SGX Rulebooks
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1. Introduction

1.1

Rule 5.7.1 states that save in specified situations, neither a Trading Member nor a Trading Representative shall deal in securities or futures contracts for its own account or for a Prescribed Person's account if the Trading Representative has an unexecuted order on the same terms from a customer.

Added on 3 June 20193 June 2019.

1.2

Rule 5.7.2 defines "Prescribed Person" as including a person, a group of persons, a Corporation or a group of Corporations, or family trusts, whom the Trading Member, or any Director, Officer, Trading Representative, employee or agent of the Trading Member is associated with or connected to.

Added on 3 June 20193 June 2019.

1.3

This Practice Note explains the application of Rule 5.7.

Added on 3 June 20193 June 2019.

2. Application of Rule 5.7.1

2.1

An order includes an order for a single stock futures contract or futures contracts.

Added on 3 June 20193 June 2019.

2.2

An unexecuted order from a customer includes an order that has been received but not entered into the Trading System.

Added on 3 June 20193 June 2019.

2.3

"On the same terms" includes:

(a) orders for the same counter, same buy/sell instruction and limit price;
(b) a price limit order and a careful discretion order in the same counter and same buy/sell instruction; and
(c) an order for the underlying security on the one hand and an order for single stock futures or Marginable Futures Contracts over that underlying security on the other.

Added on 3 June 20193 June 2019.

2.4

The Trading Member or Trading Representative must ensure that customers' orders are not compromised when squaring off a house error position on the same terms. Where the customer's order is a careful discretion order, trades allocated to the customer's account must not be worse off to that allocated to the house error account (such accounts being accounts carried on the books of the Trading Member).

Added on 3 June 20193 June 2019.

2.5

In considering whether Rule 5.7.1 has been complied with, the following factors are relevant:

(a) whether the Trading Member or the Trading Representative acts in accordance with the Trading Member or the Trading Representative's customers' instructions;
(b) whether orders that do not involve the exercise of discretion by the Trading Representative are entered in the sequence in which they are received, and otherwise as expeditiously as practicable;
(c) whether in a situation where the time the orders were received cannot be clearly established and one of the orders is for the Trading Member or the Trading Representative's own account, the Trading Member or the Trading Representative gives preference to the order of a customer over any order for the Trading Member or the Trading Representative's own account;
(d) whether the Trading Member or the Trading Representative who is aware of a customer's unexecuted instructions ensures that it does not use that information to:
(i) the disadvantage of the customer; or
(ii) the Trading Member or the Trading Representative's own benefit.

Added on 3 June 20193 June 2019.

3. Interpretation of Rule 5.7.2

3.1

"Prescribed Person" includes a person, group of persons, a Corporation or a group of Corporations or family trusts, whom the Trading Member, Director, employee or Trading Representative of the Trading Member is associated with or connected to.

Added on 3 June 20193 June 2019.

3.2

However, where the Trading Member, Director, employee or Trading Representative of the Trading Member has no control or influence over the associated or connected person, group of persons, Corporation or group of Corporations, or family trusts, they would not fall within the definition of "Prescribed Person".

Added on 3 June 20193 June 2019.