4.6 Obligations of A Trading Member

4.6.1 Compliance

A Trading Member must:—

(1) comply with the Rules, and any Directives SGX-ST prescribes; and

(2) continue to satisfy the admission criteria.

4.6.2 Acts as Principal

A Trading Member contracts as principal as regards the other Trading Member when it trades on SGX-ST.

4.6.3 Contracts

(1) A Trading Member enters contracts in accordance with the Rules, Clearing Rules and any Directives SGX-ST prescribes.

(2) A Trading Member must honour all contracts:—

(a) entered by or through it on the Trading System; and

(b) via Direct Business.

Amended on 3 April 2008 3 April 2008.

4.6.4 Good Business Practice

A Trading Member must adhere to the principles of good business practice in the conduct of its business.

4.6.5 Responsibility to SGX-ST

A Trading Member is responsible to SGX-ST for:—

(1) any liability to SGX-ST of its Directors, Officers, Trading Representatives, employees and agents; and

(2) the acts and omissions of its Directors, Officers, Trading Representatives, employees and agents.

4.6.6 Supervision

A Trading Member must supervise its Trading Representatives, employees and agents.

4.6.7 Establish Procedures and Systems

A Trading Member must:—

(1) establish and maintain procedures and systems to prevent any breach of the Rules and Directives by its Directors, Officers, Trading Representatives, employees or agents;

(2) establish and maintain adequate internal control systems, including for reconciliation of physical scrip for securities traded on SGX-ST at least monthly; and

(3) ensure that its Trading Representatives, employees, agents or any other person carrying out or enforcing its procedures and systems reasonably discharges his or her duties and obligations.

Amended on 19 May 2014 19 May 2014.

4.6.7A Risk Management and Financial Controls

(1) A Trading Member must have written policies and procedures on risk management controls and demonstrate compliance in the following areas:—

(a) monitoring the credit risks arising from the acceptance of all orders on at least a daily basis;

(b) ensuring that:

(i) automated pre-execution risk management control checks are conducted on all orders, including credit control checks on all orders;

(ii) there are appropriate internal controls for the setting and modification of any parameters of such automated pre-execution risk management control checks;

(c) having error-prevention alerts to bring attention to possible erroneous entries of quantity, price and other data fields; and

(d) defining and managing the Trading Member's sources of liquidity to ensure that there are sufficient liquidity facilities to meet settlement obligations.

(2) A Trading Member referred to in Rule 4.6.7A(1) must have automated processes in place to monitor at the firm level if the Trading Member is at risk of breaching capital and financial requirements and prudential limits on exposures to a single customer and a single security, so as to restrict trading activity or inject additional capital if necessary.

Refer to Practice Note 4.6.7A(2).

Added on 18 September 2012 18 September 2012 and amended on 15 March 2013 15 March 2013.

4.6.8 Change in Control

(1) A Trading Member must inform SGX-ST in writing as soon as it becomes aware of:—

(a) any transaction that will result in a change in the legal or beneficial ownership of 20% or more of the Trading Member's issued share capital, and any subsequent increase of 5% or more of the Trading Member's issued share capital; or

(b) any change that may have the effect of altering control of the Trading Member.

(2) If control of a Trading Member changes, SGX-ST may restrict or revoke the Trading Member's trading rights on any grounds described in Rules 4.2.4(2) to (6), (8) to (10) and (13).

(3) If SGX-ST revokes the Trading Member's trading rights, the Trading Member may, within 14 days after it is notified of SGX-ST's decision, appeal in writing to the SGX RegCo Board whose decision will be final.

Amended on 15 September 2017 15 September 2017.

4.6.9 Reporting

A Trading Member must inform SGX-ST in writing immediately if it or any of its Directors, Officers, Trading Representatives, employees, or agents:—

(1) breaches the Securities and Futures Act or Securities and Futures Regulations or any other relevant applicable laws and regulatory requirements relating to the regulation of organised markets and licenced entities;

(2) breaches the Rules or Directives;

(3) breaches any relevant law or regulation which governs that person's other business activities;

(4) breaches the rules of any other exchange;

(5) breaches any provision involving fraud or dishonesty, whether in or out of Singapore;

(6) breaches director's duties;

(7) is the subject of a written complaint involving an allegation of fraud or dishonesty, whether in or out of Singapore;

(8) is the subject of an investigation involving an allegation of fraud or dishonesty, whether in or out of Singapore;

(9) is the subject of any disciplinary action taken by the Trading Member involving suspension, termination, withholding of commissions, fines or any other significant limitation of activities;

(10) engages in conduct that has the effect of circumventing the Securities and Futures Act, Securities and Futures Regulations, any other relevant applicable laws and regulatory requirements relating to the regulation of markets and licenced entities, the Rules, or Directives;

(10A) has had its licence to conduct the relevant regulated activities suspended, revoked, or expired, or in the case where it is exempted from holding a licence, the Relevant Regulatory Authority withdraws the exemption or imposes conditions or restrictions on it in respect of the relevant regulated activities;

(11) engages in conduct which is inconsistent with the principles of good business practice;

(12) engages in conduct detrimental to the financial integrity, reputation or interests of SGX-ST , or markets established or operated by SGX-ST; or

(13) is insolvent, or has been issued a bankruptcy or winding up proceeding.

Notwithstanding the foregoing, SGX-ST may require a Trading Member to inform SGX-ST from time to time in respect of any other matters and in such form as SGX-ST determines.

Amended on 19 May 2014 19 May 2014 and 8 October 2018 8 October 2018.

4.6.10 Payment

A Trading Member must pay SGX-ST all fees, levies and charges SGX-ST prescribes. SGX-ST may reduce or waive any fee, levy or charge.

