Chapter 4 — Trading Members

4.1.1

To be eligible for admission as a Trading Member, an applicant must:—

(1) unless otherwise exempted, procure and maintain the requisite licence(s) from the Relevant Regulatory Authority, to engage in regulated activities, including where appropriate trading in futures contracts, as follows:

(a) where it is a Corporation carrying on business in Singapore, a Capital Markets Services Licence; or

(b) where it is a Corporation not carrying on business in Singapore and not incorporated in Singapore, and it or its employees and agents does not engage in regulated activities in Singapore, a licence from a Relevant Regulatory Authority in the country where it is carrying on business. If SGX-ST is of the view that the regulatory requirements arising from the licence are not comparable to those contemplated under the Act and these Rules, it shall have the discretion to prescribe additional requirements;

(2) be qualified by a Clearing Member (unless it is admitted as a Clearing Member);

(3) satisfy the capital and financial requirements SGX-ST prescribes;

(4) upon admission, appoint at least 1 Approved Executive Director; and

(5) have facilities and staff adequate for expeditious and orderly trading, operations and activities.

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

4.2 Application Procedures

4.2.1

To become a Trading Member, an applicant must apply to SGX-ST in the form SGX-ST prescribes.

4.2.2

The applicant must inform SGX-ST in writing of the Clearing Member who has agreed to qualify it (unless it is admitted as a Clearing Member). The applicant must submit to SGX-ST the documentation supporting the agreement.

4.2.3

SGX-ST may, in its absolute discretion, approve or reject an application to be a Trading Member. SGX-ST is not obliged to give any reasons.

4.2.4

Without derogating from Rule 4.2.3, SGX-ST may reject an application to be a Trading Member if:—

(1) the applicant does not provide information relating to the application as SGX-ST requires;

(1A) any information or document that is furnished by the applicant to SGX-ST is false or misleading;

(2) the applicant, its substantial shareholders or head office, is in the course of being wound up, or a resolution to do so is passed by shareholders, or a court order is made, to wind it up, whether in or out of Singapore;

(3) execution against the applicant, its substantial shareholders or head office, in respect of a judgment debt has been returned unsatisfied in whole or in part, whether in or out of Singapore;

(4) the applicant, its substantial shareholders or head office, has entered into an arrangement or composition with its creditors that is still in operation, whether in or out of Singapore;

(5) a receiver, a receiver and manager, judicial manager or such other person having similar powers and duties, has been appointed, whether in or out of Singapore, in relation to any property of the applicant, its substantial shareholders or head office;

(6) SGX-ST is not satisfied with the financial standing of the applicant, its substantial shareholders or head office;

(7) SGX-ST is not satisfied with the manner in which the applicant's business is to be conducted;

(8) the applicant, any of its Officers, substantial shareholders or head office breaches any provision involving fraud or dishonesty, whether in or out of Singapore;

(9) the applicant, any of its Officers, substantial shareholders or head office has been convicted of an offence under the Securities and Futures Act or any other relevant applicable laws and regulatory requirements relating to the regulation of markets and licenced entities;

(10) the applicant, any of its Officers, substantial shareholders or head office is the subject of an investigation involving an allegation of fraud or dishonesty, whether in or out of Singapore;

(11) SGX-ST is not satisfied as to the educational or other qualification or experience of the Officers of the applicant;

(12) SGX-ST is not satisfied with the applicant's record of past performance;

(13) SGX-ST is not satisfied that the applicant, any of its Officers, substantial shareholders or head office is a fit and proper person;

(14) SGX-ST has reason to believe that the applicant or any of its Officers or employees may not perform the functions efficiently, honestly and fairly;

(15) SGX-ST has reason to believe that the applicant may not act in the best interests of its customers; or

(16) in SGX-ST's opinion, it would be contrary to the interests of the public to admit the applicant as a Trading Member.

Amended on 12 October 2005 12 October 2005 and 19 May 2014 19 May 2014.

4.3 Appeals

4.3.1

If SGX-ST rejects an application to be a Trading Member, the applicant may, within 14 days after it is notified of SGX-ST's decision, appeal in writing to the SGX RegCo Board whose decision will be final.

Amended on 15 September 2017 15 September 2017.

4.4 Register of Trading Members

4.4.1

An applicant approved by SGX-ST as a Trading Member will have its name entered in the Register of Trading Members. SGX-ST will notify all Trading Members of the effective date of a Trading Member's admission.

4.5 Trading Rights

4.5.1

A Trading Member has access to organised markets established or operated by SGX-ST or such organised markets as SGX-ST specifies.

Amended on 8 October 2018 8 October 2018.

4.5.2

A Trading Member does not have the right to clear and settle contracts concluded on SGX-ST.

4.5.3

Subject to Rule 4.5.4, a Trading Member may deal in securities or futures contracts for 1 or more of the following:—

(1) customers;

(2) its proprietary accounts; and

(3) proprietary accounts of its related corporations or Associated Corporations.

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

4.5.4

A Trading Member that holds a licence specified in Rule 4.1.1(1)(b) shall not deal in securities or futures contracts for customers domiciled in Singapore.

