RES 5 – Rules, Ethics and Skills for Financial Advisory Services Set Two

Correct: According to SGX-DT rules and the Trading Member’s obligations regarding the Quest system, each User ID is unique and must be used exclusively by the authorized individual to whom it was issued. Trading Members are responsible for ensuring that terminals are secured and that no unauthorized person can access the system, regardless of whether they intend to trade or merely monitor the screen. This maintains the integrity of the audit trail and accountability within the Singapore derivatives market.

Incorrect: The suggestion that unauthorized staff can monitor terminals is incorrect because access to the trading system itself is restricted to authorized personnel to maintain system security. Sharing User IDs is a direct violation of SGX-DT rules which require individual accountability. The requirement for terminal security applies to all trading environments, not just public areas, as the risk of unauthorized access must be mitigated at all times within the financial institution.

Takeaway: Under SGX-DT rules, Trading Members must maintain strict individual accountability by ensuring Quest User IDs are never shared and terminals are secured against any unauthorized access.

Correct: In accordance with the Securities and Futures (Licensing and Conduct of Business) Regulations, where any change occurs in the particulars of a representative (such as a change in residential address, name, or educational qualifications) entered in the Representative Register, the holder of the Capital Markets Services (CMS) license must notify MAS of the change within 14 days after the date of the change.

Incorrect: The 7 business days timeframe is incorrect as the regulation specifies 14 days. The 30-day end-of-month reporting cycle applies to certain financial returns but not to representative particulars. The 48-hour requirement is typically associated with reporting serious misconduct or suspicious transactions under the CDSA, rather than administrative changes to representative particulars.

Takeaway: CMS licensees are required to notify MAS of any changes to a representative’s particulars within 14 days of the occurrence to ensure the Representative Register remains accurate.

Correct: Under Section 197 of the Securities and Futures Act (SFA), it is an offense to create a false or misleading appearance of active trading in capital markets products. Transactions that involve no change in beneficial ownership, known as wash sales, are specifically cited as a means of creating such a false appearance. For individuals, the criminal penalty for contravening this section is a fine not exceeding $250,000 or imprisonment for a term not exceeding 7 years, or both.

Incorrect: Option b describes front-running, which is a different form of misconduct and does not match the scenario of wash sales or the specific penalties of Section 197. Option c refers to insider trading and civil penalties under Section 232; while market rigging can lead to civil penalties, the question asks for the criminal penalties associated with the Section 197 prohibition. Option d describes churning, which relates to the suitability of advice and excessive trading rather than the creation of a false market appearance through wash sales.

Takeaway: Section 197 of the SFA prohibits wash sales and other forms of market rigging that create a false appearance of active trading, carrying significant criminal penalties including heavy fines and imprisonment.

Correct: In Singapore, representatives conducting regulated activities under the SFA must fulfill CPD requirements that are relevant to their specific license. This includes a minimum number of hours dedicated to ethics and rules/regulations. Furthermore, under MAS guidelines and industry best practices, representatives and their principal firms are required to maintain proper documentation of CPD activities for a period of no less than five years to facilitate regulatory audits.

Incorrect: Focusing solely on technical strategies is insufficient because MAS mandates specific training in ethics and rules/regulations for CPD compliance. General financial courses may not meet the ‘relevance’ requirement if they do not pertain to the representative’s specific regulated activity in derivatives. Finally, MAS does not provide a centralized tracking service for individual CPD hours; the burden of tracking and record-keeping lies with the representative and their principal firm.

Takeaway: Derivatives dealers must complete relevant CPD hours annually, including mandatory ethics and rules components, and maintain their own records for at least five years for compliance purposes.

Correct: In accordance with MAS Notice SFA04-N02 on Anti-Money Laundering and Countering the Financing of Terrorism, financial institutions in Singapore must perform robust Customer Due Diligence (CDD). This includes verifying the identity and address of the customer using reliable, independent source documents. If the documentation provided does not meet the prescribed standards (such as being too old to be considered current), the firm cannot complete the verification process and must not open the account until valid documentation is obtained.

Incorrect: Opening the account before completing verification, even with withdrawal restrictions, violates the fundamental requirement to complete CDD before establishing a business relationship. A statutory declaration does not replace the requirement for independent source document verification under MAS guidelines. Filing an STR is premature if the issue is merely an administrative documentation expiry; an STR is required only if there are reasonable grounds to suspect money laundering or terrorism financing, not simply for an expired utility bill.

Takeaway: Strict adherence to Customer Due Diligence (CDD) requirements, including the use of current and valid documentation, is a mandatory prerequisite for opening any trading account in Singapore.

Correct: According to Regulation 16(1)(a) of the Securities and Futures (Licensing and Conduct of Business) Regulations, a CMS licensee that receives customer money must deposit the money into a trust account maintained with a specified financial institution no later than the business day immediately following the day on which the money is received. This is a fundamental requirement to ensure that customer assets are protected from the licensee’s own liabilities and insolvency risks.

Incorrect: The suggestion that a three-day delay is acceptable for technical failures is incorrect as the regulation does not provide such an extension for system upgrades. The requirement to transfer funds to a clearing house within twelve hours is not the standard for trust account deposits under the SF(LCB)R. Allowing a five-day delay based on a standing instruction for administrative convenience is prohibited, as the ‘next business day’ rule is a strict conduct of business requirement that cannot be waived through general administrative agreements.

