Chapter 6 Designated Market-Makers

6.1.1

To be eligible for registration as a Designated Market-Maker, an applicant must be a Corporation that is deemed appropriate by SGX-ST.

Added on 3 June 2019 3 June 2019.

6.2.1

To become a Designated Market-Maker, an applicant must apply to SGX-ST in the form and manner SGX-ST prescribes.

Added on 3 June 2019 3 June 2019.

SGX-ST may, in its absolute discretion, approve or reject an application to be a Designated Market-Maker, having due regard to, among other things, the appropriateness, financial condition and fitness and propriety of the applicant, its substantial shareholders, Chief Executive Officer and Directors.

Added on 3 June 2019 3 June 2019.

6.2.3

Without derogating from Rule 6.2.2, the factors that SGX-ST may consider when approving an application to be a Designated Market-Maker include but are not limited to the following:

(a) whether the applicant or its substantial shareholders, 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;

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

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

(d) whether 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, or its substantial shareholders;

(e) whether SGX-ST is not satisfied with the financial standing of the applicant or its substantial shareholders;

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

(g) whether the applicant, or any of its substantial shareholders, Chief Executive Officer or Directors is convicted of an offence involving fraud or dishonesty or is found by a court of law to have acted fraudulently or dishonestly, whether in or out of Singapore;

(h) whether the applicant, or any of its substantial shareholders, Chief Executive Officer or Directors 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;

(i) whether the applicant, or any of its substantial shareholders, Chief Executive Officer or Directors is the subject of an investigation involving an allegation of fraud or dishonesty, whether in or out of Singapore;

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

(k) whether SGX-ST is not satisfied that the applicant, any of its Chief Executive Officer or Directors are able to satisfy such experience and competency requirements as SGX-ST may prescribe;

(l) whether SGX-ST has reason to believe that the applicant or any of its Chief Executive Officer or Directors may not perform their functions efficiently, honestly and fairly;

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

(n) whether the applicant, unless exempted, does not have the requisite licence(s) with the Authority;

(o) whether the applicant, if it does not hold a Capital Markets Services Licence, is not regulated in a jurisdiction with regulatory standards comparable to those contemplated under the Securities and Futures Act and these Rules;

(p) whether the applicant's regulatory authority does not have an information sharing and co-operation arrangements with the Authority; and

(q) whether in SGX-ST's opinion, it would be contrary to the interests of the public to register the applicant as a Designated Market-Maker.

Added on 3 June 2019 3 June 2019.

6.2.4

SGX-ST may approve an application subject to such conditions or restrictions and for such period as SGX-ST may in its discretion deem appropriate including but not limited to restrictions on the applicant's scope of business and operations. SGX-ST shall inform the applicant of the imposition or withdrawal of any such conditions or restrictions in writing. A breach of any one of such conditions or restrictions shall constitute a breach of the Rules.

Added on 3 June 2019 3 June 2019.

6.2.5

SGX-ST may, in its absolute discretion at any time by notice in writing, vary or lift any such conditions or restrictions, or impose such further conditions or restrictions as it may think fit.

Added on 3 June 2019 3 June 2019.

6.3 Appeals

6.3.1

If SGX-ST rejects an application to be a Designated Market-Maker, 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.

Added on 3 June 2019 3 June 2019.

6.4 Register of Designated Market-Makers

6.4.1

An applicant approved by SGX-ST as a Designated Market-Maker will have its name entered in the Register of Designated Market-Makers. SGX-ST will notify all Designated Market-Makers and Trading Members of the effective date of the Designated Market-Maker's registration.

Added on 3 June 2019 3 June 2019.

6.5 Proprietary Accounts

6.5.1

A Designated Market-Maker may make a market in Specified Instruments for one or more of the following:

(a) its proprietary accounts; and

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

Added on 3 June 2019 3 June 2019.

6.6 Obligations of a Designated Market-Maker

6.6.1 Compliance with Rules

(a) A Designated Market-Maker shall comply with the Rules at all times where relevant and continue to satisfy the registration criteria and any approval conditions or restrictions prescribed by SGX-ST.

(b) SGX-ST may, in its absolute discretion at the request of a Designated Market-Maker, waive or vary any obligation of the Designated Market-Maker.

Added on 3 June 2019 3 June 2019.

6.6.2 Bid and Offer Quotations

(a) A Designated Market-Maker must provide on the Trading System competitive bid and offer quotations:

(i) on a continuous basis or in such other manner as SGX-ST prescribes to provide for an adequately liquid market with suitable disclosure to investors;

(ii) within the maximum spread; and

(iii) for not less than the minimum quantity that SGX-ST prescribes.

(b) In the event a Designated Market-Maker ceases to provide bid and offer quotations (whether due to foreseen or unforeseen circumstances), it must, as soon as practicable,:

(i) notify SGX-ST of the cessation as well as the reasons for it; and

(ii) make a public announcement of the cessation.

