Chapter 11 — Capital and Financial Requirements

11.1 Definitions and Interpretation

Amended on 29 December 2014 29 December 2014.

11.1.1

In this Chapter,

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Term	Meaning
A
"Adjusted net head office funds"	has the meaning ascribed to it in Regulation 2 of the SFR (Financial and Margin Requirements).
"Aggregate indebtedness"	has the meaning ascribed to it in Regulation 2 of the SFR (Financial and Margin Requirements).
"Aggregate resources"	means (1) in the case of a Trading Member incorporated in Singapore, its financial resources and qualifying letters of credit referred to in Rule 11.4.6 less its total risk requirement; and (2) in the case of a Trading Member incorporated outside Singapore that holds a capital markets services licence, its adjusted net head office funds and qualifying letters of credit referred to in Rule 11.4.6 less its total risk requirement.
"Average aggregate resources"	means the average of the aggregate resources on the last day of each of the three months preceding the previous month.
B
"Base capital"	(1) in the case of a Trading Member that holds a Capital Markets Services Licence, has the meaning ascribed to it in Regulation 2 of the SFR (Financial and Margin Requirements). (2) in the case of a Trading Member that holds a licence specified in Rule 4.1.1(1)(b), the sum of its paid-up ordinary share capital and unappropriated profit or loss;
C
"Capital Markets Services Licence"	has the meaning ascribed to it in the SFA.
"Counterparty risk requirement"	has the meaning ascribed to it in the Notice on Risk Based Capital Adequacy Requirements for Holders of Capital Markets Services Licences.
E
"Exchange"	means SGX-ST or any other market or organisation (whether an exchange, association, body corporate or unincorporated or otherwise) responsible for administering a market in securities, commodities, options, derivatives or any other financial instrument whose contracts are cleared by, or novated to CDP.
F
"Financial resources"	has the meaning ascribed to it in Regulation 2 of the SFR (Financial and Margin Requirements).
I
"Irredeemable and Non-Cumulative Preference Share Capital"	has the meaning ascribed to it in Regulation 2 of the SFR (Financial and Margin Requirements).
N
"Net head office funds"	has the meaning ascribed to it in Regulation 2 of the SFR (Financial and Margin Requirements).
[Deleted]	[Deleted]
O
"Operational risk requirement"	has the meaning ascribed to it in the Notice on Risk Based Capital Adequacy Requirements for Holders of Capital Markets Services Licences.
Q
"Qualifying Letter of Credit"	has the meaning ascribed to it in Regulation 2 of the SFR (Financial and Margin Requirements).
"Qualifying subordinated loan"	has the meaning ascribed to it in Regulation 2 of the SFR (Financial and Margin Requirements).
R
"Recognised group A securities exchange"	means an overseas securities exchange regulated by a financial services regulatory authority of a country or territory specified in Table 4 of Fourth Schedule of the SFR (Financial and Margin Requirements).
S
[deleted]	[deleted]
"SFA"	means the Securities and Futures Act (Cap. 289) or any subsidiary legislation promulgated under it or any statutory modification, amendment or re-enactment thereof for the time being in force, or any act or subsidiary legislation which may replace the SFA, and any reference to any provision of the SFA is to that provision as so modified, amended or re-enacted (or as contained in any subsequent act or legislation which may replace the SFA).
"SFR (Financial and Margin Requirements)"	means the Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licences) Regulations or any statutory modification, amendment or re-enactment thereof for the time being in force, or any regulations which may replace the SFR (Financial and Margin Requirements), and any reference to any provision of the SFR (Financial and Margin Requirements) is to that provision as so modified, amended or re-enacted (or as contained in any subsequent regulations which may replace the SFR (Financial and Margin Requirements).
"SGX-DC"	means Singapore Exchange Derivatives Clearing Limited.
"Singapore Government securities"	means securities issued or proposed to be issued by the Government, and includes— (a) any debenture, stock or bond issued or proposed to be issued by the Government; (b) any right or option in respect of any debenture, stock or bond referred to in paragraph (a); (c) book-entry Government securities as defined in section 2 of the Development Loan (1987) Act (Cap. 81A) or section 2 of the Government Securities Act (Cap. 121A); and (d) book-entry Treasury Bills as defined in section 2 of the Local Treasury Bills Act (Cap. 167).
T
"Total risk requirement"	has the meaning ascribed to it in Regulation 2 of the SFR (Financial and Margin Requirements).

Amended on 23 January 2009 23 January 2009, 19 May 2014 19 May 2014, 29 December 2014 29 December 2014 and 22 April 2019 22 April 2019.

Unless the context requires otherwise, where the terms defined in Rule 11.1.1 are defined in relation to a holder of a Capital Markets Services Licence, such definitions shall, with the necessary modifications, apply to a Trading Member, as those definitions apply to a holder of a Capital Markets Services Licence whether or not that Trading Member holds a Capital Markets Services Licence.

Added on 29 December 2014 29 December 2014.

11.1A Financial Requirement for Trading Members

11.1A.1

The following requirements apply in relation to Trading Members:—

(1) a Trading Member that holds a Capital Markets Services Licence shall at all times meet the base capital requirements prescribed under Rule 11.2;

(2) a Trading Member that holds a licence specified in Rule 4.1.1(1)(b) shall at all times meet the net liquid capital requirements prescribed under Rule 11.2A; and

(3) all Trading Members shall meet such capital, financial and other requirements that SGX-ST may impose under Rule 11.5.

Added on 19 May 2014 19 May 2014 and amended on 29 December 2014 29 December 2014.

11.2 Base Capital Requirement [Rule has been deleted.]

Deleted on 22 April 2019 22 April 2019.

11.2.1

(a) A Trading Member that holds a Capital Markets Services Licence shall not cause or permit:—

(1) where the Corporation is incorporated in Singapore, its base capital; or

(2) where the Corporation is incorporated outside Singapore, its net head office funds,

to fall below the base capital requirement.