4.6.11 Approved Executive Director

A Trading Member must inform SGX-ST in writing at least 7 days before an Approved Executive Director ceases to act. If the cessation is with immediate effect, the Trading Member must inform SGX-ST in writing the same day.

4.6.12 Directors

A Trading Member must inform SGX-ST in writing of a change in the composition of its board of Directors within 7 days of the change.

4.6.13 Trading Representatives

A Trading Member must:—

(1) register with SGX-ST persons who deal in securities or trade in futures contracts as Trading Representatives (unless exempted by SGX-ST);

(2) where it engages a Remisier, enter into a written agency agreement with that Remisier. The agreement must address the following:—

(a) the amount of commission payable to the Remisier;

(b) the amount of security deposit to be given by the Remisier to the Trading Member;

(c) responsibility for any losses or liabilities as a result of any acts or omissions of the Remisier; and

(d) charges that may be levied by the Trading Member on its Remisier;

(3) inform SGX-ST in writing at least 7 days before a dealer converts to a Remisier or vice versa. SGX-ST may vary or waive the notice period; and

(4) [Deleted.]

(5) [Deleted.]

(6) inform SGX-ST in writing no later than the day on which the Trading Representative ceases to act. If the cessation is with immediate effect, the Trading Member must inform SGX-ST in writing the same day.

Amended on 3 April 2008 3 April 2008, 29 November 2010 29 November 2010 and 8 October 2018 8 October 2018.

4.6.14 Memorandum and Articles of Association

A Trading Member must inform SGX-ST in writing at least 7 days before any change to its Memorandum and Articles of Association takes effect.

4.6.15 Other Businesses

(1) A Trading Member must inform SGX-ST in writing at least 14 days before it engages in, or holds any substantial shareholding in, any other business.

(2) A Trading Member must ensure that the engagement (and any actions taken under it) or shareholding does not breach the Securities and Futures Act, Securities and Futures Regulations, the Rules, any Directives or any relevant law or regulation.

(3) A Trading Member must supply SGX-ST with any information SGX-ST requires regarding the engagement or acquisition of shareholding.

(4) If SGX-ST objects to the engagement or acquisition of shareholding, a Trading Member must not proceed with it. SGX-ST may extend the period specified in Rule 4.6.15(1). If extended, the Trading Member must not proceed with the engagement or acquisition of shareholding before the expiry of the extended period.

(5) If an engagement or shareholding, in SGX-ST's opinion, is detrimental to the financial integrity, reputation or interests of SGX-ST, the Trading Member concerned, or organised markets established or operated by SGX-ST, SGX-ST may require the Trading Member to end it.

(6) If SGX-ST objects to the engagement or acquisition of shareholding or requires a Trading Member to end it, the Trading Member may, within 14 days after it is notified of SGX-ST's decision, appeal in writing to the SGX RegCo Board whose decision will be final.

Amended on 15 September 2017 15 September 2017 and 8 October 2018 8 October 2018.

4.6.16 Register of Securities

(1) A Trading Member that holds a Capital Markets Services Licence must maintain a register of securities in accordance with the Securities and Futures Act. The register must include futures contracts.

(2) If asked by SGX-ST, a Trading Member must produce the register for inspection.

(3) A Trading Member must permit SGX-ST to take extracts of the register.

Amended on 3 April 2008 3 April 2008, 19 May 2014 19 May 2014, 29 December 2014 29 December 2014 and 8 October 2018 8 October 2018.

4.6.17 Business Name

A Trading Member must inform SGX-ST in writing at least 7 days before it effects any change in its business name or contact details.

4.6.18 Issue of Shares

A Trading Member must not issue or allot partly paid shares.

4.6.19 Voluntary Liquidation

A Trading Member must not commence voluntary liquidation without the prior written approval of SGX-ST.

4.6.20 Trading Member Ceases to Carry on Business

(1) Upon written request, SGX-ST may allow a Trading Member to cease carrying on business while retaining its membership for such period as SGX-ST specifies. Upon expiry of such period, the Trading Member must recommence business in Singapore.

(2) During the period of cessation of business, the Trading Member must not hold itself out or engage in any act that may give the impression that it is an active Trading Member.

(3) SGX-ST will waive continuing compliance of Rules 4.1.1(1) and (5) during the period the Trading Member ceases to carry on business.

Amended on 23 January 2009 23 January 2009 and 19 May 2014 19 May 2014.

4.6.21 Business Continuity Requirements

(1) A Trading Member must assess its business and operational risks and maintain adequate business continuity arrangements.

(2) A Trading Member must document its business continuity arrangements in a business continuity plan.

(3) A Trading Member's senior management shall be responsible for the Trading Member's business continuity plan. Sufficient awareness of the risks, mitigating measures and state of readiness must be demonstrated by way of an attestation to the Trading Member's Board of Directors. A Trading Member that holds a licence specified in Rule 4.1.1(b) shall comply with such requirements established by the Relevant Regulatory Authority, if any, and principles of good business practice in relation to this Rule 4.6.21(3).

(4) A Trading Member must review and test its business continuity plan regularly.

(5) A Trading Member must appoint emergency contact persons, and furnish the contact information of such persons to SGX-ST. The Trading Member's emergency contact persons must be contactable at all times, and must immediately notify SGX-ST in the event of emergencies.

Refer to Practice Note 4.6.21.

Added on 22 January 2009 22 January 2009 and amended on 19 May 2014 19 May 2014.

4.6.22 Adequacy of Systems

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.

Refer to Directive No. 5.

Added on 18 September 2012 18 September 2012.