3.10.1
Subject to the margin financing requirements of this Rule, a Trading Member who is licensed to conduct product financing may extend credit facilities to customers for transactions in Specified Products.
Added on 3 June 20193 June 2019.
3.10.2
SGX-ST may exempt a Remote Trading Member from compliance with Rules 3.10.3 to 3.10.16, subject to any other requirements that SGX-ST may impose, if SGX-ST is of the view that the Remote Trading Member is subject to requirements of its Relevant Regulatory Authority that are comparable to the requirements in those Rules.
Added on 3 June 20193 June 2019.
3.10.3
Margin financing arrangements shall be evidenced in the form of a written agreement executed between the Trading Member and the customer.
Added on 3 June 20193 June 2019.
3.10.4
If a Trading Member seeks to mortgage, charge, pledge or hypothecate the assets of any customer who operates a margin financing account (such account being an account carried on the books of the Trading Member) with it, it shall:
- do so only in respect of a sum not exceeding the amount owed by the customer to the Trading Member and without obligation to retain in its possession or control assets of like character;
- ensure that it is given the discretion to sell or dispose of the assets in any manner in order to meet with the prescribed margin financing requirements; and
- before mortgaging, charging, pledging or hypothecating a retail customer’s assets:
- inform the retail customer that the Trading Member may mortgage, charge, pledge or hypothecate the retail customer’s assets but only for a sum not exceeding the amount owed by the customer to the Trading Member;
- explain to the retail customer the risks of mortgaging, charging, pledging or hypothecating the retail customer’s assets; and
- obtain the retail customer’s written consent to mortgage, charge, pledge or hypothecate the retail customer’s assets.
Added on 3 June 20193 June 2019 and amended on 1 April 2025.
3.10.4A
A Trading Member must not, in relation to any assets or monies received from a retail customer, enter into any contract, arrangement or transaction of which the purpose or effect is to transfer any right, interest, benefit or title in those assets or monies to itself or any other person, unless:
- in the case of assets, the contract, arrangement or transaction is entered into in connection with borrowing or lending of the retail customer’s Specified Products;
- in the case of monies, the contract, arrangement or transaction is entered into in connection with lending of the retail customer’s Specified Products; and
- the Trading Member complies with the relevant laws in relation to the borrowing or lending (as the case may be) of the retail customer’s Specified Products.
Added on 1 April 2025
3.10.5
A Trading Member who provides margin financing must obtain margin from each customer in respect of any margin financing account (such account being an account carried on the books of the Trading Member) and in respect of any credit facility provided to the customer for Specified Products transactions. The margin deposited by customers with the Trading Member shall be in the form of acceptable collateral and such other instruments as SGX-ST may from time to time prescribe.
Added on 3 June 20193 June 2019.
3.10.7
- A Trading Member shall not cause or permit the equity in a customer’s margin financing account (such account being an account carried on the books of the Trading Member) to be 110% of the debit balance in the customer’s margin financing account or less.
- Where the equity in a customer’s margin financing account is 110% of the debit balance in his margin financing account or less, the Trading Member:
- shall immediately require the customer to provide additional margin in the margin financing account within two Market Days from the date of the notice to increase the equity in the customer’s margin financing account to more than 110% of the debit balance in the customer’s margin financing account; and
- shall not cause or permit any new transaction to be made in the customer’s margin financing account, unless such new transaction will increase the percentage of equity over debit balance in the customer’s margin financing account.
Added on 3 June 20193 June 2019 and amended on 1 April 2025.
3.10.8
Where the customer fails to provide additional margin as required by the Trading Member under Rule 3.10.7, the Trading Member shall have the discretion to take such action as it may deem appropriate, including, liquidating the Specified Products purchased via the margin financing account and/or liquidating all or any acceptable collateral deposited to bring the equity to more than 110% of the debit balance without notice to the customer.
Added on 3 June 20193 June 2019.
3.10.9
A Trading Member shall review all margin financing accounts carried on the books of the Trading Member daily to ensure that credit is not over-extended beyond the approved facility limits and that the margin financing requirements and limits prescribed in this Rule 3.10 are met at all times. The Trading Member shall establish and maintain a robust framework to govern the conduct of such reviews.
Refer to Practice Note 3.10.
Added on 3 June 20193 June 2019 and amended on 1 April 2025.
3.10.10
A Trading Member shall have the discretion to impose higher margin financing requirements on any of its customers and/or to prescribe more stringent provisions on its customers than the provisions of this Rule 3.10.
Added on 3 June 20193 June 2019.
3.10.11
A customer may withdraw cash or assets from his margin financing account carried on the books of the Trading Member provided that:
- such withdrawal does not cause the equity in his account to fall to 110% of the debit balance or less; and
- the amount of cash withdrawn does not exceed the amount of cash balance held in his margin financing account at the point of withdrawal.
Added on 3 June 20193 June 2019 and amended on 1 April 2025.
3.10.12
A Trading Member shall not cause or permit:
Added on 3 June 20193 June 2019.
3.10.13
All transactions in a margin financing account carried on the books of the Trading Member shall be on a ready basis. The margin financing account shall not be used to meet margin requirements in respect of Marginable Futures Contracts.
Added on 3 June 20193 June 2019.
3.10.14
In computing the market value of Specified Products bought and carried in a customer's margin financing account (such account being an account carried on the books of the Trading Member) and the market value of acceptable collateral, the Trading Member shall apply such applicable haircuts as SGX-ST may prescribe from time to time.
Added on 3 June 20193 June 2019.
3.10.15
SGX-ST shall have the absolute discretion upon notice to the Trading Members to vary any or all of the margin financing requirements stipulated in this Rule 3.11 or any of the haircuts in Rule 3.10.14, and impose such other requirements for margin financing transactions from time to time as it deems fit and appropriate.
Added on 3 June 20193 June 2019.
3.10.16
For the purposes of this Rule 3.10, the terms:
- "acceptable collateral", "debit balance", "equity", "free financial resources" and "margin exposure" each has the meaning ascribed to them in Regulation 24(6) of the SFR (Financial and Margin Requirements);
- “assets” in relation to a customer has the meaning ascribed to “customer’s assets” in Regulation 15 of the SFR (Licensing and Conduct of Business);
- “cash balance" includes unutilised cash deposits, and cash from sales proceeds or corporate action events; and
- “retail customer” has the meaning ascribed to it in Regulation 2 of the SFR (Licensing and Conduct of Business).
Added on 3 June 20193 June 2019 and amended on 1 April 2025.