(b) A Trading Member that holds a licence specified in Rule 4.1.1(1)(b) shall not cause or permit its base capital to fall below the base capital requirement specified in this Rule 11.2, or such other base capital requirement as SGX-ST may impose.

Amended on 29 December 2014 29 December 2014 and 22 April 2019 22 April 2019.

11.2.2

The base capital requirement of:—

(1) a Trading Member shall be at least $1 million,

(2) a Clearing Member shall be at least $5 million,

(3) a Clearing Member which is also a member of SGX-DC shall be at least $8 million.

11.2.3

If a Trading Member fails to comply or becomes aware that it will fail to comply with the base capital requirement prescribed under Rule 11.2, or such higher base capital requirement as SGX-ST may have imposed under Rule 11.5, it shall immediately notify SGX-ST.

11.2.4

(a) A Trading Member that holds a Capital Markets Services Licence shall not cause or permit:

(i) where the Trading Member is incorporated in Singapore, its base capital; or

(ii) where the Trading Member is incorporated outside Singapore, its net head office funds,

to at any time fall below the base capital requirement specified in this Rule 11.2, or such other base capital requirement as SGX-ST may impose. It shall be a breach of the Rules by the Trading Member if the base capital or, as the case may be, net head office funds fall(s) below such base capital requirement, whether or not the Trading Member makes or has made the notification specified in Rule 11.2.3.

(b) A Trading Member that holds a licence specified in Rule 4.1.1(1)(b) shall not cause or permit its base capital to at any time fall below the base capital requirement specified in this Rule 11.2, or such other base capital requirement as SGX-ST may impose. It shall be a breach of the Rules by the Trading Member if the base capital falls below such base capital requirement, whether or not the Trading Member makes or has made the notification specified in Rule 11.2.3.

SGX-ST may refer the matter to the Disciplinary Committee, and may take such interim control measures, including but not limited to do all or any of the following, as SGX-ST deems fit and appropriate:—

(1) require the Trading Member to operate its business subject to such restrictions or conditions as SGX-ST decides;

(2) suspend the Trading Member for a period SGX-ST decides. The suspension may be announced to all Trading Members. During the suspension, the Trading Member:—

(a) must not enter into a new transaction without the approval of SGX-ST;

(b) remains liable to complete all contracts outstanding at the time of suspension. However, it must not deliver any securities or settle any transaction without the approval of SGX-ST.

(3) require a Director to step down from day-to-day conduct of the business affairs of the Trading Member; and

(4) appoint a person or persons (which may include a firm of auditors) as Manager to manage the business of the Trading Member. SGX-ST will fix the remuneration of the Manager, which must be paid by the Trading Member. The Trading Member is solely responsible for the Manager's acts and defaults. The Manager must carry out directions given by SGX-ST in relation to the business of the Trading Member, including carrying on the business of the Trading Member in accordance with instructions.

Amended on 22 April 2019 22 April 2019.

11.2A [Rule has been deleted.]

Deleted on 22 April 2019 22 April 2019.

11.2A.1 [Rule has been deleted.]

Deleted on 22 April 2019 22 April 2019.

11.2A.2 [Rule has been deleted.]

Deleted on 22 April 2019 22 April 2019.

11.2A.3 [Rule has been deleted.]

Deleted on 22 April 2019 22 April 2019.

11.2A.4 [Rule has been deleted.]

Deleted on 22 April 2019 22 April 2019.

11.3 Financial Resources Requirement

This Rule 11.3 shall apply to a Trading Member that holds a Capital Markets Services Licence.

Amended on 19 May 2014 19 May 2014 and 29 December 2014 29 December 2014.

11.3.1

A Trading Member shall not cause or permit:—

(1) where it is incorporated in Singapore, its financial resources; or

(2) where it is incorporated outside Singapore, its adjusted net head office funds,

to fall below its total risk requirement.

Amended on 29 December 2014 29 December 2014.

11.3.2

Financial resources and adjusted net head office funds shall be calculated in the same manner as prescribed in Regulation 2 of the SFR (Financial and Margin Requirements).

Amended on 29 December 2014 29 December 2014.

11.3.3

Total risk requirement shall be calculated in the same manner as prescribed in the Notice on Risk Based Capital Adequacy Requirements for Holders of Capital Markets Services Licences.

Amended on 29 December 2014 29 December 2014.

11.3.4 [Rule has been deleted.]

Deleted on 29 December 2014 29 December 2014.

11.3.5

If a Trading Member fails to comply or becomes aware that it will fail to comply with the financial resources requirement prescribed under Rule 11.3, or such higher financial resources requirement as SGX-ST may have imposed under Rule 11.5, it shall immediately notify SGX-ST.

11.3.6

Regardless whether or not there has been any notification by a Trading Member under Rule 11.3.5, if the financial resources or adjusted net head office funds of the Trading Member, as the case may be, are below the total risk requirement prescribed under Rule 11.3 or such higher percentage of the total risk requirement as SGX-ST may have imposed under Rule 11.5, it shall be deemed a breach of a provision of the SGX-ST Rules by the Trading Member. SGX-ST may refer the matter to the Disciplinary Committee, and may take such interim control measures, including but not limited to do all or any of the following, as SGX-ST deems fit and appropriate:—

(1) require the Trading Member to operate its business subject to such restrictions or conditions as SGX-ST decides;

(2) suspend the Trading Member for a period SGX-ST decides. The suspension may be announced to all Trading Members. During the suspension, the Trading Member:—

(a) must not enter into a new transaction without the approval of SGX-ST;

(b) remains liable to complete all contracts outstanding at the time of suspension. However, it must not deliver any securities or settle any transaction without the approval of SGX-ST.

(3) require a Director to step down from day-to-day conduct of the business affairs of the Trading Member; and

(4) appoint a person or persons (which may include a firm of auditors) as Manager to manage the business of the Trading Member. SGX-ST will fix the remuneration of the Manager, which must be paid by the Trading Member. The Trading Member is solely responsible for the Manager's acts and defaults. The Manager must carry out directions given by SGX-ST in relation to the business of the Trading Member, including carrying on the business of the Trading Member in accordance with instructions.

