Chapter 15 — Research

15.1.1

The research department of a Trading Member must engage only in the following activities:—

(1) research or analysis of securities or futures contracts (including recommendations, if any); or

(2) other activities SGX-ST approves.

Amended on 3 April 2008 3 April 2008 and 8 October 2018 8 October 2018.

Unless exempt under the Securities and Futures Act or the Securities or Futures Regulations, prior to engaging in research activities, a Trading Member and its research staff must obtain the appropriate licence.

Added on 3 April 2008 3 April 2008.

15.1.2

A Trading Member must not circumvent this Chapter by entering into any arrangements.

15.1A Application of Chapter

15.1A.1

This Chapter shall not apply to a Trading Member who holds a licence specified in Rule 4.1.1(1)(b). Such a Trading Member shall comply with such requirements established by the Relevant Regulatory Authority, if any, and principles of good business practice in relation to the areas set out in Chapter 15 for its business activities on SGX-ST.

Added on 19 May 2014 19 May 2014.

15.2 Notification Procedures

15.2.1

A Trading Member must inform SGX-ST in writing at least 14 days before it establishes a research department.

15.2.2

A Trading Member must supply SGX-ST with any information SGX-ST requires regarding the proposed establishment.

15.2.3

SGX-ST may limit the scope of activity of the research department.

15.2.4

SGX-ST may require a Trading Member to end any research activity if:—

(1) the Trading Member fails to comply with this Chapter; or

(2) in SGX-ST's opinion, the research activity is detrimental to the financial integrity, reputation or interests of SGX-ST, the Trading Member concerned, or markets established or operated by SGX-ST.

15.2.5

If SGX-ST requires a Trading Member to end its research activity, 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.

15.3 Supervision

15.3.1

A Trading Member must:—

(1) supervise its research analysts;

(2) implement written supervisory procedures to ensure that its research analysts comply with this Chapter; and

(3) implement any procedure, Directive or recommendation by SGX-ST.

15.3.2

A Trading Member is responsible to SGX-ST for the acts and omissions of its research analysts.

15.3.3

SGX-ST may limit the scope of activity of a research analyst or direct a Trading Member to replace a research analyst if the person:—

(1) causes the Trading Member to breach the Rules or Directives;

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

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

(4) is the subject of an investigation involving fraud or dishonesty, whether in or out of Singapore.

15.3.4

A Trading Member may, within 14 days after it is directed by SGX-ST to replace a research analyst, appeal in writing to the SGX RegCo Board whose decision will be final.

Amended on 15 September 2017 15 September 2017.

15.4 Separation of Research Activities

15.4.1

A Trading Member's research activities must be separate from its dealing, corporate finance and back office operations. Separation means at least having the following:—

(1) separate reporting lines in place between the research activities and the other activities;

(2) adequate restriction of communication and information flow between the research activities and the other activities to avoid influencing research activities;

(3) adequate procedures to avoid any conflict of interest that may arise from the research activities and the other activities; and

(4) bonus, salary or other form of compensation to a research analyst not being based on any corporate finance or dealing transaction.

15.4.2

A Trading Member must implement any procedure, Directive or recommendation by SGX-ST.

15.5 Investment Recommendations

15.5.1

A Trading Member must:—

(1) have an adequate basis, supported by research, for making an investment recommendation;

(2) maintain independence and objectivity in producing a research report or making an investment recommendation; and

(3) not issue a research report or make an investment recommendation that is not consistent with its research analyst's actual views regarding a subject company.

15.6 Records

15.6.1

A Trading Member must maintain records of its research report or investment recommendation for 7 years.

15.7 Disclosure

15.7.1

A Trading Member and a research analyst must disclose:—

(1) any interest at the date of the dissemination of the research report or investment recommendation in the subject of the report or recommendation. "Interest" includes direct or indirect ownership of securities or futures contracts (excluding the amount of securities or futures contracts owned), directorships, trustee positions, customer of the Trading Member or any other relationship that may be regarded as creating a potential conflict of interest with the Trading Member's responsibility under Rule 15.5.1(2); and

(2) any monetary compensation (excluding salary and bonuses) or other benefits receivable in respect of the research report or investment recommendation.

Amended on 3 April 2008 3 April 2008 and 8 October 2018 8 October 2018.

15.8 Trade Restrictions

15.8.1

A Trading Member and a research analyst must not:—

(1) knowingly buy or sell a security or futures contract if the Trading Member or research analyst has material information not generally available to the public in relation to the security or Futures Contract;

(2) except on instructions from a customer, knowingly buy or sell a security or futures contract if the transaction may create a conflict of interest in relation to the Trading Member's duty to its customers;

(3) procure any person to buy or sell a security or futures contract if the Trading Member or research analyst is prohibited under Rules 15.8.1(1) and (2) from doing so; and

(4) buy or sell a security or futures contract contrary to the most recent research report published by the Trading Member unless 3 Market Days have passed since the report was issued. This trading restriction does not apply if:—

(a) the Trading Member is acting on a customer's express instructions;

(b) significant news is announced that would change the research report or investment recommendation; or

(c) the research analyst is in financial difficulty and must sell the security or futures contract. The Trading Member must ensure that the research analyst obtains prior written approval of a senior management staff independent of research, dealing or corporate finance for each trade. The Trading Member must also maintain documentation of the financial condition and the decision for 7 years.

Amended on 3 April 2008 3 April 2008 and 8 October 2018 8 October 2018.