(c) Upon resumption, the Designated Market-Maker must similarly notify SGX-ST and make a public announcement as soon as practicable. At the appropriate juncture, the Designated Market-Maker must make a public announcement of the reasons for cessation of market-making.

Added on 3 June 2019 3 June 2019.

6.6.3 Adequate Internal Control Systems

(a) A Designated Market-Maker must establish and maintain adequate internal control systems to ensure smooth operation of its market-making activities.

(b) A Designated Market-Maker shall pre-notify SGX-ST of any change to its internal control systems that may affect the carrying out of its obligations stipulated under this Chapter 6.

(c) SGX-ST reserves the right to review current or impose additional requirements if it is not satisfied with the internal control systems of the Designated Market-Maker.

(d) Where a Designated Market-Maker is also performing regulated activities, the Designated Market-Maker must establish adequate segregation between their market-making activities and regulated activities.

Added on 3 June 2019 3 June 2019.

6.6.4 Execution of Trades

If a Designated Market-Maker is not a Trading Member, its trades in any Specified Instruments must be made through a Trading Member.

Added on 3 June 2019 3 June 2019.

6.6.5 Market-Making Representative

(a) A Designated Market-Maker must appoint at least one person as its market-making representative to receive and execute orders on its behalf. The person must be registered with SGX-ST as a market-making representative.

(b) A market-making representative shall comply with the Rules where relevant.

Added on 3 June 2019 3 June 2019.

6.6.6 Auditors' Report

A Designated Market-Maker must provide an independent auditors' report to SGX-ST at SGX-ST's request. This is for SGX-ST to review the Designated Market-Maker's performance or suitability as a Designated Market-Maker. The report may relate to the Designated Market-Maker's financial standing, personnel or internal control procedures.

Added on 3 June 2019 3 June 2019.

6.6.7 Payment

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

Added on 3 June 2019 3 June 2019.

6.6.8 Notification of Adverse Events

A Designated Market-Maker shall, save as otherwise provided in this Rule 6.6.8, immediately notify SGX-ST if:

(a) it is unable, or is likely to be unable to satisfy any of the approval conditions or restrictions prescribed by SGX-ST;

(b) it is unable, or is likely to be unable to satisfy any of its obligations as a Designated Market-Maker under the Rules;

(c) it or its substantial shareholder, Chief Executive Officer, Director or market-making representative:

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

(ii) breaches the Rules;

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

(iv) breaches the rules of any other exchange;

(v) has been alleged or found to have breached director's duties under common law or applicable statute;

(vi) is the subject of a written complaint or investigation involving an allegation of fraud or dishonesty, is convicted of an offence involving fraud or dishonesty, or is found by a court of law to have acted fraudulently or dishonestly, whether in or out of Singapore;

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

(viii) is experiencing an emergency or potentially debilitating situation that threatens its operations (e.g. a cyber threat or terror attack);

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

(x) has had its licence or relevant approval to conduct the relevant regulated activities suspended, revoked, or expired, or in the case where it is exempted from holding a licence or obtaining approval, the exemption is withdrawn or conditions or restrictions are imposed in respect of the relevant regulated activities;

(xi) engages in conduct that is inconsistent with the principles of good business practice;

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

(xiii) is insolvent or wound-up, or has had an insolvency or winding-up application presented, or an order made by a court of competent jurisdiction, or any step is taken or a resolution passed, for its winding-up, dissolution, judicial management or administration; or

(xiv) has had any attachment, distress, execution or legal process instituted against its assets, or has had any liquidator, receiver or any similar person appointed (or an application has been made for the appointment of such person) in respect of any of its assets.

Notwithstanding this Rule 6.6.8, in the case of an emergency or potentially debilitating situation under Rule 6.6.8(c)(viii), the Designated Market-Maker may inform SGX-ST as soon as practicable, but in any case no later than one hour, after its discovery of the situation. SGX-ST may require a Designated Market-Maker to inform SGX-ST in respect of any other matters and in such form as SGX-ST determines.

Added on 3 June 2019 3 June 2019.

6.7 Suspension or Restriction of Trades in Specified Instruments

6.7.1

SGX-ST may suspend, restrict or halt trading in any or all Specified Instruments in accordance with the Rules.

Added on 3 June 2019 3 June 2019.

6.7.2

Except with SGX-ST's approval, a Designated Market-Maker must not make a market in a Specified Instrument that is suspended or subject to a trading halt. SGX-ST may specify conditions under which the Designated Market-Maker is permitted to do so.

Added on 3 June 2019 3 June 2019.

6.7.3

If SGX-ST imposes restrictions on trades in any Specified Instruments, a Designated Market-Maker must not make a market in Specified Instruments that will breach the restrictions.

Added on 3 June 2019 3 June 2019.