11.3.7 Early Warning Requirement on Financial Resources

A Trading Member shall immediately notify SGX-ST if:—

(1) in the case where the Trading Member is incorporated in Singapore, its financial resources; or

(2) in the case where the Trading Member is incorporated outside Singapore, its adjusted net head office funds,

fall below 120% of its total risk requirement.

11.3.8

If SGX-ST is notified by a Trading Member under Rule 11.3.7 or becomes aware (whether or not there has been any notification by the Trading Member under Rule 11.3.7) that the Trading Member's financial resources or adjusted net head office funds, as the case may be, have fallen or will fall below 120% of its total risk requirement, or such higher percentage as SGX-ST may have imposed under Rule 11.5, SGX-ST shall be entitled to require the Trading Member to comply with any or all of the directions prescribed under Regulation 7(3) of the SFR (Financial and Margin Requirements).

11.3.9 Notification Requirement on Financial Resources

A Trading Member shall immediately notify SGX-ST if:—

(1) in the case where the Trading Member is incorporated in Singapore, its financial resources; or

(2) in the case where the Trading Member is incorporated outside Singapore, its adjusted net head office funds,

fall below 150% of its total risk requirement.

11.3.10

If SGX-ST is notified by a Trading Member under Rule 11.3.9 or becomes aware (whether or not there has been any notification by the Trading Member under Rule 11.3.9) that the Trading Member's financial resources or adjusted net head office funds, as the case may be, have fallen or will fall below 150% of its total risk requirement, or such higher percentage as SGX-ST may have imposed under Rule 11.5, SGX-ST shall be entitled to require the Trading Member to:—

(1) submit the statements of assets and liabilities, financial resources, total risk requirement, aggregate indebtedness, and such other statements as required by SGX-ST at such interval and for such time frame as determined by SGX-ST; and

(2) operate its business in such manner and on such conditions as SGX-ST may impose.

11.3.11 [Rule has been deleted.]

Deleted on 29 December 2014 29 December 2014.

11.4 Aggregate Indebtedness Requirement

This Rule 11.4 shall apply to a Trading Member that holds a Capital Markets Services Licence.

Amended on 19 May 2014 19 May 2014 and 29 December 2014 29 December 2014.

11.4.1

A Trading Member shall not cause or permit its aggregate indebtedness to exceed 1200% of its aggregate resources.

11.4.2

If a Trading Member fails to comply or becomes aware that it will fail to comply with the aggregate indebtedness requirement prescribed under Rule 11.4, or such lower percentage of aggregate indebtedness over aggregate resources as SGX-ST may have imposed under Rule 11.4, it shall immediately notify SGX-ST.

11.4.3

Regardless of whether or not there has been any notification by a Trading Member under Rule 11.4.2, if the aggregate indebtedness of the Trading Member exceeds 1200% of its aggregate resources prescribed under Rule 11.4, or such lower percentage of aggregate indebtedness over aggregate resources as SGX-ST may have imposed under Rule 11.5, it shall be deemed a breach of a provision of the SGX-ST Rules by the Trading Member. SGX-ST may refer the matter to the Disciplinary Committee, and may take such interim control measures, including but not limited to do all or any of the following, as SGX-ST deems fit and appropriate:—

(1) require the Trading Member to operate its business subject to such restrictions or conditions as SGX-ST decides;

(2) suspend the Trading Member for a period SGX-ST decides. The suspension may be announced to all Trading Members. During the suspension, the Trading Member:—

(a) must not enter into a new transaction without the approval of SGX-ST;

(b) remains liable to complete all contracts outstanding at the time of suspension. However, it must not deliver any securities or settle any transaction without the approval of SGX-ST.

(3) require a Director to step down from day-to-day conduct of the business affairs of the Trading Member; and

(4) appoint a person or persons (which may include a firm of auditors) as Manager to manage the business of the Trading Member. SGX-ST will fix the remuneration of the Manager, which must be paid by the Trading Member. The Trading Member is solely responsible for the Manager's acts and defaults. The Manager must carry out directions given by SGX-ST in relation to the business of the Trading Member, including carrying on the business of the Trading Member in accordance with instructions.

11.4.4 Early Warning for Aggregate Indebtedness Requirement

A Trading Member shall immediately notify SGX-ST if its aggregate indebtedness exceeds 600% of its aggregate resources.

11.4.5

If SGX-ST is notified by a Trading Member under Rule 11.4.4 or becomes aware (whether or not there has been any notification by the Trading Member under Rule 11.4.4) that the Trading Member's aggregate indebtedness has exceeded or will exceed 600% of its aggregate resources, or such lower percentage as SGX-ST may have imposed under Rule 11.5, SGX-ST shall be entitled to require the Trading Member to comply with any or all of the directions prescribed under Regulation 17(2) of the SFR (Financial and Margin Requirements).

11.4.6 Qualifying Letter of Credit

(1) For the purpose of Rule 11.4, a Trading Member may include 1 or more Qualifying Letter(s) of Credit in its calculation of aggregate resources, subject to the total amount payable under the Qualifying Letter(s) of Credit or 50% of the Trading Member's total risk requirement, whichever is lower.

(2) For the purpose of Rule 11.4.6(1), a Qualifying Letter of Credit is a legally enforceable and irrevocable letter of credit that is made:—

(a) (i) in the case of a Trading Member who is not a Clearing Member, in favour of SGX-ST; or (ii) in the case of a Trading Member who is also a Clearing Member, in favour of CDP; and

(b) issued by a bank approved by, and in a form acceptable to SGX-ST or CDP, as the case may be;

but does not include any letters of credit provided by the Clearing Member to satisfy Rule 7 of the Clearing Rules of CDP or any other requirement imposed by CDP.

(3) SGX-ST shall reserve the right to call on any of the letter(s) of credit made in favour of SGX-ST pursuant to Rule 11.4.6 and apply the proceeds thereof in respect of the Trading Member's default to SGX-ST.

