2008.

5.7.3

For the purpose of Rule 5.7.1, the full amount of the letter(s) of credit or any part thereof deposited pursuant to Rules 5.1C or 5.1G may be taken into account for the calculation of aggregate resources.

Amended on 1 July 2008 1 July 2008.

5.7.4

For the purpose of Rule 5.7.1, "exposure to a single security" means:—

(1) the amount of the single security underwritten or sub-underwritten by or placed with the General Clearing Member, after deducting the amount which the General Clearing Member has sub-underwritten or placed with:—

(a) a bank licensed under the Banking Act (Chapter 19);

(b) a merchant bank approved as a financial institution under the Monetary Authority of Singapore Act (Chapter 186);

(c) a finance company licensed under the Finance Companies Act (Chapter 108);

(d) a company or society registered under the Insurance Act (Chapter 142) to carry on insurance business as an insurer;

(e) the holder of a Capital Markets Services Licence under the SFA for dealing in capital markets products or for fund management;

(f) a financial institution outside Singapore which is licensed or regulated by a financial services regulatory authority in the country in which it is domiciled, and has a long-term credit rating of investment grade; and

(g) any other person, provided that:—

(i) full payment has been received by the General Clearing Member for the sub-underwritten, placed, sold or allotted amount; or

(ii) the sub-underwritten, placed, sold or allotted amount can be offset against collateral received by the General Clearing Member under a netting agreement.

(2) the book value of the single security carried long or the market value of the single security carried short in the General Clearing Member's own account carried on its books;

(3) for outstanding options in the single security carried in the General Clearing Member's own options trading account carried on its books:—

(a) the book value of options bought for the account;

(b) the excess of the market value of the underlying security over the exercise price of uncovered call options written for the account; and

(c) the excess of the exercise price of put options written for the account over the market value of the underlying security;

(4) in relation to the single security carried in a customer's cash accounts carried on the books of the General Clearing Member, 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;

(5) for outstanding options in the single security carried in the customer's options trading accounts carried on the books of the General Clearing Member:—

(a) the contract value of the options bought by the customer to the extent that such amounts have not been paid for;

(b) the excess of the market value of the underlying security over the exercise price of uncovered call options written by the customer; and

(c) the excess of the exercise price of put options written by the customer over the market value of the underlying security;

(6) the net amount of the single security borrowed or lent, as the case may be, by the General Clearing Member;

(7) in relation to a single security bought or carried, or deposited as collateral in the margin financing accounts carried on the books of the General Clearing Member, the margin exposure of the General Clearing Member to the single security as determined in accordance with the margin financing requirements prescribed by SGX-ST;

(8) the amount of interest receivable secured by the single security;

(9) the amount of loans and advances secured by the single security; and

(10) the amount under subscription by the General Clearing Member for its own account carried on its books in relation to a single security which is approved for quotation on SGX-ST or any recognised group A securities exchange but has not, as yet, been so quoted.

Amended on 1 July 2008 1 July 2008, 23 January 2009 23 January 2009, 1 July 2016 1 July 2016 and 8 October 2018 8 October 2018.

5.7.5

For the purpose of Rule 5.7.4, a security is deemed to be carried in a customer's cash account or a General Clearing Member's own account (such account being an account carried on the books of the General Clearing Member) 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.

Amended on 1 July 2008 1 July 2008 and 1 July 2016 1 July 2016.

5.7.6

For the purposes of Rule 5.7, in calculating exposure in any particular security, all outstanding options exercisable into that security shall be included in such computation.

5.7.6A

For the purposes of Rule 5.7.4(2) and Rule 5.7.4(4), in calculating exposure in any particular security, all futures contracts listed on any exchange with that security as an underlying shall be included in such computation.

Added on 3 April 2008 3 April 2008.

5.7.7

Rule 5.7 shall not apply to:—

(1) securities issued by the Singapore Government or any public authority in Singapore and

(2) the General Clearing Member's arbitrage transactions.

Amended on 1 July 2008 1 July 2008.

5.7.8

For the purpose of Rule 5.7, where a security quoted on SGX-ST or any recognised group A securities exchange has been suspended for more than thirty (30) consecutive days, a General Clearing Member shall not permit its exposure to the security to increase in monetary value above the level subsisting on the 30th consecutive day of suspension until such time that the suspension has been lifted.

Amended on 1 July 2008 1 July 2008.

5.7.9

In Rule 5.7, "single security" includes ordinary and preference shares, loan stocks, company warrants, structured warrants, transferable subscription rights, bonds, debentures, depository receipts, options and any other debt instruments or equity securities.

Amended on 3 April 2008 3 April 2008.

5.8 Monthly Returns

5.8.1

Each Clearing Member must make and keep as a record formal computations of its capital and financial requirements pursuant to:—

(1) in the case of a General Clearing Member, Rules 5.1, 5.1A, 5.1B, 5.1C, 5.1D, 5.1E, 5.1F, 5.1G, 5.4, 5.5, 5.6 and 5.7; or

(2) in the case of a Bank Clearing Member, Rules 5.1, 5.1B, 5.1D, 5.1F, and 5.4,

as of the close of business each month, or in the case of capital adequacy report of Bank Clearing Members, quarterly. The computations must be in such form as CDP may prescribe and submitted to CDP within fourteen (14) calendar days after the end of each month, or such time frame as CDP may prescribe.