Added on 19 May 2014 19 May 2014 and amended on 8 October 2018 8 October 2018.

4.5A Direct Market Access

4.5A.1

A Trading Member may authorise Direct Market Access for its customers in respect of markets established by or operated by SGX-ST or such markets as SGX-ST specifies.

Added on 18 September 2012 18 September 2012.

4.5A.2 Conditions Governing Direct Market Access

(1) For every customer that a Trading Member authorises Direct Market Access for, the Trading Member must have measures in place for each customer to:—

(a) meet minimum standards including standards on financial standing, credit history and criminal records, adverse records or pending court proceedings relating to prohibited market conduct;

(b) have appropriate procedures in place to assure that all relevant persons:—

(i) are familiar with and comply with these Rules;

(ii) have knowledge and proficiency in the use of the order management system;

(c) be provided information concerning its access to the Trading System and applicable laws:

(d) be subject to a legally binding agreement governing the terms and conditions for such Direct Market Access;

(e) have security arrangements in place to ensure that unauthorised persons are denied such Direct Market Access; and

(f) assist SGX-ST in any investigation into potential violations of these Rules and applicable laws. Such assistance shall be timely and shall include, but is not limited to, the provision of information to SGX-ST relating to the identity and address of any person who may be responsible for the execution of an order or trade.

(2) Where a Trading Member permits the delegation of Direct Market Access by its authorised customer and any other persons, the Trading Member must include in the legally binding agreement referred to in Rule 4.5A.2(1)(d) the requirement for such customer and any other persons delegating Direct Market Access to ensure that all persons with Direct Market Access are subject to the requirements set out in Rules 4.5A.2(1)(a) to (f).

(3) SGX-ST may require a Trading Member to provide to SGX-ST a report by an independent reviewer on the Member's compliance with Rules 4.5A.2, 4.5A.3 and 4.5A.4(2).

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

4.5A.3 Conditions Governing Sponsored Access

(1) Where a Trading Member authorises Sponsored Access for its customers, in addition to the requirements set out in Rule 4.5A.2, the Trading Member must:—

(a) maintain a register recording the identity and address of all customers with Sponsored Access;

(b) produce to SGX-ST the register referred to in Rule 4.5A.3(1)(a) at such time as SGX-ST requires; and

(c) have measures in place for each customer to comply with the requirements set out in Rule 4.6.22, Rule 12.1.1, Directive No. 4, Directive No.5 and any other requirement set out by SGX-ST relating to the order management system.

(2) Where a Trading Member permits the delegation of Sponsored Access by its authorised customer and any other persons:—

(a) the Trading Member must have measures to ensure that the authorised customer and any other persons delegating Sponsored Access:

(i) are persons regulated by a recognised regulatory authority in respect of any regulated activity; or

(ii) where such persons are not regulated in accordance with Rule 4.5A.3(2)(a)(i), that such persons are Trading Members of SGX-ST, and that such persons shall only be permitted to delegate Sponsored Access to their related corporations; and

(b) the Trading Member must include in the legally binding agreement referred to in Rule 4.5A.2(1)(d) the requirement for such customer and any other persons delegating Sponsored Access to ensure that all persons with Sponsored Access are included in the register referred to in Rule 4.5A.3(1)(a) and subject to the requirements set out in Rule 4.5A.3(1)(c).

For the purpose of this Rule 4.5A.3, "recognised regulatory authority" refers to a signatory to the International Organization of Securities Commissions' Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information, and “regulated activity” shall have the same meaning as in the Securities and Futures Act.

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

4.5A.4 Suspension and Termination of Direct Market Access

(1) SGX-ST may suspend or terminate, or direct a Trading Member to suspend or terminate a person's Direct Market Access:—

(a) where the person has failed to assist SGX-ST with an investigation in accordance with Rule 4.5A.2(1)(f);

(b) in the interest of a fair, orderly and transparent market; or

(c) where the person has caused the Trading Member to breach requirements in the Rules.

(2) A Trading Member must have the ability to immediately suspend or terminate a person's Direct Market Access when necessary for the fulfillment of its duties under Rule 4.6.4 or any other reason.

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

4.5B Controlling Access

4.5B.1

A Trading Member must have security arrangements in place to ensure that unauthorised persons are denied access to markets established by or operated by SGX-ST or such markets as SGX-ST specifies.

Added on 18 September 2012 18 September 2012.

4.6 Obligations of A Trading Member

4.6.1 Compliance

A Trading Member must:—

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

(2) continue to satisfy the admission criteria.

4.6.2 Acts as Principal

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

4.6.3 Contracts

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

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

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

(b) via Direct Business.

Amended on 3 April 2008 3 April 2008.

4.6.4 Good Business Practice

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

4.6.5 Responsibility to SGX-ST

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

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

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

4.6.6 Supervision

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

4.6.7 Establish Procedures and Systems

A Trading Member must:—

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

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

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

Amended on 19 May 2014 19 May 2014.

4.6.7A Risk Management and Financial Controls

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

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

(b) ensuring that:

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

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

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

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

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

Refer to Practice Note 4.6.7A(2).