Added on 29 December 2014 29 December 2014.

11.5 Powers to Impose Other Requirements

11.5.1

SGX-ST may prescribe for 1 or more Trading Members, capital, financial and other requirements in excess of the minimum prescribed under Chapter 11 herein on the basis of volume, risk exposure of positions carried, risk concentration, margin policies, nature of business conducted or to be conducted or its membership in any exchange or market and such other criteria as deemed necessary by SGX-ST.

11.6 [Rule has been deleted.]

Deleted on 30 May 2007 30 May 2007.

11.7 Exposure to Single Customer

This Rule 11.7 shall apply to a Trading Member that holds a Capital Markets Services Licence.

Amended on 19 May 2014 19 May 2014 and 29 December 2014 29 December 2014.

11.7.1

A Trading Member shall immediately notify SGX-ST if the Trading Member's exposure to a single customer exceeds 20% of its average aggregate resources. To reduce the Trading Member's risk exposure to a single customer, SGX-ST shall have the right to impose on the Trading Member such risk management measures as it deems necessary.

11.7.2

For the purpose of Rule 11.7.1, the full amount of the letter(s) of credit or any part thereof deposited pursuant to Rule 11.4.6 may be taken into account for the calculation of aggregate resources.

Amended on 29 December 2014 29 December 2014.

11.7.3

In this Rule, "exposure to a single customer" means:—

(1) in the case of securities carried in a customer's account (other than a margin financing account) carried on the books of a Trading Member::—

(a) for purchase contracts that remain unpaid:—

(i) where the securities purchased have not been delivered to the customer, the excess of the contracted price of the securities purchased by the single customer over the aggregate market value of the securities purchased and such other collateral, as prescribed by SGX-ST, which is held by the Trading Member less any amount due and payable by the Trading Member to him; and

(ii) where the securities purchased have been delivered to the customer, the excess of the contracted price of the securities purchased by the single customer over the aggregate market value of all his collateral, as prescribed by SGX-ST, which is held by the Trading Member less any amount due and payable by the Trading Member to him;

(b) for sale contracts for which delivery has not been made, the excess of the amount of the market value of the securities sold by the single customer over the aggregate of the market value of any of his collateral, as prescribed by SGX-ST, which is held by the Trading Member and the contracted sale price less any amount due and payable by the Trading Member to him;

(c) where the contracts referred to in Rule 11.7.3(1)(a) or (b) have been offset by a contra transaction on or before the due date, the exposure shall not include those amounts specified in Rule 11.7.3(1) (a) or (b) in respect of such contracts but shall instead include the amount of the contra loss, if any, on the date on which the contra transaction takes effect; and

(d) where the contracts referred to in Rule 11.7.3(1)(a) or (b) have been offset by a force-sale or buying-in transaction after the due date, the exposure shall not include those amounts specified in Rule 11.7.3(1) (a) or (b) in respect of such contracts but shall instead include the amount of the loss, if any, arising from the force-sale or buying-in transaction, on the date on which the transaction takes effect;

(1A) for the purposes of Rule 11.7.3(1) "securities" includes structured warrants;

(2) the amount of margin deficiency in the single customer's margin financing account carried on the books of the Trading Member as determined in accordance with the margin requirements specified by SGX-ST;

(3) the amount of margin deficiency in the single customer's options margin account carried on the books of the Trading Member as determined in accordance with the option margin requirements specified by SGX-ST;

(4) the excess of the amount owed by the single customer in his options trading account carried on the books of the Trading Member over the market value of options held;

(5) the amount of any unsecured interest owed by the single customer;

(6) the amount of any unsecured loan, advance and credit facility granted to the single customer;

(7) where the Trading Member has lent securities to the single customer or is acting as guarantor for the return of securities lent to the single customer, the excess of the amount of the market value of the securities lent to the single customer over the amount of the market value of collateral and cash deposited by the single customer;

(8) where the Trading Member has deposited collateral with the single customer in respect of securities lent by the single customer or is acting as guarantor for the return of collateral deposited with the single customer in respect of any securities lent by him, the excess of the amount of the market value of collateral and cash deposited with the single customer over the amount of the market value of securities lent by him; and

(9) the amount of deficiency in relation to margins required in any account of the single customer carried on the books of the Trading Member as determined in accordance with the margin requirements prescribed by the relevant exchange, clearing house or other such relevant financial institution.

Amended on 3 April 2008 3 April 2008, 23 January 2009 23 January 2009 and 1 July 2016 1 July 2016.

11.7.4

For the purposes of Rule 11.7.3, a security or futures contract is deemed to be carried in a customer's account (other than a margin account) carried on the books of the Trading Member on the contract date specified in the contract note in respect of the transaction in that security or futures contract or on the exercise date specified in the exercise notice in respect of an option in that security which has been exercised.

Amended on 23 January 2009 23 January 2009 and 1 July 2016 1 July 2016.

11.7.5

In this Rule:—

"single customer" means, in relation to a customer who is:—

(1) a person, that person and such group of persons who the first-mentioned person is able to control or influence;

(2) a Corporation, that Corporation and any other Corporation or group of Corporations which is or are deemed to be related to the first-mentioned Corporation pursuant to section 4(1) of the Companies Act; or

(3) a person, that person

(a) and any Corporation whose issued share capital is 50% or more owned by those persons mentioned in Rule 11.7.5(1) or those Corporations mentioned in Rule 11.7.5(2); or

(b) and any Corporation whose composition of board of directors is controlled by those persons mentioned in Rule 11.7.5(1); and for this purpose the composition of the board of directors shall be deemed to be controlled by those persons, if they, by the exercise of some power exercisable by them without the consent or concurrence or any other person, can appoint or remove all or a majority of the directors of that Corporation,

but shall not include the Trading Member itself.

