Chapter 3 — Conduct of Members, Approved Traders and Representatives

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Futures Trading Rules

Schedules Schedule A

Chapter 3 — Conduct of Members, Approved Traders and Representatives

Rule Violation

Whether composition may be offered

Composition Amount which may be Offered by the Exchange, where the Exchange has Determined the Member, Approved Trader and/or Registered Representative to be Liable

Mandatory minimum penalty imposable by the DC

Rule Chapter/Number

Brief Description of Rule

Members

Approved Traders

Registered Representatives

1st Violation

2nd Violation

3rd Violation

1st Violation

2nd Violation

3rd Violation

1st Violation

2nd Violation

3rd Violation

Chapter 3 — Conduct of Members, Approved Traders and Representatives

3.2

Duties Applicable to All Members, Approved Traders & Registered Representatives

3.2.1

Members, Approved Traders and Registered Representatives to observe general duties of integrity, fair dealing and care

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

$1,000 – $3,000

$3,000 – $6,000

$6,000 – $8,000

$1,000 – $3,000

$3,000 – $6,000

$6,000 – $8,000

N.A.

3.2.2

Corporate Member to ensure that constitutive documents conform to this Rules

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.2.3

Member to immediately report change in Member's circumstances

[Unless otherwise specified in this Schedule]

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.2.3A

r/w Regulatory Notice

Member to comply with such reporting and/or other requirements pertaining to specific Contracts as may be prescribed by the Exchange

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.2.4

Member to immediately inform the Exchange of the stipulated events

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.2.5

Member not to carry on business on any market if prohibited by the Exchange

Not Compoundable

N.A.

$10,000

Member to comply with the rules and regulations of other markets on which a Member carries on business

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.2.6

Member to promptly settle all margin liabilities

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.2.7

Member not to carry speculative long and short positions for the same Contract Month

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.2.8

Member, Approved Trader and Registered Representative to comply with advertising guidelines

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

$1,000 – $3,000

$3,000 – $6,000

$6,000 – $8,000

$1,000 – $3,000

$3,000 – $6,000

$6,000 – $8,000

N.A.

3.3

Duties of Members Undertaking Agency Trades

3.3.1

Member to comply with customer account & Know-Your-Customer Requirements

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.2

Member to comply with management approval requirement for opening customer accounts

Compoundable

$500

$1,000

$2,000

N.A.

3.3.3

Member to obtain written acknowledgement of Risk Disclosure Statement for matters set out in Rules 3.3.3(b)(i), (b)(ii) and/or (b)(iii).

Not Compoundable

N.A.

$10,000.

Member to obtain written acknowledgement of Risk Disclosure Statement as prescribed under Rule 3.3.3(b)(iv) read with Regulatory Notice 3.3.3.

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.4

Member to execute orders only upon receipt from a Customer, unless otherwise authorised by the Customer

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.5

Member to provide Internet Trading Customers with adequate information, guidance and training with respect to the stipulated matters

Compoundable

$500

$1,000

$2,000

N.A.

3.3.6

Member to accept orders only via Registered Representatives

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.7

Member or Registered Representative not to accept orders without executing them. Approved Trader to execute orders in accordance with the applicable rules

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

$1,000 – $3,000

$3,000 – $6,000

$6,000 – $8,000

$1,000 – $3,000

$3,000 – $6,000

$6,000 – $8,000

N.A.

3.3.8

Registered Representative to immediately record an order, amendment or cancellation on an Order Form, or in the manner prescribed by the Relevant Regulatory Authority, as applicable, unless immediately entered by an Approved Trader

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

$1,000 – $3,000

$3,000 – $6,000

$6,000 – $8,000

N.A.

Member to notify Exchange of changes to requirements prescribed by the Relevant Regulatory Authority

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

Registered Representative to comply with additional requirements prescribed by the Exchange

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

$1,000 – $3,000

$3,000 – $6,000

$6,000 – $8,000

N.A.

3.3.8A

Member to have in place processes to prevent unauthorised changes to order info

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.9

Member to comply with the Conduct of Business Regulations or such requirements prescribed by the Relevant Regulatory Authority, as applicable, in respect of statement of accounts and contract notes

Not Compoundable

N.A.

$10,000

Member to provide statement of account and contract note at Exchange's request

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

Member to obtain prior consent or to comply with such requirements prescribed by the Relevant Regulatory Authority, as applicable, for electronic issuance of statement of account or contract note

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

Member to notify Exchange of changes to requirements prescribed by the Relevant Regulatory Authority

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

Member to comply with additional requirements prescribed by the Exchange¹¹

Not Compoundable

N.A.

$10,000

3.3.10

Member to meet the stipulated fiduciary obligations to its Customers and to comply with segregation requirements under the SFA and Conduct of Business Regulations or to comply with segregation requirements prescribed by the Relevant Regulatory Authority, as applicable

Not Compoundable

N.A.

