Chapter 3 Conduct of Members, Approved Traders and Representatives

3. Conduct of Members, Approved Traders and Registered Representatives

3.1 Overview

This Chapter is targeted at the ongoing obligations of Members, Approved Traders and Registered Representatives upon admission to or registration with the Exchange. This Chapter is divided into three (3) main parts: (a) duties applicable to all Members, Approved Traders and Registered Representatives; (b) duties applicable to Members engaging in Agency Trades and their Approved Traders and Registered Representatives; and (c) trading practices. The obligations of Members, Approved Traders and Registered Representatives are more onerous when a Member undertakes Agency Trades and handles Customer monies as opposed to when it engages solely in House Trades.

3.2 Duties Applicable to All Members, Approved Traders and Registered Representatives

3.2.1 General Duties of Integrity, Fair Dealing and Care

When trading on the Markets, Members, Approved Traders and Registered Representatives are required to:

(a) observe high standards of integrity, market conduct and fair dealing;

(b) act with due skill, care and diligence; and

(c) refrain from any act or course of conduct which is likely to harm the reputation of the Markets or any Members.

3.2.2 Constitutive Documents

A corporate Member shall ensure that its memorandum and articles of association or its constitutive documents conform to this Rules so as to enable that Member to perform the obligations, terms and covenants contemplated in this Rules. A corporate Member shall amend its memorandum and articles of association or its constitutive documents to the extent necessary to ensure consistency with this Rule 3.2.2.

3.2.3 Reporting of Change in Member's Circumstances

Without prejudice to Rule 2.14.1, a Member shall immediately inform the Exchange in writing of:

(a) any material change to the information submitted in its application for Membership; or

(b) any facts or circumstances which may change the legal form or organisation of the Member or its trading activities on the Markets, including (without limitation) any consolidation, re-organisation, merger, change of name, Change of Control or similar event.

3.2.3A Reporting and Other Requirements Pertaining to Specific Contracts

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

Refer to Regulatory Notice 3.2.3A.

Added on 22 November 2021.

3.2.4 Other Reporting Obligations of Members

A Member shall inform the Exchange in writing immediately if the Member, or any of its Approved Traders, Registered Representatives, directors, officers or employees, as the case may be:

(a) breaches any provisions of the Act, this Rules or any applicable laws (foreign or local) governing the Member's activities;

(b) breaches any rules of any other exchange or market (foreign or local) which has jurisdiction over the activities of the Member, its Approved Traders, Registered Representatives, directors, officers or employees;

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

(d) breaches any director's duties as contemplated under common law or otherwise;

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

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

(g) engages in conduct that has the effect of circumventing the Act, other relevant applicable laws and regulatory requirements relating to the regulation of markets and licenced entities or this Rules;

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

(i) engages in conduct which is detrimental to the financial integrity, reputation or interests of the Exchange or the Markets; or

(j) is insolvent, or is the subject of bankruptcy or winding up proceedings.

The reporting obligations under this Rule 3.2.4 apply whenever any of the abovementioned events occurs, or threatens to occur.

Amended on 1 April 2014 1 April 2014.

3.2.5 Prohibitions on Conduct of Other Business

A Member may carry on its business on any market, unless the carrying-on of such business on such market has been prohibited by the Exchange. The Member shall fully comply with the prevailing constitution, rules, by-laws, regulations, customs and practices of such other markets.

3.2.6 Settlement of Margins Due

A Trading Member shall promptly settle all margin liabilities owed to its sponsoring Clearing Member.

3.2.7 Speculative Long and Short Positions for the Same Contract Month

A Member shall not be permitted to carry a speculative long position and a speculative short position for the same legal and beneficial owner in the same Contract, as well as in the same Connect Contract, for the same Contract Month.

Amended on 29 July 2022.

3.2.8 Advertising Guidelines

A Member, Approved Trader and Registered Representative shall ensure that any advertising, market letters or similar information that they issue, in the form and context in which such advertisements, market letters or similar information appear or are used:

(a) shall be true to the best of their knowledge and belief;

(b) shall make no promise with respect to profits, always indicating the possibility of losses if profits are mentioned;

(c) shall not misrepresent their Membership, registration, or the privileges which they enjoy under this Rules, in relation to the Exchange; and

(d) shall not misrepresent any authorisation, licence or permission which they possess from, or any registration with, the appropriate regulatory body.

If the Exchange finds any advertising, market letters or similar information issued by a Member, Approved Trader or Registered Representative to be in contravention of this Rule 3.2.8, it may require all such prospective advertising, market letters or similar information issued by that Member, Approved Trader or Registered Representative to be submitted to the Exchange for approval prior to release.

A General Trading Member that holds a licence specified in Rule 2.4.1(b) shall not direct any advertising, market letters or similar information to deal in securities or Futures Contracts on the Exchange to customers domiciled in Singapore or to the extent that it may be acted upon by persons in Singapore.

Amended on 29 November 2010 29 November 2010 and 1 April 2014 1 April 2014.

3.3 Duties of Members Undertaking Agency Trades

A Member which undertakes Agency Trades shall comply with the following additional obligations.

3.3.1 Customer Account and Know-Your-Customer Requirements

A Customer Account shall be identified and designated by the full name of the Customer and an account code. Prior to opening a Customer Account, a Member shall satisfy itself that it has:

(a) obtained key particulars relating to the Customer (and any person authorised to trade for the Customer);

(b) verified the identity of the Customer and that the Customer has requisite authority to open the account; and

(c) understood the Customer's risk appetite and investment objectives,

in a manner consistent with industry best practices on know-your-customer requirements.

Refer to Regulatory Notice 3.3.1.