11.7A Other Requirements for Exposure to Single Customer

11.7A.1

This Rule 11.7A shall apply to a Trading Member that holds a licence specified in Rule 4.1.1(1)(b). Such Trading Member shall have in place adequate tools and procedures to monitor its exposure to a single customer. SGX-ST shall have the right to require such Trading Member to demonstrate the adequacy of such tools and procedures as it deems necessary.

Added on 19 May 2014 19 May 2014.

11.7A.2

The Trading Member shall immediately notify SGX-ST if the Trading Member's exposure to a single customer exceeds its internal threshold.

Added on 19 May 2014 19 May 2014.

11.7A.3

In this Rule 11.7A, "single customer" and "exposure to a single customer" shall have the meaning ascribed to it in Rule 11.7.

Added on 19 May 2014 19 May 2014.

11.8 Exposure to Single Security

This Rule 11.8 shall apply to a Trading Member that holds a Capital Markets Services Licence.

Amended on 19 May 2014 19 May 2014 and 29 December 2014 29 December 2014.

11.8.1

A Trading Member shall immediately notify SGX-ST if the Trading Member's exposure to a single security exceeds:—

(1) in the case where the security is quoted on SGX-ST or any recognised group A securities exchange, 300% of its average aggregate resources;

(2) in all where the security is quoted other than as specified in Rule 11.8.1(1), 100% of its average aggregate resources;

(3) in the case where the security is approved for quotation on SGX-ST or any recognised group A securities exchange but has not, as yet, been so quoted:—

(a) 100% of the average aggregate resources of the Trading Member if its aggregate resources is less than $75 million; or

(b) 150% of the average aggregate resources of the Trading Member if its aggregate resources is $75 million or more,

Provided that the exposure under Rule 11.8.1(3) together with the exposure, if any, to securities already quoted, shall not exceed the limit specified in Rule 11.8.1(1); and

(4) 10% of its average aggregate resources if the security is unquoted, but shall not include any security issued by:—

(a) any subsidiary of the Trading Member which is established solely for the purpose of providing research, nominee, custodian or trustee services; or

(b) any other company which SGX-ST may approve.

11.8.2

To reduce a Trading Member's risk exposure to a single security, SGX-ST shall have the right to impose on the Trading Member such risk management requirements as it thinks fit.

11.8.3

For the purpose of Rule 11.8.1, the full amount of the letter(s) of credit or any part thereof deposited pursuant to Rule 11.4.6 may be taken into account for the calculation of aggregate resources.

Amended on 29 December 2014 29 December 2014.

11.8.4

For the purpose of Rule 11.8.1, "exposure to a single security" means:—

(1) the amount of the single security underwritten or sub-underwritten by or placed with a Trading Member, after deducting the amount which the Trading Member has sub-underwritten or placed with:—

(a) a bank licensed under the Banking Act (Cap. 19);

(b) a merchant bank approved as a financial institution under the Monetary Authority of Singapore Act (Cap. 186);

(c) a finance company licensed under the Finance Companies Act (Cap. 108);

(d) a company or society registered under the Insurance Act (Cap. 142) to carry on insurance business as an insurer;

(e) the holder of a Capital Markets Services Licence under the Securities and Futures Act for dealing in capital markets products for fund management;

(f) a financial institution outside Singapore which is licensed or regulated by a financial services regulatory authority in the country in which it is domiciled, and has a long-term credit rating of investment grade; and

(g) any other person, provided that:—

(i) full payment has been received by the Trading Member for the sub-underwritten, placed, sold or allotted amount; or

(ii) the sub-underwritten, placed, sold or allotted amount can be offset against collateral received by the Trading Member under a netting agreement.

(2) the book value of the single security carried long or the market value of the single security carried short in a Trading Member's own account carried on the books of the Trading Member;

(3) for outstanding options in the single security carried in a Trading Member's own options trading account carried on the books of the Trading Member:—

(a) the book value of options bought for the account;

(b) the excess of the market value of the underlying security over the exercise price of uncovered call options written for the account; and

(c) the excess of the exercise price of put options written for the account over the market value of the underlying security;

(4) in relation to the single security carried in a customer's cash account carried on the books of the Trading Member, the contract value of the single security to the extent that such amounts have not been paid for, or the market value of the single security to the extent that such securities have not been delivered, whichever is the higher;

(5) for outstanding options in the single security carried in a customer's options trading account carried on the books of the Trading Member:—

(a) the contract value of the options bought by the customer to the extent that such amounts have not been paid for;

(b) the excess of the market value of the underlying security over the exercise price of uncovered call options written by the customer; and

(c) the excess of the exercise price of put options written by the customer over the market value of the underlying security;

(6) the net amount of the single security borrowed or lent, as the case may be, by a Trading Member;

(7) in relation to the single security bought or carried, or deposited as collateral in the margin financing accounts carried on the books of the Trading Member, the margin exposure of a Trading Member to the single security as determined in accordance with the margin financing requirements prescribed by SGX-ST;

(8) the amount of interest receivable secured by the single security;

(9) the amount of loans and advances secured by the single security; and

(10) the amount under subscription by a Trading Member for its own account carried on the books of the Trading Member in relation to the single security which is approved for quotation on SGX-ST or any recognised group A securities exchange but has not, as yet, been so quoted.

Amended on 23 January 2009 23 January 2009, 29 December 2014 29 December 2014, 1 July 2016 1 July 2016 and 8 October 2018 8 October 2018.

11.8.5

For the purposes of this Rule, a security is deemed to be carried in a customer's cash account or a Trading Member's own account (such account being an account carried on the books of the Trading Member) on the contract date specified in the contract note in respect of the transaction in that security or on the exercise date specified in the exercise notice in respect of an option in that security which has been exercised.

Amended on 1 July 2016 1 July 2016.

11.8.6

For the purposes of this Rule, in calculating exposure in any particular security, all outstanding options exercisable into that security shall be included in such computation.

11.8.6A

For the purposes of Rule 11.8.4(2) and Rule 11.8.4(4), in calculating exposure in any particular security, all futures contracts with that security as an underlying shall be included in such computation.