6.8 Suspension and Restriction of Activities

6.8.1

SGX-ST may suspend or restrict the activities of a Designated Market-Maker for such period as SGX-ST specifies if:

(a) the Designated Market-Maker fails to continue to satisfy the registration criteria or any approval condition or restriction prescribed by SGX-ST;

(b) the Designated Market-Maker fails to comply with any Rule applicable to Designated Market-Makers, the Securities and Futures Act, or any applicable law;

(c) the Designated Market-Maker fails to comply with the Rules in its capacity as a Trading Member (if applicable);

(d) the Designated Market-Maker is suspended in its capacity as a Trading Member or its trading access is ceased (if applicable);

(e) the Designated Market-Maker defaults on any trade in a Specified Instrument or any other securities or futures contracts;

(f) the Designated Market-Maker, in SGX-ST's opinion, is in financial or operating difficulty, or is unable to perform its obligations as Designated Market-Maker;

(g) the Designated Market-Maker, in SGX-ST's opinion, engages in conduct detrimental to the financial integrity, reputation or interests of SGX-ST, or organised markets established or operated by SGX-ST;

(h) the Designated Market-Maker is suspected of or found to be manipulating or distorting the market for a Specified Instrument or attempting to do so;

(i) the Designated Market-Maker is the subject of a written complaint or investigation involving an allegation of fraud or dishonesty or market misconduct, or is convicted of an offence involving fraud or dishonesty or market misconduct, or is found by a court of law to have acted fraudulently or dishonestly or engaged in market misconduct, whether in or out of Singapore; or

(j) it is necessary or desirable in the interests of maintaining a fair and orderly market or for ensuring a safe and efficient clearing facility, or for ensuring the integrity of the market or for proper management of systemic risk, or for investor protection, or it is directed by any authority.

Added on 3 June 2019 3 June 2019.

6.9 Revocation of Registration

6.9.1

SGX-ST may revoke the registration of a Designated Market-Maker with immediate effect:

(a) in the circumstances under Rule 6.8.1; or

(b) if the Designated Market-Maker is expelled as a Trading Member as a result of disciplinary proceedings.

Added on 3 June 2019 3 June 2019.

6.10 Notification of Action and Appeal

6.10.1

If SGX-ST intends to take action against a Designated Market-Maker or a market-making representative under Rule 6.8 or Rule 6.9, it will inform the Designated Market-Maker or market-making representative in writing. Such action will be effective on the date specified in the written notice.

Added on 3 June 2019 3 June 2019.

6.10.2

If SGX-ST revokes the registration of a Designated Market-Maker under Rule 6.9, the Designated Market-Maker 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.

Added on 3 June 2019 3 June 2019.

6.11 Resignation

6.11.1 Procedures

(a) A Designated Market-Maker who intends to resign from making a market for a Specified Instrument must give at least 30 days' written notice to SGX-ST, stating the proposed date of resignation. SGX-ST may vary or waive the notice period. SGX-ST will notify all Designated Market-Makers and Trading Members of the effective date of resignation.

(b) A Designated Market-Maker must continue to comply with any Rule applicable to Designated Market-Makers as may be imposed by SGX-ST until the effective date of resignation.

Added on 3 June 2019 3 June 2019.

6.11.2 Acceptance of Resignation by SGX-ST

(a) SGX-ST shall have the absolute discretion to accept the resignation, postpone the effective date of the resignation and/or without prejudice to the courses of action available to SGX-ST, take such measures as it may determine appropriate before or after the resignation takes effect. Notwithstanding the foregoing, SGX-ST may in its absolute discretion refuse to accept the resignation of a Designated Market-Maker if it is:

(i) conducting an investigation under the Rules, investigating a complaint, or has initiated disciplinary proceedings against the Designated Market-Maker; or

(ii) not satisfied that the Designated Market-Maker has fulfilled or is able to fulfil all its obligations to SGX-ST.

(b) If SGX-ST accepts a Designated Market-Maker's resignation, the Designated Market-Maker's name will be deleted from the register of Designated Market-Makers upon the effective date of resignation.

Added on 3 June 2019 3 June 2019.

6.12 Obligations of a Former Designated Market-Maker

6.12.1

A former Designated Market-Maker remains liable to SGX-ST and its customers (if applicable) for any liabilities incurred under or in connection with the Rules during the period of its registration in respect of a Specified Instrument. The former Designated Market-Maker also remains subject to disciplinary action for any breach of the Rules committed during the period of its registration.

Added on 3 June 2019 3 June 2019.

6.12.2

The following Rules shall continue to apply to a former Designated Market-Maker — Rule 1.9 (Limitation of Liability), Rule 1.10 (Indemnity), Rule 1.11 (Provision of Information), Rule 1.12.2 (Disclosure of Information by SGX-ST), Chapter 12 (Supervision and Enforcement), this Rule 6.12, and any other Rules that contemplate and are capable of operation after the cessation or de-registration of a Designated Market-Maker, whether pursuant to this Rule 6.12 or otherwise.

Added on 3 June 2019 3 June 2019.