Directive No. 1 — Directorship of SGX-ST Listed Companies
Dates Cross Reference Enquiries Issue Date
1 December 2003
1 December 2003
19 May 201419 May 2014
Rules 6.2.3 and 7.5.6 Please contact Member Supervision:—
Facsimile No : 6538 8273
E-Mail Address: firstname.lastname@example.org In 1991, SGX-ST (formerly known as Stock Exchange of Singapore Limited) introduced 2 policies, in consultation with the Monetary Authority of Singapore, that:—(1) prohibited the appointment of Approved Executive Directors and Trading Representatives to the boards of SGX-ST listed companies, and(2) prohibited the appointment of a director to an SGX-ST listed company as a director of a Trading Member.2 Trading Members are advised that the Exchange has revised these policies. The new requirements, applicable immediately, are set out below.3 An Approved Executive Director or a Trading Representative may be appointed as a nonexecutive director of an SGX-ST listed company (but not as an executive director) subject to the following:—(1) the Approved Executive Director or Trading Representative furnishing SGX-ST with:—(a) an explanation of how conflicts of interest that may arise from the dual appointments have been addressed, and(b) an undertaking to disclose to customers the directorship as and when necessary for the discharge of the Approved Executive Director's or Trading Representative's fiduciary responsibility; and(2) the Trading Member advising SGX-ST that it is aware of the directorship and is satisfied that conflicts of interest have been sufficiently addressed.4 An Approved Executive Director or Trading Representative must inform SGX-ST of the proposed appointment in accordance with SGX-ST Rule 6.2.3 and Rule 7.5.6 respectively.5 Possible conflicts of interest that the Approved Executive Director or Trading Representative may need to consider and address under Item 3 above include:—(1) When an Approved Executive Director or a Trading Representative is in a position to influence the trading decision of his customers and would recommend the listed company of which he is a director, how does he ensure unbiased advice and full disclosure to his customer?(2) When an Approved Executive Director or a Trading Representative possesses information about a listed company that is not generally available to the public and is in a position to influence research recommendations or corporate finance activities, how does he fulfill his obligations in respect of the listed company and Trading Member?6 A Trading Member may appoint a director of an SGX-ST listed company as a non-executive director (but not as an executive director).
Under SGX-ST Rule 4.6.12, the Member must inform SGX-ST of the appointment within 7 days.7 An Approved Executive Director or Trading Representative who is a director of an SGX-ST listed company must keep a record of his share transactions in that company. If the Approved Executive Director or Trading Representative is required to maintain a register of securities, that will suffice. SGX-ST may inspect the record at any time or take extracts of it.
Directive No. 2 — Remisiers Working in Teams
Dates Cross Reference Enquiries Amended on
3 April 20083 April 2008.
Please contact Member Supervision:—
Facsimile No : 6538 8273
E-Mail Address: email@example.com We are pleased to inform Trading Members that following consultation with the Monetary Authority of Singapore, Remisiers can now operate in teams and enter orders for each other's customers. Trading Members and their Remisiers who wish to engage in such arrangements must observe the following:—(1) Prior to commencement of any team arrangements, Trading Members must approve the teams and furnish SGX-ST with the names of Remisiers who operate in teams and any subsequent updates.(2) If a customer's order is passed along a chain of Remisiers, each Remisier must record from and to whom he receives and transmits the order, and the time of such receipt and transmission. Trading Members must ensure that the team Remisiers do not trade ahead of their customers.(3) Trading Members must keep customers informed of the team arrangements, and give them the option not to be serviced by Remisiers working in teams. Trading Members should also keep their customers informed of any changes to team compositions.(4) Remisiers must be jointly and severally liable if customers' losses are not recovered.(5) Trading Members must establish in writing the terms and conditions of each team arrangement with its Remisiers. The terms and conditions must include how possible disputes amongst remisiers working in teams are resolved. Possible disputes that may arise from team arrangements include those in respect of commission allocation, trading errors, and overtrading.(6) Trading Members must ensure that their Banker's Guarantees are enforceable.(7) Trading Members must ensure that Remisiers working in teams will not compromise their compliance with all relevant legislation and regulations.2 Team arrangements increase the risk of a single customer or the team trading beyond the trading limit imposed. In this respect, Trading Members should closely monitor the team to ensure that customers' and Remisiers' trading limits are not exceeded, especially in the case of trades not executed on the Trading System which are not captured real time in the Trading System. Trading Members should also conduct frequent reviews of team operations to ensure that trading irregularities do not occur.