3.3.2 Management Approval Required for Opening Customer Accounts

At least one (1) management staff, or a management staff of a Related Corporation of that Member charged with the account approval function, is required to approve the opening of a Customer Account. Such management staff shall be independent of the Member's sales and dealing functions. The management staff's approval shall be in writing, maintained as a permanent record and obtained prior to the execution of the first trade of the Customer in that account.

3.3.3 Risk Disclosure Statement

(a) A Member shall obtain a written acknowledgement from its Customer that the Customer is aware^* of the risks associated with trading in Contracts.

(b) The written acknowledgement shall:

(i) in the case of a General Trading Member that holds a licence to engage in a Regulated Activity, contain such requirements as contemplated under the Act;

(ii) in the case of a General Trading Member that holds a licence specified in Rule 2.4.1(b), contain such requirements as may be prescribed by the Relevant Regulatory Authority. The General Trading Member shall immediately notify the Exchange on any changes to such requirements. Notwithstanding the foregoing, the Exchange shall have the discretion to prescribe additional requirements;

(iii) in the case of a Bank Trading Member, contain such requirements as contemplated under the Act and include an acknowledgement by the Customer that the Investor Compensation Scheme contemplated under Part 11 of the Act does not apply in relation to the Bank Trading Member; and

(iv) in each case, contain such information as may be prescribed by the Exchange from time to time.

*Refer to Regulatory Notice 3.3.3.

Amended on 25 August 2009 25 August 2009, 16 July 2012 16 July 2012, 1 April 2014 1 April 2014, 22 November 2021 and 18 January 2022.

3.3.4 Customer Instructions and Power of Attorney

A Member shall execute orders only upon receipt of instructions from a Customer which has opened accounts with the Member. Unless otherwise authorised by a Customer, the Member shall communicate solely with that Customer in respect of statements, contract notes, or any other information relating to the activities of that Customer. The Member shall obtain a power of attorney or proper written authorisation from its Customer before:

(a) accepting orders from a third party to trade in that Customer Account; or

(b) allowing a third party to collect monies, assets, contract notes, cheques or statements on that Customer's behalf.

3.3.5 Customer Education

Save for Accredited Investors, a Member shall provide its Internet Trading Customers with adequate information, guidance and training with respect to the following matters:

(a) potential limitations and risks of Internet Trading trading;

(b) prohibited trading practices;

(c) system functionalities and order management procedures; and

(d) Contract Specifications.

With respect to Accredited Investors, a Member's obligation relates solely to the provision of adequate information, guidance and training in relation to prohibited trading practices.

Refer to Practice Note 3.3.5.

Amended on 15 March 2013 15 March 2013.

3.3.6 Orders Only Via Registered Representatives

Other than orders made via Internet Trading by Customers, a Member may only accept orders on behalf of Customers through its Registered Representatives.

Amended on 15 March 2013 15 March 2013.

3.3.7 Accepting Orders without Executing

A Member or a Registered Representative shall not accept orders from a Customer for contracts without causing such orders to be executed on the relevant markets and in accordance with the rules applicable to such markets. An Approved Trader shall execute such orders in accordance with the rules applicable to such markets.

3.3.8 Recording of Orders

(a) Unless an order or amendment or cancellation of an order is immediately entered by an Approved Trader into the OMS or such other electronic facility or automated trading system that facilitates trading on markets, as the case may be, a Registered Representative shall immediately record such order, amendment or cancellation.

(b) The order, amendment or cancellation shall be recorded:

(i) in the case of a General Trading Member that holds a licence to engage in a Regulated Activity and a Bank Trading Member, on an Order Form. "Order Form" as used herein refers to an order form that is dated, time-stamped and contains such information as required under Regulation 39(3) of the Conduct of Business Regulations and other information as prescribed by the Exchange; and

(ii) in the case of a General Trading Member that holds a licence specified in Rule 2.4.1(b), in the manner prescribed by the Relevant Regulatory Authority. The General Trading Member shall immediately notify the Exchange on any changes to such requirements. Notwithstanding the foregoing, the Exchange shall have the discretion to prescribe additional requirements.

Refer to Regulatory Notice 3.3.8.

Amended on 1 April 2014 1 April 2014.

3.3.8A Preventing Unauthorised Changes to Order Information

A Member must have in place controls to prevent unauthorised changes to order information entered into the Trading System.

Added on 15 March 2013 15 March 2013 and 14 November 2016 14 November 2016.

3.3.9 Customer's Statement of Account and Contract Note

(a) A Member shall issue statements of account and contract notes to its Customers.

(b) The issuance of statements of account and contract notes shall:

(i) in the case of a General Trading Member that holds a licence to engage in a Regulated Activity and a Bank Trading Member, comply with the applicable provisions including provisions relating to a Customer's statement of account and contract note in electronic form, as required under the Conduct of Business Regulations. With respect to the issuance of a statement of account or contract note in an electronic form, a Member shall obtain the Customer's prior revocable and informed consent and retain evidence of such Customer's consent. Informed consent refers to a Customer being apprised of the manner of delivery and retrieval of the electronic record and any costs incurred in connection therewith;

(ii) in the case of a General Trading Member that holds a licence specified in Rule 2.4.1(b), comply with such requirements as prescribed by the Relevant Regulatory Authority, including requirements relating to a customer's statement of account or contract note in electronic form. The General Trading Member shall immediately notify the Exchange on any changes to such requirements. Notwithstanding the foregoing, the Exchange shall have the discretion to prescribe additional requirements.

(c) At the request of the Exchange, a Member shall produce for inspection the contract note in substantially the same form and containing the same information as was provided to the Customer.

Amended on 1 April 2014 1 April 2014.