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

4.6.8 Change in Control

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

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

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

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

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

Amended on 15 September 2017 15 September 2017.

4.6.9 Reporting

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

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

(2) breaches the Rules or Directives;

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

(4) breaches the rules of any other exchange;

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

(6) breaches director's duties;

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

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

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

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

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

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

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

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

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

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

4.6.10 Payment

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

4.6.11 Approved Executive Director

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

4.6.12 Directors

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

4.6.13 Trading Representatives

A Trading Member must:—

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

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

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

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

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

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

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

(4) [Deleted.]

(5) [Deleted.]

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

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

4.6.14 Memorandum and Articles of Association

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

4.6.15 Other Businesses

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

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

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

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

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

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

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

4.6.16 Register of Securities

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

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

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

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

4.6.17 Business Name

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

4.6.18 Issue of Shares

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

4.6.19 Voluntary Liquidation

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

4.6.20 Trading Member Ceases to Carry on Business

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

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

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

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

4.6.21 Business Continuity Requirements

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

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

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

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

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

Refer to Practice Note 4.6.21.

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

4.6.22 Adequacy of Systems

A Trading Member must ensure that its systems and connections to the Trading System operate properly, and have adequate and scalable capacity to accommodate trading volume levels.

Refer to Directive No. 5.

Added on 18 September 2012 18 September 2012.

4.7 Qualification by A Clearing Member

4.7.1 Qualified by a Clearing Member

(1) A Trading Member must not execute a contract on SGX-ST unless it is qualified by a Clearing Member.

(2) At any time, a Trading Member must be qualified by no more than 1 Clearing Member.

(3) A Trading Member must immediately inform SGX-ST in writing if:—

(a) it is not qualified by a Clearing Member; or

(b) its qualifying Clearing Member is replaced by another Clearing Member. The Trading Member must submit to SGX-ST a copy of the written agreement between the new qualifying Clearing Member and itself.

4.7.2 Clearing of Contracts by Qualifying Clearing Member

A Trading Member must ensure all contracts concluded on SGX-ST are submitted to its qualifying Clearing Member for clearing.

4.8 Resignation

4.8.1 Procedures

If a Trading Member intends to resign, it must:—

(1) give SGX-ST at least 30 days' written notice, stating the proposed date of resignation. SGX-ST may vary or waive the notice period. If the resignation is accepted, SGX-ST will notify all Trading Members of the effective date of resignation;

(2) not enter into any contract 7 Market Days from the date of notice except with the written approval of SGX-ST;

(3) satisfy SGX-ST that it has taken, or will take, steps for the orderly winding down of its business with SGX-ST; and

(4) satisfy SGX-ST that it has fulfilled or is able to fulfill:—

(a) its obligations to SGX-ST; and

(b) its obligations to its customers as SGX-ST may specify. For avoidance of doubt, a Trading Member must continue to comply with the Rules, and any Directives as may be imposed by SGX-ST until resignation.

4.8.2 Acceptance of Resignation by SGX-ST

SGX-ST need not accept the resignation of a Trading Member if it is:—

(1) conducting an investigation under the Rules, investigating a complaint, or has initiated disciplinary proceedings against the Trading Member; or

(2) not satisfied that the Trading Member has fulfilled or is able to fulfill:—

(a) its obligations to SGX-ST; and

(b) its obligations to its customers as SGX-ST may specify.

4.8.3 Deletion from Register

If SGX-ST accepts a Trading Member's resignation, the Trading Member's name will be deleted from the Register of Trading Members upon the effective date of resignation.

4.9 Cessation of Trading Access

4.9.1

A Trading Member's access to organised markets established or operated by SGX-ST ceases if:—

(1) a resolution is passed by its shareholders, or a court order is made, to wind it up;

(2) an arrangement or composition is entered into with its creditors under any law relating to bankruptcy or insolvency;

(3) it is not qualified by a Clearing Member or its qualification by a Clearing Member has been suspended;

(4) it is suspended;

(5) it ceases to carry on business pursuant to Rule 4.6.20;

(6) it is declared a defaulter pursuant to Chapter 14; or

(7) licence(s) to conduct the relevant regulated activities from the Relevant Regulatory Authority lapses or is revoked, or in the case where it is exempted from holding a licence, the Relevant Regulatory Authority withdraws the exemption.

Amended on 29 November 2010 29 November 2010, 11 January 2011 11 January 2011, 19 May 2014 19 May 2014 and 8 October 2018 8 October 2018.

4.9.2

When a Trading Member's right to access organised markets established or operated by SGX-ST has ceased, SGX-ST will notify all Trading Members of the effective date of cessation and the date of reinstatement of access rights (if applicable).

Amended on 8 October 2018 8 October 2018.

4.9.3

A Trading Member whose access to organised markets established or operated by SGX-ST has ceased must continue to comply with the relevant Rules, and any Directives.

Amended on 8 October 2018 8 October 2018.

4.10 Obligations of a Former Trading Member

4.10.1

A former Trading Member remains liable to SGX-ST and its customers for any liabilities incurred under the Rules or Directives during the period of its membership. The former Trading Member also remains subject to disciplinary actions for any offence committed during the period of its membership.