Directive No. 3 — Obligations of a Designated Market-Maker
Dates Cross Reference Enquiries Added on
1 July 20051 July 2005
and amended on
3 April 20083 April 2008 and 27 May 201327 May 2013.
Rule 5.5 Please contact Member Supervision:—
Facsimile No : 6538 8273
E-Mail Address: firstname.lastname@example.org
1. Bid and Offer Quotations1.1 In accordance with Rule 5.5.3, a Designated Market-Maker must publish on the Trading System competitive bid and offer quotations:—(a) on a continuous basis or in such manner as SGX-ST prescribes to provide for an adequately liquid market (with suitable disclosure to investors);(b) within the maximum spread; and(c) for not less than the minimum quantity that SGX-ST prescribes.1.2 In the event a Designated Market-Maker ceases to make bid and offer quotations (whether due to foreseen or unforeseen circumstances), it must:—(a) immediately notify SGX-ST of the cessation as well as the reasons for it; and(b) make a public announcement of the cessation at the same time.1.3 Upon resumption, the Designated Market-Maker must similarly notify SGX-ST and make a public announcement at the same time. At the appropriate juncture, the Designated Market-Maker must make a public announcement of the reasons for cessation of market-making.
2. Adequate Internal Control Systems2.1 A Designated Market-Maker must establish and maintain adequate internal control systems to ensure smooth operation of its market-making activities.2.2 A Designated Market-Maker shall pre-notify SGX-ST of any change to its internal control systems which may affect the carrying out of its obligations stipulated under paragraph 1.2.3 SGX-ST reserves the right to review current or impose additional requirements if it is not satisfied with the internal control systems of the Designated Market-Maker.
Directive No. 4 — Audit Trails and Records
1. Introduction1.1 In accordance with Rule 12.1.1, a Trading Member must maintain proper records and audit trails to evidence compliance with the Rules, and in accordance with the requirements in the Securities and Futures Act, Securities and Futures Regulations, and the Rules.
2. Storage of Audit Trail Data2.1 The Trading Member must keep data and records such that they are easily retrievable by authorised personnel and are stored securely such that no tampering occurs. Backups of records must be kept at a location separate from the original records.2.2 The Trading Member must check data and records for quality and accuracy on an on-going basis and correct any quality or accuracy defects detected.2.3 The following are examples of proper procedures in maintaining records and audit trails:—(a) for electronic storage of audit trail data :(i) the Trading Member is able to store or download the data in text delimited or ASCII format or such other format that is readable by SGX-ST;(ii) the Trading Member is able to print out the data in hard copies;(iii) the Trading Member has proper back-up controls for its data and records;(iv) the order management system has dated and clocked all data files placed on storage media to reflect the computer run time of the file; and(b) for non-electronic storage of audit trail data, the Trading Member has paper records showing all the actions of an order (from the point the order is entered) and the respective times and dates, and there are paper records to reflect the print time and date.