3.3.10 Segregation of Customers' Monies and Assets and Fiduciary Obligations

Subject to Rule 3.3.10(b)(ii), the following requirements apply in relation to a Member's fiduciary obligations to its Customers:

(a) a Member shall discharge its fiduciary obligations to its Customers by:

(i) segregating Customers' monies and assets;

(ii) depositing Customers' monies and assets in trust or custody accounts; and

(iii) separately accounting for the monies and assets of each Customer;

and

(b) a Member shall comply with the following segregation requirements:

(i) in the case of a General Trading Member that holds a licence to engage in a Regulated Activity and a Bank Trading Member, all segregation requirements under the Act and the Conduct of Business Regulations. Except as allowed under those Regulations, the Member is prohibited from depositing or co-mingling its own monies and assets with its Customers' monies and assets; and

(ii) in the case of a General Trading Member that holds a licence specified in Rule 2.4.1(b), such segregation requirements as prescribed by the Relevant Regulatory Authority. The General Trading Member shall immediately notify the Exchange on any changes to such requirements. Notwithstanding the foregoing, the Exchange shall have the discretion to prescribe additional requirements.

"Customer" as used in this Rule 3.3.10 in relation to a General Trading Member that holds a licence to engage in a Regulated Activity and a Bank Trading Member does not include: (a) a director, officer, employee, Approved Trader or Registered Representative of the Member; or (b) an Affiliate of the Member.

Amended on 1 April 2014 1 April 2014 and 2 May 2016 2 May 2016.

3.3.11 Trading or Accepting Customer's Monies or Assets After Insolvency

Unless otherwise approved by the Exchange, a Member shall not trade, accept any Customer's monies or assets, or solicit any new orders after the Member's insolvency.

3.3.12 Customer Margins

Margins payable by a Clearing Member to the Clearing House shall be governed by the Clearing Rules. For margins applicable to Customers, margin calls and related matters, the following requirements apply:

(a) a Member shall procure Initial Margins from its Customers, and ensure that its Customers comply with Maintenance Margins for such amounts as required by the Clearing House. "Initial Margins" refers to the minimum amount required to be deposited by Customers with a Member for each: (i) open Contract or open Connect Contract, as prescribed by the Clearing House; or (ii) open contract traded on an exchange other than the Exchange, excluding Connect Contracts, as prescribed by the relevant exchange or clearing house. "Maintenance Margins" refers to the minimum balance which shall be maintained in a Customer Account subsequent to the deposit of the Initial Margins for that Customer's (i) Open Positions in Contracts or in Connect Contracts, as prescribed by the Clearing House, and (ii) Open Positions in contracts traded on exchanges other than the Exchange, excluding Connect Contracts, as prescribed by the relevant exchanges or clearing houses;

(b) subject to Rule 3.3.12(ba) and (bb), a Member may accept cash, government securities, common stocks, bank certificates of deposit, bank guarantees, bank letters of credit, gold bars, gold certificates and such other instruments as the Clearing House permits from its Customer for meeting the Customer's Initial Margins and Maintenance Margins requirements. Valuation of such instruments shall be in accordance with procedures specified by the Clearing House on the Exchange's website.

(ba) a General Trading Member that holds a licence to engage in a Regulated Activity and a Bank Trading Member shall not accept the following forms of margins under this Rule:

(i) bank guarantees or letters of credit issued by a Customer, or a Customer's Related Corporation, which is a bank, for trades incurred in that Customer Account;

(ii) bank guarantees and letters of credit other than those issued by a bank that holds a valid licence and operates in Singapore under the Banking Act 1970; and

(iii) currency and financial instruments denominated in currencies which are subject to exchange controls such that they are illegal tender outside the currency's home country, or are restricted by any form of capital controls;

(bb) a General Trading Member that holds a licence specified in Rule 2.4.1(b) shall not accept margins in the form of bank guarantees or letters of credit issued by a Customer, or a Customer's Related Corporation, which is a bank, for trades incurred in that Customer Account;

(c) except for trades which reduce the Customer's Maintenance Margins requirements, a Member shall not allow a Customer to incur any new trade, unless:

(i) the minimum Initial Margins for the new trade are deposited or are forthcoming within a reasonable period from the trade date; and

(ii) the Customer's Total Net Equity complies with the Maintenance Margins for its existing Open Positions or additional margins to be posted pursuant to Rule 3.3.12(e) are forthcoming within a reasonable period from the trade date.

For settlement currency denominated in Japanese Yen, 'reasonable period' in this Rule 3.3.12(c) means a period which shall not exceed three (3) Trading Days from the trade date (T+3). For all other settlement currencies, it means a period which shall not exceed two (2) Trading Days from the trade date (T+2);

(d) Excess Margins on all Open Positions of a Customer may be utilised by a Member as Initial Margins on a new position of the same Customer. "Excess Margins" refers to credits in excess of Initial Margins;

(e) a Member shall call for additional margins from a Customer if at any time the Customer's Total Net Equity falls below the Maintenance Margins. Such additional margins posted should be sufficient to bring the relevant account up to the Initial Margins level within a reasonable period. Nothing herein prohibits a Member from making a call for additional margins or imposing a stricter settlement period as it sees fit.

For settlement currency denominated in Japanese Yen, 'reasonable period' in this Rule 3.3.12(e) means a period which shall not exceed three (3) Trading Days from the date that the Customer's Total Net Equity falls below the Maintenance Margins. For all other settlement currencies, it means a period which shall not exceed two (2) Trading Days from the date that the Customer's Total Net Equity falls below the Maintenance Margins;

(f) if a Member is unable to contact a Customer, a written notice sent to the Customer at the most recent address furnished by the Customer to the Member shall be deemed sufficient;

(g) in the event of a Member's failure to obtain margins from the relevant Customers as required under this Rule, a Member may take such necessary actions to rectify the deficiency as it sees fit. The Exchange may also order such Member to immediately Close Out all or such part of the positions of such Customers on its books so as to rectify the deficiency; and

(h) a Member shall comply with such requirements on the computation and monitoring of a Customer's margins as the Exchange may prescribe.

