SGX Rulebooks
Link copied to clipboard
Custom Print

2.5.1 Overview of Base Capital, Total Risk Requirement and Statutory Requirements

A Member is required to comply with the financial requirements set forth in Rule 2.5, including, where applicable, requirements for Base Capital, Net Head Office Funds, Adjusted Net Head Office Funds, Financial Resources and Aggregate Resources. "Financial Resources", "Base Capital", "Net Head Office Funds", "Adjusted Net Head Office Funds", "Total Risk Requirement", "Aggregate Indebtedness", and "Aggregate Resources" shall have the meanings ascribed to them under Chapter 8 of this Rules.

Amended on 25 August 200925 August 2009, 1 April 20141 April 2014 and 22 April 201922 April 2019.

2.5.2 Trading Members

The following requirements apply in relation to Trading Members:

(a) except for Rule 2.5.4, a Trading Member that engages solely in House Trades and Proprietary Trades of its Related Corporations is not subject to any financial requirements under Rule 2.5. However, in deciding whether to admit such Trading Member, the Exchange shall take into account matters such as the prospective Trading Member's financial standing, pending court proceedings and criminal records;
(b) a General Trading Member that holds a licence to engage in a Regulated Activity, shall at all times:
(i) maintain a Base Capital or Net Head Office Funds, as the case may be, of not less than $1 million;
(ii) not cause or permit its Financial Resources or Adjusted Net Head Office Funds, as the case may be, to fall below its Total Risk Requirement; and
(iii) not cause or permit its Aggregate Indebtedness to exceed 1200% of its Aggregate Resources.
(b1) a General Trading Member that holds a licence specified in Rule 2.4.1(b) shall at all times maintain a Base Capital of not less than $1 million;
(c) a Bank Trading Member shall at all times:
(i) maintain a Base Capital of not less than $1 million; and
(ii) comply with all applicable RRA Financial Requirements.

Amended on 25 August 200925 August 2009, 1 April 20141 April 2014 and 22 April 201922 April 2019.

2.5.3 [Rule has been deleted.]

Deleted on 25 August 200925 August 2009.

2.5.4 Additional Financial, Capital and Other Requirements Imposed by the Exchange or the Clearing House

The Exchange or the Clearing House may from time to time prescribe additional financial and capital requirements for any Member or category or group of Members. Without limiting the foregoing, the Exchange may prescribe with respect to particular Members, capital, financial and other requirements in excess of the requirements prescribed under the Act, relevant applicable laws and regulatory requirements relating to the regulation of markets and licenced entities, or this Rules with respect to volume, risk exposure of positions carried, risk concentration, margin policies, nature of business conducted or to be conducted, their memberships in any exchange or market, and such other matters as deemed fit by the Exchange.

Amended on 1 April 20141 April 2014.

2.5.5 Calculation of Financial Resources

In the calculation of Financial Resources, a corporate Member may include Qualifying Subordinated Loan(s), subject to such conditions and restrictions as prescribed under the Financial and Margin Regulations and in such form as prescribed by the Exchange or the Clearing House.*

* Refer to Annex A — Deed of Subordination (Term Loan)Annex A — Deed of Subordination (Term Loan) and Annex B — Deed of Subordination (Revolving Credit Facility)Annex B — Deed of Subordination (Revolving Credit Facility).

Amended on 25 August 200925 August 2009, 7 February 20147 February 2014 and 29 December 201429 December 2014.

2.5.6 Notification Requirements of General Trading Members

The following requirements apply in relation to material changes to Financial Resources or Adjusted Net Head Office Funds:

(a) a General Trading Member is required to immediately notify the Exchange in the event of any material changes to its Financial Resources or Adjusted Net Head Office Funds, as the case may be, including:
(i) an initial notification if its Financial Resources or Adjusted Net Head Office Funds, as the case may be, fall below 150% of its Total Risk Requirement;
(ii) a warning notification if its Financial Resources or Adjusted Net Head Office Funds, as the case may be, fall below 120% of its Total Risk Requirement;
(iii) if its Aggregate Indebtedness exceeds 600% of its Aggregate Resources; or
(iv) if its Financial Resources or Adjusted Net Head Office Funds, as the case may be, is reduced by more than 20% from the previously submitted monthly financial statement;
(b) if the Exchange is notified by a General Trading Member under this Rule 2.5.6 or otherwise becomes aware that a General Trading Member's Financial Resources or Adjusted Net Head Office Funds, as the case may be, has fallen or will fall below 120% of its Total Risk Requirement or such higher percentage as the Exchange may have imposed under Rule 2.5.4, the Exchange may direct that Member to comply with any or all of the requirements described under Regulation 7(3) of the Financial and Margin Regulations;
(c) if the Exchange is notified by a General Trading Member under this Rule 2.5.6 or otherwise becomes aware that a General Trading Member's Financial Resources or Adjusted Net Head Office Funds, as the case may be, has fallen or will fall below 150% of its Total Risk Requirement or such higher percentage as the Exchange may have imposed under Rule 2.5.4, the Exchange shall be entitled to require that Member to:
(i) submit its statements of assets and liabilities, Financial Resources, Total Risk Requirement, Aggregate Indebtedness, and such other statements as required by the Exchange at such interval and for such time frame as determined by the Exchange; and
(ii) operate its business in such manner and on such conditions as the Exchange may impose;
and
(d) if the Exchange is notified by a General Trading Member under this Rule 2.5.6 or otherwise becomes aware that a General Trading Member's Aggregate Indebtedness exceeds or will exceed 600% of its Aggregate Resources, or such lower percentage as the Exchange may have imposed under Rule 2.5.4, the Exchange may direct that Member to comply with any or all of the requirements described under Regulation 17(2) of the Financial and Margin Regulations.