3. Audit Trail of Transactions3.1 A Trading Member must produce to SGX-ST, if asked, a complete audit trail of transactions, from the receipt of an order to its settlement. Unless otherwise required by SGX-ST, for trades and orders which occurred within the 6 month period immediately before the request, the records must be provided to SGX-ST immediately, and for trades and orders which occurred more than 6 months prior to the request, the records must be provided to SGX-ST no later than two business days from the date of request.3.2 For a complete audit trail of transactions, a Trading Member must ensure that the following records are captured, where applicable:
Record of all Fields Relating To Order Entry
1. SGXAccess Connection ID 2. Trader ID and name 3. Client ID and name — from customer account carried on the books of the Trading Member 3A. Trading Account code 3B. Position Account code 4. User ID and name — used to log into Trading Member's systems 5. Order ID — assigned by the Trading System 6. Order type — eg good-till-cancelled order, all-or-none order, etc 7. Buy/sell 8. Counter name and quantity to be bought/sold 9. Order price — including original trigger price for stop orders 10. Settlement instructions — eg settlement with CPF funds, contra etc 11. Forced key usage 12. Flow of order — if order passes through multiple systems prior to reaching the market 13. Identity of order reviewer — if any 14. Description of amendments made — if any 15. Date and time of order entry, and of any actions taken relating to the order — including transmission, rejection, amending, routing, filtering, execution, withdrawal, etc ,and should include orders that are progressively released. 16. Error messages and subsequent actions taken by the user, reviewer or system 17. Status of order — such as the order being partially filled, fulfilled, unfilled, withdrawn, amended, rejected, etc 18. Executed order number — assigned by the Trading System 19. Traded price — for executed orders 20. Counter name and quantity bought/sold — for executed orders 21. Counterparty Trading Member identity — for executed orders 22. Orders and trades in Trading Member records not stored electronically — to be referenced to Order ID and executed order numbers assigned by the Trading System 23. Any other relevant records/instructions3.3 For record of times required under the Rules, the Trading Member must ensure that:—(a) the record of times should be to the highest level of precision achievable by the operating system and such record must be accurate at least to the second;(b) the times captured must not use a clock that can be modified by the person entering the order; and(c) the time in the order management system should be synchronized with the GPS time adopted by SGX-ST. If it is not feasible to synchronize the times, the Trading Member must maintain on record the time difference at the start of each Trading Day so as to facilitate the reconciliation of audit trail logs during audit and security incident investigations.
Directive No. 5 — Adequacy of Systems
1. Introduction1.1 In accordance with Rule 4.6.22, a Trading Member must ensure that its systems and connections to the Trading System operate properly, and have adequate and scalable capacity to accommodate trading volume levels.
2. Planning and Assessment Programs to Ensure Adequacy2.1 In ensuring the adequacy of systems and connections to the Trading System, Trading Members should establish comprehensive planning and assessment programs to test system operation, capacity and security. Trading Members should also have in place arrangements for the employment of appropriate technical expertise to maintain and operate systems and connections to the Trading System.2.2 The scope of such programs should cover:—(a) the establishment of capacity estimates for systems performing automated order routing, execution and market data functions. Such estimates should be based on a suitably long look-back period and historical activity;(b) assurance that the system and its functions, including risk controls and error-prevention alerts, have been tested in accordance with prudent business practices before use and following any material change;(c) periodically conducting capacity stress tests to determine the behaviour of automated systems under a variety of simulated conditions;(d) seeking on a periodic basis the assessment of independent reviewers with regard to whether Trading Members' systems are performing adequately and whether these systems have adequate security. Such independent reviewers may be any persons not involved in the operation of Trading Members' systems who have sufficient technical expertise; and(e) implementation of policies for the hiring and training of qualified technical personnel.2.3 The programs described in paragraph 2.2 may be established under outsourcing arrangements where appropriate. Members continue to be responsible for ensuring that the respective requirements are adequately met under the outsourcing arrangements.
Directive No. 6 — Additional Obligations in respect of American Depository Receipts
Issue Date Cross Reference Enquiries — —1 A Trading Member must disclose the risks pertaining to trading in American Depository Receipts ("ADRs") quoted on GlobalQuote in media which the Trading Member may produce in relation to ADRs for its customers. These media include, but are not limited to:—(1) investor education programs in relation to ADRs organised by the Trading Member (including seminars, talks, classes, etc.);(2) website(s) in relation to ADRs created or maintained by the Trading Member; and(3) marketing material(s) in relation to ADRs produced by the Trading Member (including brochures, pamphlets, flyers, etc.).2 To facilitate Trading Members' compliance with this Directive, the Exchange will provide Trading Members with a list of risk factors pertaining to trading in ADRs.3 In the Directive:—(1) "American Depository Receipt" or "ADR" means a U.S. security that represents ownership of shares in an organisation; and(2) "GlobalQuote" means a quotation board operated by SGX-ST.