Refer to Regulatory Notice 3.3.12

Amended on 1 April 2014 1 April 2014, 25 January 2017 25 January 2017, 18 January 2022 and 29 July 2022.

3.3.13 [Deleted]

Deleted on 25 January 2017 25 January 2017.

3.3.14 Inter-Exchange Cross Margining

Notwithstanding Rule 3.3.12, a Member may grant margin credit at a rate not exceeding that which is prescribed by the Clearing House, to a Customer which holds long and short positions on futures contracts (on the same underlying) which are traded on the Exchange and another exchange, to the extent that the risk on the position in one (1) exchange is set-off against another ("Inter-exchange Cross Margining") if the following conditions are satisfied:

(a) the risk-offsetting positions relate to contracts prescribed by the Clearing House as eligible for inter-exchange cross margining;

(b) the Member ensures that the risk-offsetting positions are carried in Customer Accounts in which the same Customer is the legal and beneficial owner;

(c) the Member provides for the right of set-off in respect of the Customer's positions with the Clearing House and any other relevant clearing house in its contractual agreements with that Customer;

(d) the Member, except for a Bank Trading Member or a General Trading Member that holds a licence specified in Rule 2.4.1(b), continues to calculate the Counterparty Risk Requirement for each counterparty exposure to the Customer as if margin credit had not been granted;

(e) the Member continues to maintain adequate liquidity facilities (bank lines and cash balances) to fund the gross margin payable to the Clearing House and any other relevant clearing houses;

(f) the Member imposes a limit on the amount of margin credit granted to the Customer which should not exceed:

(i) in the case of a General Trading Member, 20% of the Member's Free Financial Resources; or

(ii) in the case of a Bank Trading Member or General Trading Member that holds a licence specified in Rule 2.4.1(b), such other amount as may be prescribed by the Exchange in respect of Contracts traded on the Exchange;

(g) the Member has proper internal controls and risk management procedures*, to monitor the credit risk and liquidity risk arising from Inter-exchange Cross Margining. The Exchange reserves the right to impose additional conditions or disallow a Member from offering Inter-exchange Cross Margining if it is not satisfied with the internal controls and risk management procedures of the Member requesting Inter-exchange Cross Margining; and

*Refer to Regulatory Notice 3.3.14(g).

(h) the Member notifies the Exchange, prior to offering Inter-exchange Cross Margining to its Customers, that it has complied and will continue to comply with the conditions set forth herein.

For the avoidance of doubt, Inter-exchange Cross Margining is not allowed for positions carried in Customer Accounts opened with different Members.

Amended on 1 April 2014 1 April 2014 and 22 April 2019 22 April 2019.

3.3.15 Transfer of Error Trades to House Account

The following requirements apply in relation to the transfer of error trades:

(a) if a Member commits an execution error (other than an error in price), the Member shall duly transfer the error trade out from the Customer Account to the Member's House Account, or such other account as the Exchange may permit;

(b) if a Member commits an execution error in price such that the price executed is not in accordance with the Customer's instruction, the Member may, after reaching an agreement with the Customer, resolve the error by compensating the Customer through cash or credit adjustment to the Customer Account. However, in a situation where the Customer does not accept cash or credit adjustment but requests the Member to abide by the instructed price, the Member may accede to the request provided that it discloses to the Customer the details of the trade execution error in the contract note issued to the Customer. These details shall include:

(i) the price that the Member has confirmed to the Customer; and

(ii) the actual price at which the trade is executed;

and

(c) the Member shall maintain proper records to document the details of the error trade, and the review and approval process by its authorised personnel. The Member shall submit to the Exchange on the first Business Day of each week, details of all execution errors in price which occurred in the preceding week where its Customers did not accept cash or credit adjustments, in the form prescribed by the Exchange from time to time.

Amended on 2 May 2016 2 May 2016.

3.3.16 Transfer of Unsuccessful Give-Up Trades to House Account

A Member may enter into a give-up arrangement with a Customer and an accepting Clearing Member, provided that such arrangement is supported by a duly executed give-up agreement. If an executed trade is not successfully given up to and accepted by the accepting Clearing Member by the end of the Trading Day following the trade date (T+1), the Member shall transfer the give-up trade to a designated account meant for unsuccessful give-up trades. This designated account shall be a House Account, or such other account as the Exchange may permit. The Member shall conduct regular reviews and take action to clear the designated account.

Refer to Regulatory Notice 3.3.16.

Amended on 2 May 2016 2 May 2016.

3.3.16A Separate Accounts

A Member must maintain separate accounts for each Person whose account is carried on the books of the Member.

Added on 26 April 2013 26 April 2013.

3.3.17 Reporting of Account Identity

A Member shall submit to the Clearing House, in the manner as prescribed from time to time, the identities of the owners or controlling parties of any House Account or Customer Account which:

(a) is used for trading of Contracts or carrying of Contracts; or

(b) contains positions required to be reported pursuant to this Rules as prescribed by the Clearing House.

Refer to Regulatory Notice 3.3.17; 3.3.18; 3.3.26; 3.3.27.

"Customer Account" as used in this Rule 3.3.17 does not include an account owned by: (a) a director, officer, employee, Approved Trader or Registered Representative of the Member; or (b) an Affiliate of the Member. "House Account" as used in this Rule 3.3.17, is an account which is not a Customer Account as defined in this Rule 3.3.17.