$10,000

Member to notify Exchange of changes to requirements prescribed by the Relevant Regulatory Authority

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

Member to comply with additional requirements prescribed by the Exchange¹²

Not Compoundable

N.A.

$10,000

3.3.11

Member not to trade or accept any Customer's monies or assets after insolvency

Not Compoundable

N.A.

$10,000

3.3.12

Member to comply with the stipulated requirements in relation to customer margins

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.13

[deleted]

3.3.14

Member to apply Inter-Exchange Cross Margining, only if the stipulated conditions are met

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.15

Member to comply with the requirements for the transfer of error trades to House Account

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.16

Member to enter into a give-up arrangement only if give-up agreement is executed and to comply with the stipulated requirements for unsuccessful give-up trades

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.17

Member to comply with the requirements for reporting of account identity

Compoundable

$500

$1,000

$2,000

N.A.

3.3.18

Member to comply with the requirements for the reporting of open positions

Compoundable

$500

$1,000

$2,000

N.A.

3.3.19

Member to comply with the requirements and procedures prescribed by the Exchange for Omnibus Accounts

[Unless otherwise specified in this Schedule]

Compoundable

$500

$1,000

$2,000

N.A.

3.3.20

Member to comply with limits on Omnibus Accounts imposed by the Exchange

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.21

Member to obtain the required disclosures from the Omnibus Account Holder

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

Member to comply with the orders of the Exchange in the event of an Omnibus Account Holder's failure to disclose

Not Compoundable

N.A.

$10,000

Member to ensure that Omnibus Account Holders are aware of this Rule 3.3.21

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.22

Member to produce audit trail of transactions when requested by the Exchange

Not Compoundable

N.A.

$10,000

3.3.23(a)

Member to ensure that data and records are made and kept in a way that is easily retrievable

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.23(b)

Member to keep data and records for the minimum period prescribed by the relevant law and regulatory requirements

Not Compoundable

N.A.

$10,000

3.3.23(c)

Member to make data and records available to the Exchange in a timely manner when requested

Not Compoundable

N.A.

$10,000

3.3.23A(a)

Members, Approved Traders and Registered Representative s to maintain a register of securities in accordance with SFA

Not Compoundable

$10,000

3.3.23A(b)

Members, Approved Traders and Registered Representative s to produce the register for inspection if requested by the Exchange

Not Compoundable

$10,000

3.3.23A(c)

Members, Approved Traders and Registered Representative s to permit the Exchange to take extracts of the register

Not Compoundable

$10,000

3.3.24

Member to comply with all information technology and data security requirements

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.25

Member to issue unique ID tags & passwords

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.26

Member to make and keep as record, computations of financial & capital requirements

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.27

Member to submit financial statements or other infomration as required by the Exchange

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

Member to comply with the directions of the Exchange thereafter

Not Compoundable

N.A.

$10,000

3.3.28

Member to comply with the requirements relating to auditor certification of its accounts

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.29

Member to cause auditor to report the stipulated information to the Exchange

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.30

Member to satisfy the applicable approval or notification requirements in relation to any change of auditors

Compoundable

$500

$1,000

$2,000

N.A.

3.3.31

General Trading Member not to act as guarantor

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

Member that holds a licence specified in Rule 2.4.1(b) to satisfy the notification requirements in relation to acting as guarantor

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.32(a)

General Trading Member to satisfy the Other Operational Risk Requirement in respect of opening a Foreign Branch

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.32(b)

General Trading Member to obtain the necessary approval from the Authority and the Exchange in respect of opening a Foreign Branch

Not Compoundable

N.A.

$10,000

3.3.32(c)

General Trading Member to obtain approval from the regulator in the relevant foreign jurisdiction in respect of opening a Foreign Branch and to furnish documentation of such approval to the Exchange

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.32(d)

General Trading Member to obtain approval from its, or its parent company's primary regulator in respect of opening a Foreign Branch and furnish documentation of such approval to the Exchange

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.32(e)

General Trading Member to comply with any other requirements imposed by the Exchange on Foreign Branch

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.32(f)

General Trading Member to ensure that activities of the Foreign Branch fall within the Regulated Activitities which the General Trading Member is authorised to conduct

Not Compoundable

N.A.

$10,000

3.3.32(g)

General Trading Member to submit the required undertaking to the Exchange, in relation to its Foreign Branch

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.32(h)

General Trading Member to conduct the necessary internal audit on th Foreign Branch and submit a copy of the internal audit report to the Exchange

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.3.33

Member that holds a licence specified in Rule 2.4.1(b) to comply with such requirements prescribed by the Relevant Regulatory Authority and principles of good business practice in relation to Rule 3.3.1, 3.3.4, 3.3.15 and 3.3.31¹³

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

Compoundable

$500

$1,000

$2,000

N.A.