Amended on 1 July 2008 1 July 2008 and 29 December 2014 29 December 2014 and 22 April 2019 22 April 2019.

5.8.2

Where the Clearing Member fails to submit the statements required in Rule 5.8.1 within the prescribed time, there shall be imposed upon the Clearing Member a late fee of $100 for each day that the statements are not submitted in the prescribed time, unless an extension of time has been granted.

5.8.3

Requests for extension of time shall be submitted to CDP at least 3 Market Days prior to the due date for submission of the statements.

5.8.4

The Clearing Member shall be required to resubmit the statements and documents prescribed under Rule 5.8.1 and take such other steps as CDP may require upon CDP's notification that the statements and documents are inaccurate or incomplete.

5.9 Appointment of Auditors and Audit Requirements

5.9.1

A Clearing Member, except for a Bank Clearing Member, shall seek the approval of CDP prior to any appointment of new auditors.

Amended on 1 July 2008 1 July 2008.

5.9.1A

A Bank Clearing Member shall inform CDP of the appointment of any new auditors within seven (7) days of such appointment.

Added on 1 July 2008 1 July 2008.

5.9.2 Statutory Audit Report For General Clearing Members

Without prejudice to such audit and/or reporting requirements as may be imposed by CDP from time to time, a General Clearing Member shall furnish to CDP, within five (5) months of the end of its financial year or within such longer period as may be permitted in writing by CDP, the relevant forms which a General Clearing Member is required to lodge in the prescribed format under Regulation 27(9) of the SFR (Financial and Margin Requirements), the annual accounts duly audited by, and the certificate of, its auditor or auditors who shall be a public accountant or a firm of public accountants approved by CDP. The certificate shall pertain to the audit conducted by such auditor or auditors in respect of the financial year aforesaid and shall be in such form prescribed by the Relevant Regulatory Authority.

Amended on 12 October 2005 12 October 2005 and 1 July 2008 1 July 2008 and 22 April 2019 22 April 2019.

5.9.3

Where, in the performance of his or their duties, the General Clearing Member's auditor or auditors becomes or become aware:—

(1) of any matter which in his or their opinion adversely affects or may adversely affect the financial position of the General Clearing Member to a material extent,

(2) of any matter which in his or their opinion constitutes or may constitute a contravention of any provision of the SFA or this Clearing Rules, or an offence involving fraud or dishonesty,

(3) of any irregularity that has or may have a material effect upon the accounts, including irregularities that jeopardise the moneys or other assets of any Customer of the General Clearing Member; or

(4) that the accounting system, internal accounting control and procedures for safeguarding moneys or other assets are inadequate and the inadequacies have a material effect on the accounts,

the auditor or auditors shall immediately report the matter to CDP.

Amended on 1 July 2008 1 July 2008.

5.9.4

(1) Where a Clearing Member fails to submit the documents pursuant to Rule 5.9.2 within the specified time, there may be imposed upon that Clearing Member a fee of $200 for each day that the statements are not submitted within the prescribed time, unless an extension of time has been granted.

(2) Requests for extension of time shall be submitted to CDP at least 3 Market Days prior to the due date.

5.9.5 Audit Report For Bank Clearing Members

Without prejudice to such audit and/or reporting requirements as may be imposed by CDP from time to time, a Bank Clearing Member shall furnish to CDP within five (5) months of the end of its financial year or within such longer period as may be permitted in writing by CDP, the annual accounts duly audited by, and the certificate of its auditor or auditors. The certificate shall pertain to the audit conducted by such auditor or auditors in respect of the financial year aforesaid and shall be in such form prescribed by the Relevant Regulatory Authority.

Added on 1 July 2008 1 July 2008 and amended on 22 April 2019 22 April 2019.

5.9.6

Where, in the performance of his or their duties, the Bank Clearing Member's auditor or auditors becomes or become aware:—

(1) of any matter in relation to the Bank Clearing Member's business governed by this Clearing Rules, which in his or their opinion adversely affects or may adversely affect the financial position of the Bank Clearing Member to a material extent,

(2) of any matter which in his or their opinion constitutes or may constitute a contravention of any applicable provision of the SFA or this Clearing Rules or an offence involving fraud or dishonesty in relation to the Bank Clearing Member's business governed by this Clearing Rules,

(3) of any irregularity in the Bank Clearing Member's business governed by this Clearing Rules, that has or may have a material effect upon the accounts, including irregularities that jeopardise the moneys or other assets of any customer of the Bank Clearing Member, or

(4) that the accounting system, internal accounting control and procedures for safeguarding moneys or other assets, in relation to the Bank Clearing Member's business governed by this Clearing Rules, are inadequate and the inadequacies have a material effect on the accounts,

the auditor or auditors shall immediately report the matter to CDP.