Amended on 2 May 2016 2 May 2016.

3.3.18 Reporting of Open Positions

The following requirements apply in relation to the reporting of Open Positions:

(a) a Member shall submit to the Exchange a daily report of Open Positions. Such report shall be in such form as the Exchange may prescribe from time to time*; and

* Refer to Regulatory Notice 3.3.17; 3.3.18; 3.3.26; 3.3.27.

(b) upon request by the Exchange, a Member shall obtain the information required by this Rule regarding the ownership and control of Open Positions within any Omnibus Account and any sub-account of any Omnibus Account. However, if the Omnibus Account holder does not want the identity of any sub-account holder to be disclosed to its carrying Member, the Omnibus Account holder may apply to the Exchange for a special identification for the sub-account thereof, for reporting Open Positions covered within this Rule through its carrying Member.

3.3.19 Omnibus Accounts

A Member may carry Omnibus Accounts subject to such requirements and procedures as the Exchange may prescribe from time to time.

3.3.20 Limits on Omnibus Accounts

The Exchange may place limitations on a Member carrying Omnibus Accounts depending on:

the number of Omnibus Accounts carried and volume of business of the Member; and
the financial condition of the Member and the Omnibus Account holders in light of requirements or standards determined by the Exchange. A Member that carries Omnibus Accounts shall ensure that the Omnibus Accounts are operated at all times in accordance with this Rules including the relevant rules on position limits and position accountability, and shall, without prejudice to any other liability it may incur, indemnify the Exchange in relation to any claim referable to such violation.

Amended on 3 August 2020.

3.3.21 Disclosures Relating to Omnibus Accounts

An Omnibus Account holder shall at all times disclose to the Member carrying that account the gross long and short positions held in that Omnibus Account in each contract. Such Member shall immediately notify the Exchange and shall promptly comply with all orders of the Exchange if the Omnibus Account holder fails to make such disclosure. A Member that carries Omnibus Accounts shall ensure that its Omnibus Account holders are aware of this Rule.

3.3.22 Audit Trail

A Member shall be required to produce a complete audit trail of transactions, from the receipt of an order to its settlement, when so requested by the Exchange.

Refer to Regulatory Notice 2.6.4.

3.3.23 Record Keeping

A Member shall ensure that data and records are:

(a) made and kept in a way that is easily retrievable by authorised personnel;

(b) kept for at least the minimum period required by the Act, Securities and Futures Regulations, and, in the case of a General Trading Member that holds a licence specified in Rule 2.4.1(b), any other relevant applicable laws and regulatory requirements relating to the regulation of markets and licenced entities; and

(c) made available to the Exchange in a timely manner when requested.

Amended on 1 April 2014 1 April 2014 and 18 January 2022.

3.3.23A Register of Securities

The following requirements apply in relation to the maintenance of a register of securities for Members, Registered Representatives and Approved Traders executing Agency Trades, except for General Trading Members that holds a licence specified in Rule 2.4.1(b) and their Registered Representatives and Approved Traders, that deal in Contracts that are classified as securities under the Act:

(a) a Member, its Registered Representatives and Approved Traders executing Agency Trades shall maintain a register of securities in accordance with the Act;

(b) If asked by the Exchange, a Member, its Registered Representatives and Approved Traders executing Agency Trades shall produce the register for inspection; and

(c) a Member, its Registered Representatives and Approved Traders executing Agency Trades shall permit the Exchange to take extracts of the register.

Added on 16 July 2012 16 July 2012 and amended on 1 April 2014 1 April 2014 and 18 January 2022.

3.3.24 IT and Data Security Requirements

A Member shall comply with all information technology and data security requirements the Exchange may prescribe from time to time including installing measures to prevent tampering of data and records.

3.3.25 ID Tags and Passwords

A Member shall issue unique identification tags and passwords to Customers and Approved Traders which have access to the Trading System through that Member.

Amended on 14 November 2016 14 November 2016.

3.3.26 Computations of Financial and Capital Requirements

A Member shall make and keep as a record, formal computations of its financial and capital requirements. The computations shall be in such form as the Exchange may prescribe and be submitted to the Exchange within such time as stipulated by the Exchange.

Refer to Regulatory Notice 3.3.17; 3.3.18; 3.3.26; 3.3.27.

3.3.27 Submission of Financial Statements and Other Information to the Exchange

The Exchange may at any time require a Member to submit to the Exchange financial statements or other information in such form and pertaining to such matters and within such time as stipulated by the Exchange. The Member shall thereafter comply with such directions as the Exchange may in its sole discretion issue.

Refer to Regulatory Notice 3.3.17; 3.3.18; 3.3.26; 3.3.27.

3.3.28 Certification by Auditor

The following requirements apply in relation to auditor certification of a Member's accounts:

(a) a Member shall be required to furnish:

(i) annual accounts duly audited by an external auditor in the jurisdiction in which that Member is incorporated or registered to the Exchange;

(ii) relevant forms in respect of its annual financial audit which it is required to lodge with its Relevant Regulatory Authority, translated into English and in such form prescribed by its Relevant Regulatory Authority, or as prescribed by the Exchange under Rule 3.3.27; and

(iii) a certificate signed by the external auditor pertaining to the audit conducted by such external auditor, in such form prescribed by the Relevant Regulatory Authority,

within five (5) months of the end of its financial year or within such longer period as may be permitted in writing by the Exchange.

(b) [deleted]

Amended on 25 August 2009 25 August 2009, 1 April 2014 1 April 2014 and 22 April 2019 22 April 2019.