3.4

Trading Practices & Conduct Rules of Members, Approved Traders & Registered Representatives

3.4.1

Member, Approved Trader or Registered Representative not to manipulate the market

Not Compoundable

$30,000

3.4.2

Member, Approved Trading or Registered Representative not to engage in churning

Not Compoundable

$30,000

3.4.3

Member, Approved Trader or Registered Representative not to engage in false trading, bucketing, fraudulent inducement to trade or employment of fraudulent device

Not Compoundable

$30,000

3.4.3A

Member to have to have in place processes to review orders and trades for suspicious trading behaviour

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.4.4

Member, Approved Trader or Registered Representative to immediately inform Exchange of prohibited trading practices

Not Compoundable

$10,000

3.4.5

Member, Approved Trader or Registered Representative not to disseminate false or misleading information

Not Compoundable

$30,000

3.4.6(a)

Member, Approved Trader or Registered Representative not to permit the use of the Member's facilities or privileges by any other person in the stipulated manner

Not Compoundable

$30,000

3.4.6(b)

Member, Approved Trader or Registered Representative not to engage in conduct which impairs dignity of the good name of the Exchange.

Not Compoundable

$10,000

3.4.6(c)

Member, Approved Trader or Registered Representative not to commit acts substantially detrimental to the interest of Exchange

Not Compoundable

$10,000

3.4.6(d)

Member, Approved Trader or Registered Representative not to refuse to comply with an order of the Exchange or the Disciplinary Committee or Appeals Committee

Not Compoundable

$30,000

3.4.6(e)

Member, Approved Trader or Registered Representative not to refuse to comply with a final arbitration award

Not Compoundable

$30,000

3.4.6(f)

Member, Approved Trader or Registered Representative to answer Customers' complaints promptly and in appropriate detail

Compoundable

$500

$1,000

$2,000

$250

$500

$1,000

$250

$500

$1,000

N.A.

3.4.6(g)

Member, Approved Trader or Registered Representative not to commit fraudulent or dishonest act or any act of bad faith

Not Compoundable

$30,000

3.4.6(h)

Member, Approved Trader or Registered Representative not to act in a dishonourable or uncommercial manner

Not Compoundable

$10,000

3.4.6(i)

Member, Approved Trader or Registered Representative not to make a material misstatement to the Exchange or Disciplinary Committee or Appeals Committee or in any information supplied to Exchange

Not Compoundable

$20,000

3.4.6(j)

Member, Approved Trader or Registered Representative not to make or cause to be made a false or misleading entry into books, records, etc

Not Compoundable

$10,000

3.4.6(k)

Member, Approved Trader or Registered Representative not to omit to make material entry in any books, records, reports, etc

Not Compoundable

$10,000

3.4.6(l)

Member, Approved Trader or Registered Representative not to alter or destroy any books, records, reports, etc

Not Compoundable

$10,000

3.4.6(m)

Member, Approved Trader or Registered Representative not to use or reveal confidential information obtained by reason of participating in an investigative proceeding or hearing

Not Compoundable

$10,000

3.4.6(n)

Member, Approved Trader or Registered Representative not to refuse to appear before the Exchange or the Disciplinary Committee or Appeals Committee at a hearing or in connection with any investigation.

Not Compoundable

$10,000

3.4.6(o)

Member, Approved Trader or Registered Representative not to refuse to fully answer all questions or produce books and records at any audit, hearing or investigation

Not Compoundable

$10,000

3.4.7

Member, Approved Trader or Registered Representative not to disclose orders

Not Compoundable

$10,000

3.4.8

Member, Approved Trader or Registered Representative not to enter bids and offers other than in good faith

Not Compoundable

$10,000

3.4.9

Member, Approved Trader or Registered Representative not to engage in the prohibited acts in relation to fictitious transactions without change in ownership

Not Compoundable

$10,000

3.4.10

Member not to execute any trade beyond any limits imposed and to comply with the prescribed requirements relating to overtrading

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

N.A.

3.4.11

Member, Approved Trader or Registered Representative not to knowingly take advantage of an error

Compoundable

$2,000 – $4,000

$4,000 – $7,000

$7,000 – $10,000

$1,000 – $3,000

$3,000 – $6,000

$6,000 – $8,000

$1,000 – $3,000

$3,000 – $6,000

$6,000 – $8,000

N.A.

3.4.12

Member, Approved Trader or Registered Representative not to be convicted of any offence relating to fraud, any act of bad faith, dishonest, dishonourable or uncommercial conduct

Not Compoundable

$10,000

3.4.13

Member, Approved Trader or Registered Representative not to engage in front running

Not Compoundable

$10,000

3.4.14

Member, Approved Trader or Registered Representative not to knowingly trade against Customers' orders

Not Compoundable

$10,000

3.4.15

Members, Approved Traders and Registered Representative s not to participate in any prohibited market conduct or in any insider trading