Added on 1 July 2008 1 July 2008.

5.10 [Rule has been deleted.]

Amended on 20 June 2005 20 June 2005 and 1 July 2008 1 July 2008.

5.11 Other Financial Requirements

5.11.1 Reduction in Paid-Up Ordinary Share Capital or Paid-Up Irredeemable and Non-Cumulative Preference Share Capital

Each General Clearing Member incorporated in Singapore shall not reduce its paid-up ordinary share capital or paid-up irredeemable and non-cumulative preference share capital without the prior written approval of CDP.

Amended on 1 July 2008 1 July 2008 and 29 December 2014 29 December 2014.

5.11.2 Preference Shares

(1) Each General Clearing Member incorporated in Singapore shall notify CDP prior to the date of issue of any preference share.

(2) A General Clearing Member incorporated in Singapore shall not repay the principal of any preference share (other than any paid-up irredeemable and non-cumulative preference share capital) that is computed as part of its financial resources, through repurchase or redemption:—

(a) unless the General Clearing Member notifies CDP within such time before the proposed date of repurchase or redemption as prescribed by the SFR (Financial and Margin Requirements);

(b) if at the date of repurchase or redemption:—

(i) its financial resources is less than 150% of its total risk requirement; or

(ii) its aggregate indebtedness exceeds 600% of its aggregate resources;

(c) if such repurchase or redemption will cause an event in Rule 5.11.2(2)(b) to occur; or

(d) if CDP has prohibited in writing such a repurchase or redemption.

Amended on 1 July 2008 1 July 2008 and 29 December 2014 29 December 2014.

5.11.3 Qualifying Subordinated Loan

(1) A General Clearing Member shall obtain the prior approval of CDP if it enters a subordinated loan agreement in a format other than the format prescribed by CDP from time to time.

(2) Each General Clearing Member incorporated in Singapore, shall immediately notify CDP when it draws down a qualifying subordinated loan, no later than the date of draw down.

(3) A General Clearing Member incorporated in Singapore:—

(a) shall not repay, whether in part or in full, any subordinated loan principal before the maturity date without the prior approval of CDP;

(b) shall not repay, whether in part or in full, any subordinated loan principal that has matured:—

(i) unless the Clearing Member notifies CDP at least one (1) Market Day before the date of repayment;

(ii) if the financial resources of the Clearing Member, are less than 150% of its total risk requirement;

(iii) in the case of a General Clearing Member, if its aggregate indebtedness exceeds 600% of its aggregate resources;

(iv) if such a repayment will cause an event in Rules 5.11.3 (2)(b)(ii) or (iii) to occur; or

(v) if CDP has prohibited in writing such a repayment.

Amended on 1 July 2008 1 July 2008, 29 December 2014 29 December 2014 and 22 April 2019 22 April 2019.

5.11.4 Making of Unsecured Loan or Advance, Payment of Dividend or Director's Fees or Increase in Director's Remuneration by General Clearing Member

Each General Clearing Member shall not, without the prior written approval of CDP, make any unsecured loan or advance, pay any dividend or director's fees or increase any director's remuneration if:—

(1) in the case where the General Clearing Member is incorporated in Singapore:—

(a) the base capital of the General Clearing Member is less than the base capital requirement as prescribed in Rules 5.1.1(1) and 5.4;

(b) the financial resources of the General Clearing Member are less than 150% of its total risk requirement;

(c) the aggregate indebtedness of the General Clearing Member exceeds 600% of its aggregate resources; or

(d) such a loan, advance, payment or increase will cause an event in Rule 5.11.4(1)(a), (b) or (c) to occur; or

(2) in the case where the General Clearing Member is incorporated outside Singapore:—

(a) the net head office funds of the General Clearing Member are less than the net head office funds requirement as prescribed in Rules 5.1D.1(1) and 5.4;

(b) the adjusted net head office funds of the General Clearing Member are less than 150% of its total risk requirement;

(c) the aggregate indebtedness of the General Clearing Member exceeds 600% of its aggregate resources; or

(d) such a loan, advance, payment or increase will cause an event in Rules 5.11.4(2)(a), (b) or (c) to occur.

Amended on 1 July 2008 1 July 2008 and 29 December 2014 29 December 2014.

5.11.5 Credit Facilities

Each Clearing Member shall submit to CDP, in the manner as prescribed from time to time:

(1) a report on all its credit facilities with its financial institutions at such frequency as CDP shall require; and

(2) any change to its credit facilities, including variation of credit limits and addition or termination of credit facilities, immediately upon such change.

Added on 23 January 2009 23 January 2009.

5.12 Register of Connected Persons

Each Clearing Member shall keep a register of its directors and their connected persons.

For the purpose of this Rule, a "connected person" has the meaning ascribed to it in Section 2 of the SFA.

5.13 Exemption for SGXlink Pte Ltd

Subject to the conditions specified in writing by the Authority, Rule 5 shall not apply to SGXLink Pte Ltd.