Amended on 25 August 200925 August 2009 and 22 April 201922 April 2019.

2.5.6A Notification requirements of General Trading Members that hold a licence specified in Rule 2.4.1(b)

The following requirements apply in relation to material changes to the Base Capital requirements specified in Rule 2.5.2(b1):

(a) a General Trading Member that holds a licence specified in Rule 2.4.1(b) shall immediately notify the Exchange if it fails to meet or becomes aware that it will fail to meet the Base Capital requirements referred to in Rule 2.5.2(b1), or such higher Base Capital requirements as the Exchange may have imposed under Rule 2.5.4; and
(b) if the Exchange is notified by a General Trading Member that holds a licence specified in Rule 2.4.1(b) under this Rule or otherwise becomes aware that such General Trading Member has failed to meet the Base Capital requirements referred to in Rule 2.5.2(b1), or such higher Base Capital requirements as the Exchange may have imposed under Rule 2.5.4, the Exchange may refer the matter to the Disciplinary Committee, and may take such interim control measures, including but not limited to all or any of the following, as the Exchange deems fit and appropriate:—
(1) require the General Trading Member to operate its business activities on the Exchange subject to such restrictions or conditions as the Exchange decides;
(2) suspend the General Trading Member's business activities on the Exchange for a period the Exchange decides. The suspension may be announced to all General Trading Members. During the suspension, the General Trading Member:—
(a) must not enter into a new transaction without the approval of the Exchange;
(b) remains liable to settle all contracts outstanding at the time of suspension. However, it must not settle any transaction without the approval of the Exchange.
(3) require a Director to step down from day-to-day conduct of the business affairs of the General Trading Member on the Exchange; or
(4) appoint a person or persons (which may include a firm of auditors) as Manager to manage the business of the General Trading Member on the Exchange. The Exchange will fix the remuneration of the Manager, which must be paid by the General Trading Member. The General Trading Member is solely responsible for the Manager's acts and defaults. The Manager must carry out directions given by the Exchange in relation to the business of the General Trading Member, including carrying on the business of the General Trading Member in accordance with instructions.

Added on 1 April 20141 April 2014 and amended on 22 April 201922 April 2019.

2.5.6B Notification Requirements of Bank Trading Members

The following requirements apply in relation to material changes to the capital and financial requirements specified in Rule 2.5.2(c):

(a) a Bank Trading Member shall immediately notify the Exchange if it fails to meet or becomes aware that it will fail to meet the capital and financial requirements referred to in Rule 2.5.2(c), or such higher capital and financial requirements as the Exchange may have imposed under Rule 2.5.4, or if any event in relation to its regulatory capital and liquidity ratios that is required to be reported to its Relevant Regulatory Authority has occurred; and
(b) if the Exchange is notified by the Bank Trading Member under this Rule or otherwise becomes aware that a Bank Trading Member has failed to meet the capital and financial requirements referred to in Rule 2.5.2(c), or such higher capital and financial requirements as the Exchange may have imposed under Rule 2.5.4, or that a reportable event in relation to its regulatory capital and liquidity ratios has occurred, the Exchange may direct that Bank Trading Member to comply with any or all of the requirements described under Regulation 7(3) of the Financial and Margin Regulations, in respect of the Bank Trading Member's business that is governed by this Rules.

Added on 22 April 201922 April 2019.

2.5.7 Requirements Relating to Preference Shares, Unsecured Loans and Others for General Trading Members

The following additional financial requirements apply to General Trading Members:

(a) a General Trading Member that holds a licence to engage in a Regulated Activity shall comply with the obligations under the Financial and Margin Regulations relating to the issue of any preference share and repurchase or redemption of any preference share (other than any paid-up irredeemable and non-cumulative preference share capital), drawing down and repayment in part or in full of any Qualifying Subordinated Loan principal, making of any unsecured loan or advance, payment of any dividend or director's fees or increase in any director's remuneration, with the additional condition that in relation to the repurchase or redemption of any preference share (other than any paid-up irredeemable and non-cumulative preference share capital), repayment in part or in full of any Qualifying Subordinated Loan principal, making of any unsecured loan or advance, payment of any dividend or director's fees or increase in any director's remuneration, a General Trading Member shall ensure that the sum of its Financial Resources or Adjusted Net Head Office Funds, as the case may be, are more than 150% of its Total Risk Requirement; and
(b) a General Trading Member that holds a licence to engage in a Regulated Activity 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 the Exchange.
(c) A General Trading Member that holds a licence specified in Rule 2.4.1(b) shall notify the Exchange immediately of any action taken that has or may have a financial or capital impact on the General Trading Member and required to be reported to the Relevant Regulatory Authority, or in relation to the events set out in (a) and (b).

Amended on 25 August 200925 August 2009, 1 April 20141 April 2014 and 29 December 201429 December 2014.