3.3.29 Reporting Obligations of Auditors

A Member shall cause the external auditor referred to in Rule 3.3.28 to immediately report to the Exchange if:

(a) the external auditor becomes aware of any matter which in its opinion adversely affects or may adversely affect the financial position of the Member to a material extent;

(b) the external auditor becomes aware of any matter which in its opinion constitutes or may constitute a contravention of any provision of the Act, relevant applicable laws and regulatory requirements relating to the regulation of markets and licenced entities or this Rules, or an offence involving fraud or dishonesty;

(c) the external auditor becomes aware of any irregularity which in its opinion has or may have a material effect on the accounts, including irregularities that jeopardise the monies or other assets of any Customer; or

(d) in the external auditor's opinion, the accounting system, internal accounting control and procedures for safeguarding monies or other assets are inadequate and the inadequacies have a material effect on the accounts.

Amended on 1 April 2014 1 April 2014.

3.3.30 Change of Auditors

(a) A General Trading Member that holds a licence to engage in a Regulated Activity shall obtain the prior written approval of the Exchange in the event of any change of its existing external auditor.

(b) A Bank Trading Member shall notify the Exchange at least seven (7) days prior to any change of its existing external auditor.

(c) A General Trading Member that holds a licence specified in Rule 2.4.1(b) shall notify the Exchange at least seven (7) days prior to any change of its existing external auditor. The General Trading Member shall appoint external auditors that are accepted by its Relevant Regulatory Authority.

(d) If the Exchange is not satisfied with the performance of duties by an external auditor appointed by a Member In relation to the Trading Member's activities on the Exchange, it may:

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

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

Amended on 25 August 2009 25 August 2009 and 1 April 2014 1 April 2014.

3.3.31 Prohibition Against General Trading Member Acting as Guarantor

Unless approved by the Exchange, a General Trading Member that holds a licence to engage in a Regulated Activity and its Foreign Branches shall not act as guarantors or furnish a guarantee for the benefit of any Person, including a Related Corporation of such Member. For the avoidance of doubt, this prohibition does not apply to a Clearing Member's obligation to guarantee all trades to the Clearing House.

A General Trading Member that holds a licence specified in Rule 2.4.1(b) shall notify the Exchange immediately if it acts as guarantors or furnish a guarantee for the benefit of any Person, including a Related Corporation of such Member and such activity has or may have a financial or capital impact on the Trading Member and required to be reported to the Relevant Regulatory Authority.

Amended on 25 August 2009 25 August 2009 and 1 April 2014 1 April 2014.

3.3.32 Foreign Branch of General Trading Member

A General Trading Member licensed under the Act shall satisfy the following requirements prior to opening an overseas branch (the "Foreign Branch") and on a continuous basis:

(a) maintain $500,000 per branch as "other operational risk requirement" in the calculation of the Operational Risk Requirement.

(b) procure approvals from MAS and the Exchange to operate a Foreign Branch;

(c) procure approvals from the primary regulator in the country where the Foreign Branch is located and furnish written documentation of such approval to the Exchange;

(d) where applicable, procure approvals from the primary regulator in the country where the General Trading Member or the General Trading Member's parent company is incorporated and furnish written documentation of such approval to the Exchange;

(e) comply with this Rules and such other requirements as imposed by the Exchange on Foreign Branches from time to time;

(f) ensure that the activities of the Foreign Branch fall within the Regulated Activities which the General Trading Member is authorised to conduct under its CMS Licence, subject to any prohibitions imposed by the Exchange under Rule 3.2.5;

(g) submit an undertaking in the form prescribed by the Exchange whereby the General Trading Member provides assurances regarding the Foreign Branch's treatment of its Customer Accounts, Customers' funds, position limits and the Exchange's ability to audit and access the books and records of the Foreign Branch;* and

* Refer to Annex F — Undertaking of Foreign Branch Annex F — Undertaking of Foreign Branch.

(h) conduct an internal audit at least once every twenty-four (24) months on the Foreign Branch. The General Trading Member shall submit a copy of the internal audit report to the Exchange within one (1) week of the General Trading Member being provided with the same.

Amended on 25 August 2009 25 August 2009 and 29 December 2014 29 December 2014.

3.3.33 Application of Rule 3.3

The following Rules shall not apply to a Trading Member that holds a licence specified in Rule 2.4.1(b).

Rule	Heading
3.3.1	Customer Account and Know-Your- Customer Requirements
3.3.2	Management Approval Required for Opening Customer Accounts
3.3.4	Customer Instructions and Power of Attorney
3.3.5	Customer Education
3.3.15	Transfer of Error Trades to House Account
3.3.31	Prohibition Against General Trading Member Acting as Guarantor

A Trading Member that holds a licence specified in Rule 2.4.1(b) 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 Rule 3.3.33.

Added on 1 April 2014 1 April 2014.

3.4 Trading Practices and Conduct Rules of Members, Approved Traders and Registered Representatives

Market manipulation, market rigging and other forms of trading misconduct set forth in the Act distort the operation of a fair, orderly and transparent market and are serious offences. A Member, Approved Trader or Registered Representative shall at all times observe the trading practices and conduct rules set forth in the Act and this Rules.

3.4.1 Market Manipulation

A Member, Approved Trader or Registered Representative shall not manipulate or attempt to manipulate the price of a contract or of any underlying, or corner, or attempt to corner, any underlying.

3.4.2 Churning

A Member, Approved Trader or Registered Representative is prohibited from churning or generating commissions through creating excessive transactions in a Customer's Account.