Added on 3 April 2008 3 April 2008.

11.8.7

This Rule shall not apply to:—

(1) securities issued by the Singapore Government or any public authority in Singapore; and

(2) a Trading Member's arbitrage transactions.

11.8.8

For the purposes of this Rule, where a security quoted on SGX-ST or any recognised group A securities exchange has been suspended for more than 30 consecutive days, a Trading Member shall not permit its exposure to the security to increase in monetary value above the level subsisting on the thirtieth consecutive day of suspension until such time that the suspension has been lifted.

11.8.9

In this Rule:—

"single security" includes ordinary and preference shares, loan stocks, company warrants, structured warrants, transferable subscription rights, bonds, debentures, depository receipts, options and any other debt instruments or equity securities.

Amended on 3 April 2008 3 April 2008.

11.8A Other Requirements for Exposure to Single Security

11.8A.1

This Rule 11.8A shall apply to a Trading Member that holds a licence specified in Rule 4.1.1(1)(b). Such Trading Member shall have in place adequate tools and procedures to monitor its exposure to a single security. SGX-ST shall have the right to require such Trading Member to demonstrate the adequacy of such tools and procedures as it deems necessary.

Added on 19 May 2014 19 May 2014.

11.8A.2

The Trading Member shall immediately notify SGX-ST if the Trading Member's exposure to a single security exceeds its internal threshold.

Added on 19 May 2014 19 May 2014.

11.8A.3

In this Rule 11.8A, "single security" and "exposure to a single security" shall have the meaning ascribed to it in Rule 11.8.

Added on 19 May 2014 19 May 2014.

11.9 Margin Financing

11.9.1

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.

Amended on 23 January 2009 23 January 2009 and 8 October 2018 8 October 2018.

11.9.1A

(1) In the case of a Trading Member that holds a Capital Markets Services Licence, Rules 11.9.2 to 11.9.16 shall apply; and

(2) in the case of a Trading Member that holds a licence specified in Rule 4.1.1(1)(b), such requirements as may be prescribed by the Relevant Regulatory Authority shall apply. The Trading Member shall immediately notify SGX-ST on any changes to such requirements. Where no such requirements have been prescribed by the Relevant Regulatory Authority, Rules 11.9.2 to 11.9.16 shall apply. Notwithstanding the foregoing, SGX-ST shall have the discretion to prescribe additional requirements.

Added on 19 May 2014 19 May 2014 and amended on 29 December 2014 29 December 2014.

11.9.2

Margin financing arrangements shall be evidenced in the form of a written agreement executed between the Trading Member and the customer.

Amended on 23 January 2009 23 January 2009.

11.9.3

If a Trading Member seeks to mortgage, pledge or hypothecate the Specified Products or property of any customer who operates a margin financing account with a Trading Member (such account being an account carried on the books of the Trading Member) shall authorise the Trading Member to mortgage, pledge or hypothecate the customer's securities or property for a sum not exceeding the debit balance in the margin financing account and without obligation to retain in its possession or control Specified Products of like character. The Trading Member shall also be given the discretion to sell or dispose of any or all the Specified Products in any manner in order to meet with the prescribed margin financing requirements.

Amended on 23 January 2009 23 January 2009, 1 July 2016 1 July 2016 and 8 October 2018 8 October 2018.

11.9.4

A Trading Member shall not cause or permit any new transaction made in a customer's margin financing account (such account being an account carried on the books of the Trading Member) unless the resulting equity in the account is not less than 140% of the debit balance, or the Trading Member has required the customer to deposit margin in the margin financing account within 2 Market Days from the date of the Specified Products transaction to bring the equity to not less than 140% of the debit balance.

Amended on 23 January 2009 23 January 2009, 1 July 2016 1 July 2016 and 8 October 2018 8 October 2018.

11.9.5

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.

Amended on 10 November 2006 10 November 2006 and 8 October 2018 8 October 2018.

11.9.6

(1) 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 fall to or below 110% of the debit balance in the customer's margin financing account, unless the Trading Member has immediately required the customer to provide additional margin in the margin financing account within 2 Market Days from the date of 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.

(2) Where the equity in a customer's margin financing account falls to or below 110% of the debit balance in his margin financing account, and that the customer has failed to provide additional margin to increase the equity in his margin financing account to more than 110% of the debit balance in his margin financing account within the prescribed time frame referred to in Rule 11.9.6(1), a Trading Member shall have discretion, including, where appropriate, liquidating the Specified Products purchased via the margin financing account including the acceptable collateral deposited to bring the equity to more than 110% of the debit balance without notice to the customer.

Amended on 10 November 2006 10 November 2006, 23 January 2009 23 January 2009, 1 July 2016 1 July 2016 and 8 October 2018 8 October 2018.

11.9.7 [Rule has been deleted.]

Deleted on 14 November 2005 14 November 2005.

11.9.8

A Trading Member shall cause daily review to be made of all margin financing accounts carried on the books of the Trading Member to ensure that credit is not over-extended beyond the approved facility and that the margin financing requirements prescribed above are met at all times. For the purpose of computing margin financing requirements in a margin financing account, the last done price of the Specified Product on the preceding Market Day, or in the case of a Prescribed Instrument, the closing price of the Prescribed Instrument on the preceding Market Day, shall be used. All transactions done on the same day shall be combined on a transaction date basis and the total cost of purchase or the net proceeds of sale including any commission charged and other expenses shall be taken into account for computing margin financing requirements.

Amended on 23 January 2009 23 January 2009, 24 February 2014 24 February 2014, 1 July 2016 1 July 2016 and 8 October 2018 8 October 2018.

11.9.9

A Trading Member shall have the discretion to impose higher margin financing requirements on any of its customers.

Amended on 23 January 2009 23 January 2009.

11.9.10

A customer may withdraw cash or Specified Products from his margin financing account carried on the books of his Trading Member provided that the equity in his account does not fall to 140% of the debit balance or less.

Amended on 23 January 2009 23 January 2009, 1 July 2016 1 July 2016 and 8 October 2018 8 October 2018.

