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Practice Note 5A.4.2, 5A.4.3 — Requirement for Clearing Member to Ensure Compliance of Position Account Rules by Authorized Trading Member

Issue Date Cross Reference Enquiries
Added on 1 July 20161 July 2016. Rules 5A.4.2., 5A.4.3. Please contact Member Supervision:

Facsimile No: 6538 8273

1. Rules 5A.4.2 and 5A.4.3 requires a Clearing Member who authorizes an Authorized Trading Member to open and maintain Authorized Accounts, or to open, maintain and allocate positions to Authorized Accounts, to ensure that the Authorized Trading Member performs the relevant obligations in relation to the Authorized Accounts.

2. There may be circumstances where a Clearing Member is unable to directly ensure that its Authorized Trading Member performs the relevant obligations in relation to the Authorized Accounts in compliance with Rules 5A.1 and 5A.2 or with Rules 5A.1, 5A.2, 5A.3 and 5A.6 (as may be applicable). This Practice Note clarifies the expectations on the Clearing Member in such circumstances.

3. Where a Clearing Member is unable to directly ensure that its Authorized Trading Member complies with the above-mentioned rules, the Clearing Member is to implement reasonable measures to ensure that the Authorized Trading Member complies with the relevant rules. The following are non-exhaustive examples of the steps which the Clearing Member should take:

a. The Clearing Member should ensure that the Authorized Trading Member is aware of its obligations relating to Authorized Accounts under the Rules and under the SGX-ST Rules.
b. The Clearing Member should obtain an undertaking from the Authorized Trading Member stating that the Authorized Trading Member will put in place adequate internal controls and processes to comply with all rules relating to Authorized Accounts.