3.4.3 False Trading, Bucketing, Fraudulent Inducement to Trade and Employment of Fraudulent Device

A Member, Approved Trader or Registered Representative shall not:

(a) engage in, or knowingly act with any other Person in, any act or practice that will or is likely to create a false or misleading appearance of active trading in any contract or a false or misleading appearance with respect to the price of any contract;

(b) knowingly execute, or hold out as having executed, an order for the purchase or sale of a contract, without having effected a bona fide purchase or sale of the contract in accordance with this Rules;

(c) induce or attempt to induce another person to trade in a contract:

(i) by making or publishing any statement, promise or forecast that it knows or ought reasonably to know to be false, misleading or deceptive;

(ii) by any dishonest concealment of material facts;

(iii) by the reckless making or publishing of any statement, promise or forecast that is false, misleading or deceptive; or

(iv) by recording or storing in any mechanical, electronic or other device information that is knowingly false or materially misleading;

or

(d) directly or indirectly in connection with any trading in a contract:

(i) employ any device, scheme or artifice to defraud;

(ii) engage in any act, practice or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception upon any Person;

(iii) make any false statement of a material fact; or

(iv) omit to state a material fact necessary in order to make any statements made, in the light of the circumstances under which they were made, not misleading.

3.4.3A Duty to Monitor for Trading Misconduct

A Member must have in place processes to review orders and trades for the purpose of detecting suspicious trading behaviour.

Refer to Practice Note 3.4.3A.

Added on 15 March 2013 15 March 2013.

3.4.4 Duty to Inform Exchange of Prohibited Trading Practices

A Member, Approved Trader or Registered Representative shall immediately inform the Exchange if it reasonably suspects, or knows of, any commission or attempted commission of the acts prohibited under Rules 3.4.1, 3.4.2 and 3.4.3.

3.4.5 Dissemination of False or Misleading Information

A Member, Approved Trader or Registered Representative shall not disseminate false or misleading reports concerning market information or conditions that may affect the price of any contract, if the Member, Approved Trader or Registered Representative:

(a) knows or ought reasonably to know that the information is false or misleading; or

(b) is reckless about the truth of the information.

This prohibition includes circulation or aiding in the circulation in any manner of rumours which cast doubt on the integrity of any contract or underlying.

3.4.6 Professional Misconduct

A Member, Approved Trader or Registered Representative shall not:

(a) permit the use of the Member's facilities or Membership privileges by another Member, Approved Trader or Registered Representative or non-Member in a manner that impairs the dignity or degrades the good name of the Exchange, or creates a market or other situation detrimental to the Exchange, or effectuates manipulations or cornerings or attempts at either, or to itself do any of the foregoing;

(b) engage in any conduct which impairs or tends to impair the dignity or the good name of the Exchange;

(c) commit an act which is substantially detrimental to the interest of the Exchange;

(d) refuse to comply with an order of the Exchange, the Disciplinary Committee or the Appeals Committee;

(e) refuse to comply with a final arbitration award;

(f) fail to answer Customers' complaints promptly and in appropriate detail;

(g) commit any fraudulent or dishonest act or any act of bad faith;

(h) act in a dishonourable or uncommercial manner;

(i) make a material mis-statement to the Exchange, the Disciplinary Committee or the Appeals Committee, or in any information supplied to the Exchange or its officers;

(j) make, or cause to be made, a false or misleading entry in any books, records, reports, slips, documents or statements relating to the business, affairs, transactions, conditions, assets or accounts of the Member;

(k) omit from making, for whatever reason, a material entry in any books, records, reports, slips, documents or statements relating to the business, affairs, transactions, conditions, assets or accounts of the Member;

(l) alter or destroy any books, records, reports, slips, documents or statements relating to the business, affairs, transactions, conditions, assets or accounts of the Member without a valid reason;

(m) make use of or reveal any confidential information obtained by reason of participating in any investigative proceeding or hearing;

(n) refuse to appear before the Exchange, the Disciplinary Committee or the Appeals Committee at a duly convened hearing or in connection with any investigation; or

(o) refuse to fully answer all questions or produce all books and records in relation to any audit, hearing or investigation.

3.4.7 Disclosing Orders Prohibited

A Member, Approved Trader or Registered Representative shall not disclose an order to any Person, except to the following for official purposes:

(a) an officer of the Exchange;

(b) an employee or agent of the Member for the purpose of executing the order;

(c) the Member's sponsoring Clearing Member for the purpose of clearing the order; or

(d) such other Persons as required by law.

3.4.8 Good Faith Bids and Offers.

A Member or an Approved Trader shall not knowingly enter, or cause to be entered, bids or offers into the Trading System other than in good faith for the purpose of executing bona fide transactions.

Refer to Practice Note 3.4.8.

Amended on 14 November 2016 14 November 2016.

3.4.9 Fictitious Transactions Without Change In Ownership

The creation of fictitious transactions or the placing of orders which do not involve any change in ownership, or the execution of such an order with knowledge of its character by a Member, Approved Trader or Registered Representative is prohibited. A Member, Approved Trader or Registered Representative shall not accept buying and selling orders at the same time and price from a Customer for the same contract month of the same futures contract or in the case of option contracts, a put or call option contract with the same class of options, the same strike price and expiration month. This Rule does not apply if orders are entered in the following circumstances:

(a) the orders are from a fund manager whose instructions are intended to switch the contract from one (1) sub-account to another for legitimate commercial reasons;

(b) the orders will be booked out finally to different beneficial owners; or

(c) if the Member or the Approved Trader establishes to the Exchange that it was not a purpose of the orders to create a false market.

Refer to Practice Note 3.4.9.