11.9.11

A Trading Member shall not cause or permit:

(1) the aggregate of the margin exposures in the margin financing accounts of all customers (such accounts being accounts carried on the books of the Trading Member) to exceed 300%, or such other percentage as SGX-ST may allow, of its free financial resources;

(2) the aggregate of the margin exposures in the margin financing accounts of all customers in respect of Specified Products, other than Specified Products quoted on SGX-ST, to exceed 100%, or such other percentage as SGX-ST may allow, of its free financial resources; and

(3) the debit balance in each customer's margin financing account to exceed 20%, or such other percentage as SGX-ST may allow, of its free financial resources.

Amended on 12 October 2005 12 October 2005, 23 January 2009 23 January 2009, 1 July 2016 1 July 2016 and 8 October 2018 8 October 2018.

11.9.12 [Rule has been deleted.]

Deleted on 12 October 2005 12 October 2005.

11.9.13

All transactions in a margin account carried on the books of the Trading Member shall be on an immediate or a ready basis. The margin account shall not be used to subscribe for new issue of securities, or to meet margin requirements in respect of Marginable Futures Contracts.

Amended on 23 January 2009 23 January 2009 and 1 July 2016 1 July 2016.

11.9.14

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 securities deposited as collateral by the margin customer, the Trading Member shall apply such applicable discounts as SGX-ST may prescribe from time to time.

Amended on 23 January 2009 23 January 2009, 1 July 2016 1 July 2016 and 8 October 2018 8 October 2018.

11.9.15

SGX-ST shall have the absolute discretion to vary any or all of the margin financing requirements stipulated in Rule 11.9, and impose such other requirements for margin financing transactions from time to time as it deems fit and appropriate.

Amended on 23 January 2009 23 January 2009.

11.9.16

In this Rule:—

Term	Meaning
"debit balance"	has the meaning ascribed to it in Regulation 24(6) of the SFR (Financial and Margin Requirements).
"equity"	has the meaning ascribed to it in Regulation 24(6) of the SFR (Financial and Margin Requirements).
"free financial resources"	has the meaning ascribed to it in Regulation 24(6) of the SFR (Financial and Margin Requirements).
"acceptable collateral"	has the meaning ascribed to it in Regulation 24(6) of the SFR (Financial and Margin Requirements).
"margin exposure"	has the meaning ascribed to it in Regulation 24(6) of the SFR (Financial and Margin Requirements).

Amended on 12 October 2005 12 October 2005 and 10 November 2006 10 November 2006.

11.10 Submission of Returns

Amended on 19 May 2014 19 May 2014.

11.10.1

A Trading Member shall submit to SGX-ST financial returns as follows:

(1) in the case of a Trading Member that holds a Capital Markets Services Licence, submit by the 14th calendar day of each month statements of assets and liabilities, base capital, financial resources, total risk requirement, aggregate indebtedness;

(2) in the case of a Trading Member that holds a licence specified in Rule 4.1.1(1)(b), submit by such time specified by SGX-ST financial returns based on such computation methodology and in the form prescribed by SGX-ST; and

(3) and such other statements as SGX-ST may from time to time require in the format specified by SGX-ST.

Refer to SGX Data Submission Website (https://esub.sgx.com) for the submission template.

Amended on 3 January 2007 3 January 2007, 19 May 2014 19 May 2014, 29 December 2014 29 December 2014 and 22 April 2019 22 April 2019.

11.10.2

Where a Trading Member fails to submit the statements required in Rule 11.10.1 within the prescribed time, there shall be imposed upon the Trading Member a late fee of $100 for each day that the statements are not submitted in the prescribed time, unless an extension of time has been granted.

11.10.3

Requests for extension of time shall be submitted to SGX-ST at least 3 Market Days prior to the due date for submission of the statements.

11.10.4

A Trading Member shall be required to resubmit the statements and documents prescribed under Rule 11.10.1 and take such other steps as SGX-ST may require upon SGX-ST's notification that the statements and documents are inaccurate or incomplete.

11.11 Annual Financial Audit

11.11.1

A Trading Member shall:

(1) in the case of a Trading Member that holds a Capital Markets Services Licence, obtain the written approval of SGX-ST in the event of any change of its existing external auditor; and

(2) in the case of a Trading Member that holds a licence specified in Rule 4.1.1(1)(b), notify SGX-ST at least seven (7) days prior to any change of its existing external auditor. The Trading Member shall appoint external auditors that are accepted by its Relevant Regulatory Authority.

Amended on 19 May 2014 19 May 2014 and 29 December 2014 29 December 2014.

11.11.1A

If SGX-ST is not satisfied with the performance of duties by an external auditor appointed by a Trading Member in relation to the Trading Member's activities on SGX-ST, it may:

(i) at any time direct the Trading Member to remove the external auditor; and

(ii) direct the Trading Member, as soon as practicable thereafter, to appoint another external auditor.

Added on 19 May 2014 19 May 2014.

11.11.2

A Trading Member shall, within 5 months after the close of the financial year, furnish to SGX-ST the following information:

(1) relevant forms in respect of its annual financial audit which a Trading Member is required to lodge with its Relevant Regulatory Authority, translated into English, and as prescribed by SGX-ST. In the case of a Trading Member who holds a Capital Markets Services Licence, the forms shall be in the prescribed format under Regulation 27(9) of the SFR (Financial and Margin Requirements);

(2) audited accounts of the Trading Member and its subsidiaries; and

(3) a certificate in respect of its annual financial audit signed by the auditor appointed by the Trading Member to carry out such audit in such form prescribed by the Relevant Regulatory Authority.

Amended on 12 October 2005 12 October 2005, 19 May 2014 19 May 2014, 29 December 2014 29 December 2014, 8 October 2018 8 October 2018 and 22 April 2019 22 April 2019.