3.4.10 Overtrading by a Member, Approved Trader or Customer

The following provisions apply in relation to overtrading:

(a) a Member shall not execute any trade beyond any limits imposed by that Member's sponsoring Clearing Member, the Exchange, the Clearing House or MAS. A Member shall ensure that its Customers do not trade beyond any limits. A Member shall be guilty of overtrading if such Member or its Approved Trader enters into any trade or trades beyond any limits imposed from time to time by its sponsoring Clearing Member, the Exchange or MAS. If a Member is charged with violating this Rule:

(i) the Exchange may at its discretion suspend that Member from trading until such time as the Disciplinary Committee or the Appeals Committee has completed the hearing in respect of such charge against such Member;

(ii) its sponsoring Clearing Member shall, upon being notified by the Exchange or the Clearing House as the case may be, withhold any profits due or owing to such Member from the transaction that resulted in overtrading, or such monies due or owing to such Member as directed by the Exchange or the Clearing House, and shall not release any such profits or monies until the Disciplinary Committee or the Appeals Committee has completed the hearing in respect of the charge against the Member; and

(iii) without prejudice to the foregoing, the Exchange may, in any case of overtrading, direct the Clearing House to withhold any profits due or owing to any Clearing Member from the transaction that resulted in overtrading, or such monies due or owing to such Member, until the Disciplinary Committee or the Appeals Committee has completed the hearing in respect of the charge against the Member; and

(b) [deleted]

(c) each trade entered into beyond any limits imposed by a sponsoring Clearing Member, the Exchange, the Clearing House or MAS shall be deemed to be a distinct and separate violation of this Rule and shall be punishable as such. If a Member is charged by the Exchange for overtrading, it is not necessary for the Exchange to show that the Member intended to overtrade. The act of overtrading is sufficient to constitute an offence under this Rules.

Amended on 15 March 2013 15 March 2013.

3.4.11 Knowingly Taking Advantage of an Error Prohibited

A Member, Approved Trader or Registered Representative shall not knowingly take advantage of a situation arising from:

(a) a breakdown or malfunction in any Exchange Systems; or

(b) error entries made by the Exchange on the Trading System.

Amended on 14 November 2016 14 November 2016.

3.4.12 Deemed Rule Violations

A Member, Approved Trader or Registered Representative shall be deemed to be in violation of this Rules if it is convicted of any offence relating to fraud, any act of bad faith, dishonest conduct, dishonorable conduct or uncommercial conduct before any court of law.

3.4.13 Front Running — Priority of Customers' Orders

A Member, Approved Trader or Registered Representative shall not trade in contracts for its own accounts or for an account associated with or connected to that Member, Approved Trader or Registered Representative, if that Member, Approved Trader or Registered Representative also has in hand Customers' orders (including discretion orders) to do the same at the prevailing market price or at the same price. This Rule does not apply if:

(a) that Member, Approved Trader or Registered Representative has no access to the Customer's order flow information;

(b) the Customer has prescribed that the order be executed under specified conditions and the order cannot be executed by reason of those conditions; or

(c) the transaction is entered into in circumstances prescribed by MAS.

"Customer" as used in this Rule 3.4.13 does not include the Member's Approved Traders, Registered Representatives or Persons associated with or connected to the Member, Approved Trader or Registered Representative.

3.4.14 Trading Against Customers' Orders Prohibited

A Member, Approved Trader or Registered Representative shall not knowingly effect a transaction to buy from or sell to a Customer any contract for:

(a) an account in which the Member, Approved Trader or Registered Representative has an interest; or

(b) the account of any Person associated with or connected to the Member, Approved Trader or Registered Representative.

This Rule does not apply if the Member, Approved Trader or Registered Representative has first entered the Customer's order into the Trading System and waited at least 10 seconds before entering an opposite order, or if the Member, Approved Trader or Registered Representative has obtained the Customer's prior written consent. "Customer" as used in this Rule 3.4.14 does not include the Member's Approved Traders, Registered Representatives or Persons associated with or connected to the Member, Approved Trader or Registered Representative.

Amended on 14 November 2016 14 November 2016.

3.4.15 Prohibited Conduct

A Member, a Registered Representative or an Approved Trader shall not participate in any prohibited market conduct or in any insider trading, or knowingly assist a person in such conduct.

Added on 16 July 2012 16 July 2012.

3.5 Inspection and Audit

3.5.1 Scope of Inspection and Audit Rights

The Exchange, in its discretion, may inspect, audit and take copies of the accounts, books, contracts and other records and documents of that Member to the extent that is necessary or desirable in connection with the discharge of the Exchange's regulatory obligations. The Exchange may also appoint or cause the Member to appoint independent Persons to do the same. Such Person shall report to the Exchange on all or any of the following:

(a) whether that Member's accounts are being kept and maintained in compliance with this Rules;

(b) whether that Member's financial position is being maintained in compliance with this Rules;

(c) whether that Member's business is being conducted in compliance with this Rules;

(d) whether that Member's accounts, financial position or any non-compliance with this Rules may jeopardize the integrity of the Exchange; and

(e) such other matter as the Exchange may direct.

3.5.2 Access and Cooperation

A Member shall cooperate with the Exchange and procure for the Exchange or the duly appointed Person:

(a) access to its premises or its affiliates' premises, as applicable, to carry out on-site inspections during normal business hours;

(b) access to the appropriate person for any queries or interviews which the Exchange or the duly appointed Person wishes to conduct in connection with its audit;

(c) any information or documents which the Exchange or the duly appointed Person considers appropriate for the purpose of investigations; and

(d) its Customers' full cooperation with the Exchange.

Amended on 2 May 2016 2 May 2016.

3.5.3 Use of Report and Costs

The Exchange may rely on the information obtained and reports prepared pursuant to Rule 3.5.1 and act on the recommendations set forth therein. The Exchange may also refer a report prepared pursuant to Rule 3.5.1 to the Clearing House or Disciplinary Committee for further action if appropriate. The Exchange may charge a fee for any inspection under Rule 3.5.1. The fee is payable immediately by the Member concerned.