11.11.3

Where, in the performance of his duties, the Trading Member's auditor becomes aware:—

(1) of any matter which in his opinion adversely affects or may adversely affect the financial position of the Trading Member to a material extent,

(2) of any matter which in his opinion constitute or may constitute a contravention breach of any provision of the SFA or any other relevant applicable laws and regulatory requirements relating to the regulation of organised markets and licenced entities, or an offence involving fraud or dishonesty,

(3) of any irregularity that has or may have a material effect upon the accounts, including irregularities that jeopardise the moneys or other assets of any customer of the Trading Member, or

(4) that the accounting system, internal accounting control and procedures for safeguarding moneys or other assets are inadequate and the inadequacies have a material effect on the accounts,

the auditor shall immediately report the matter to SGX-ST.

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

11.11.4

(1) Where a Trading Member fails to submit the documents pursuant to Rule 11.11.2 within the specified time, there may be imposed upon that Trading Member a fee of $200 for each day that the statements are not submitted within the prescribed time, unless an extension of time has been granted.

(2) Requests for extension of time shall be submitted to SGX-ST at least 3 Market Days prior to the due date.

11.12 Provision in Annual Accounts

11.12.1

A Trading Member which is incorporated in Singapore shall make such provisions in its annual accounts as SGX-ST may from time to time require.

11.12.2 [Rule has been deleted.]

Deleted on 20 June 2005 20 June 2005.

11.12.3 [Rule has been deleted.]

Deleted on 20 June 2005 20 June 2005.

11.13 Other Financial Requirements

11.13.1 Reduction in Paid-Up Ordinary Share Capital or Paid-Up Irredeemable and Non-Cumulative Preference Share Capital

A Trading Member which is incorporated in Singapore 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 SGX-ST.

Amended on 10 November 2006 10 November 2006 and 29 December 2014 29 December 2014.

11.13.2 Preference Shares

(1) A Trading Member which is incorporated in Singapore shall notify SGX-ST prior to the issue of any preference share.

(2) A Trading Member which is incorporated in Singapore shall not repay the principal of any preference share (other than any paid-up irredeemable and non-cumulative preference share capital) that is computed as part of its financial resources, through repurchase or redemption:—

(a) unless the Trading Member notifies SGX-ST within such time before the proposed date of repurchase or redemption as prescribed by the SFR (Financial and Margin Requirements);

(b) if at the date of repurchase or redemption:—

(i) its financial resources is less than 150% of its total risk requirement; or

(ii) its aggregate indebtedness exceeds 600% of its aggregate resources;

(c) if such repurchase or redemption will cause an event in Rule 11.13.2(2)(b) above to occur; or

(d) if SGX-ST has prohibited in writing such a repurchase or redemption.

Amended on 29 December 2014 29 December 2014.

11.13.3 Qualifying Subordinated Loan

(1) A Trading Member shall obtain the prior approval of SGX-ST if it enters a subordinated loan agreement in a format other than the format prescribed by SGX-ST from time to time.

(2) Where a Trading Member draws down a qualifying subordinated loan, the Trading Member shall notify SGX-ST no later than the date of draw down of the qualifying subordinated loan.

(3) A Trading Member shall not repay, whether in part or in full, any subordinated loan principal before the maturity date without the prior approval of SGX-ST.

(4) A Trading Member shall not repay, whether in part or in full, any subordinated loan principal that has matured:—

(a) unless the Trading Member notifies SGX-ST at least 1 Market Day before the date of repayment;

(b) if its financial resources is less than 150% of its total risk requirement;

(c) if its aggregate indebtedness exceeds 600% of its aggregate resources;

(d) if such a repayment will cause an event in Rule 11.13.3(4)(b) or (c) to occur; or

(e) if SGX-ST has prohibited in writing such a repayment.

Amended on 29 December 2014 29 December 2014.

11.13.4 Making of Unsecured Loan or Advance, Payment of Dividend or Director's Fees or Increase in Director's Remuneration

A Trading Member shall not, without the prior written approval of SGX-ST, make any unsecured loan or advance, pay any dividend or director's fees or increase any director's remuneration if:—

(1) in the case where the Trading Member is incorporated in Singapore:—

(a) its base capital is less than the base capital requirement as prescribed in Rules 11.2 and 11.5;

(b) its financial resources is less than 150% of its total risk requirement;

(c) its aggregate indebtedness exceeds 600% of its aggregate resources;

(d) such a loan, advance, payment or increase will cause an event in Rule 11.13.4(1)(a), (b) or (c) to occur; or

(2) in the case where the Trading Member is incorporated outside Singapore:—

(a) its net head office funds is less than the base capital requirement as prescribed in Rules 11.2 and 11.5;

(b) its adjusted net head office funds is less than 150% of its total risk requirement;

(c) its aggregate indebtedness exceeds 600% of its aggregate resources;

(d) such a loan, advance, payment or increase will cause an event in Rule 11.13.4(2)(a), (b) or (c) to occur.

Amended on 29 December 2014 29 December 2014.

11.13.5

Rules 11.13.1 to 11.13.4 shall not apply to a Trading Member that holds a licence specified in Rule 4.1.1(1)(b). Such a Trading Member shall notify the Exchange immediately of any actions taken relating to:

(1) any reduction in paid-up ordinary share capital;

(2) any issue of any preference share;

(3) the entry into a subordinated loan agreement in a format other than the format prescribed by SGX-ST from time to time, drawing down on a qualifying subordinated loan or repayment whether in part or in full, any subordinated loan principal before or upon maturity;

(4) [Rule has been deleted.]

(5) that has or may have a financial or capital impact on the Trading Member and required to be reported to the Relevant Regulatory Authority.

Added on 19 May 2014 19 May 2014 and amended on 22 April 2019 22 April 2019.

11.14 Register of Connected Persons

11.14.1

A Trading Member that holds a Capital Markets Services Licence licence shall keep a register of its directors and their connected persons. For the purpose of this Rule, a "connected person" has the meaning ascribed to it in Section 2 of the SFA.

Amended on 19 May 2014 19 May 2014 and 29 December 2014 29 December 2014.