Takeaway: CMS licensees must deposit customer money into a segregated trust account no later than the next business day to comply with Singapore’s asset protection regulations under the SF(LCB)R.

Correct: Under the Securities and Futures Act (SFA) and the Securities and Futures (Classes of Investors) Regulations, individuals who meet the financial criteria for Accredited Investor (AI) status (such as having net personal assets exceeding S$2 million) must be given the option to ‘opt-in’ to be treated as an AI. If they do not opt-in, they must be treated as retail investors. In contrast, Institutional Investors (II), which include statutory boards, banks, and the Government of Singapore, are defined by their entity type and are treated as IIs by default without an opt-in requirement.

Incorrect: The second approach is incorrect because it ignores the mandatory opt-in regime for individual Accredited Investors and misclassifies a statutory board, which is an Institutional Investor, not just an Accredited Investor. The third approach is incorrect because Institutional Investors do not need to opt-in to their status; the opt-in requirement specifically applies to individuals and certain relevant entities meeting AI criteria. The fourth approach is incorrect because individuals cannot be classified as Institutional Investors regardless of wealth, and statutory boards are explicitly listed as Institutional Investors under the SFA, not retail investors.

Takeaway: Under the SFA, individual Accredited Investors must explicitly opt-in to lose retail protections, whereas Institutional Investors are defined by their entity status and do not have an opt-in requirement.

Correct: On the SGX-DT platform, the Pre-Opening session is divided into the Pre-Opening Phase and the Non-Cancel Phase. During the Non-Cancel Phase (the final 2 minutes of the Pre-Opening session), the system allows the entry of new orders but strictly prohibits the amendment or cancellation of existing orders. This is a regulatory and operational safeguard designed to ensure that the indicative opening price is not manipulated by participants withdrawing large orders immediately before the Opening Match.

Incorrect: The suggestion of a five-minute cooling-off period is not a standard SGX-DT rule. The claim that cancellations are only allowed in T+1 sessions is incorrect, as cancellations are generally permitted in both T and T+1 sessions except during specific restricted phases. The assertion that all activity, including new entries, is frozen during the Pre-Opening session is false, as the session is specifically designed to allow order book building through new order entries.

Takeaway: During the SGX-DT Non-Cancel Phase, market participants are prohibited from amending or cancelling existing orders to protect the integrity of the opening price discovery process.

Correct: Under Section 339 of the Securities and Futures Act (SFA), Singapore maintains extra-territorial jurisdiction. This means that if an activity is conducted outside Singapore but has a substantial and reasonably foreseeable effect on the derivatives market within Singapore, or is intended to have such an effect, the provisions of the SFA apply. Licensed dealers must ensure that their cross-border activities, including solicitation and marketing, do not contravene Singapore’s regulatory standards regardless of where the act is physically performed.

Incorrect: The second option is incorrect because MAS regulations and the SFA can apply to activities targeting the Singapore market or conducted by Singapore-licensed entities even if the client is overseas. The third option is incorrect because while MAS may have cooperation agreements with other regulators, it does not grant a blanket exemption from local conduct rules for all cross-border transactions; the SFA remains the primary authority for activities involving Singapore’s financial system. The fourth option is incorrect because the PDPA governs data privacy, whereas the SFA is the specific and primary legislation governing the licensing, conduct, and reporting of derivatives trading.

Takeaway: The Securities and Futures Act (SFA) has extra-territorial reach, meaning cross-border derivatives activities must comply with Singapore law if they have a substantial effect on the Singapore market.

Correct: In accordance with SGX-DT rules, Negotiated Large Trades (NLTs) must meet a minimum volume threshold specified by the Exchange for each contract type. Furthermore, once the price and volume are agreed upon, the trade must be reported to the Exchange within a strict timeframe, generally 30 minutes, to maintain market transparency and regulatory oversight.

Incorrect: Delaying reporting until the end of the session is a violation of the requirement for timely reporting. NLT prices must generally be within a specified range (such as the day’s high/low or a percentage of the last traded price) unless specific prior approval is granted. The responsibility for reporting the trade on the Exchange’s system lies with the Trading Member, not the client or a non-member counterparty.

Takeaway: Dealers must ensure NLTs comply with specific volume thresholds and are reported to SGX-DT within the mandatory 30-minute window to ensure regulatory compliance.

Correct: Under Section 218 of the Securities and Futures Act (SFA), a contravention by a connected person occurs if they possess information that is not generally available, and that information is ‘price-sensitive’ (meaning a reasonable person would expect it to have a material effect on the price or value of the securities or derivatives). The person must also know, or ought reasonably to know, that the information is not generally available and is material.

Incorrect: The requirement for specific intent to defraud or cause loss is not a primary element for establishing a contravention of Section 218, as the test is based on the possession of material non-public information. The receipt of a direct commission or profit is not a prerequisite for the offense; the act of trading or tipping itself constitutes the breach. Furthermore, information does not need to be verified by an auditor to be price-sensitive; it merely needs to be information that a reasonable person would expect to affect the price if it were generally available.

Takeaway: Insider trading under the SFA is defined by the possession of non-public, price-sensitive information by a person who knows or should know the nature of that information, regardless of their specific intent to defraud or the ultimate certainty of the information at that time.

Correct: As a Self-Regulatory Organization (SRO) under the Securities and Futures Act (SFA), SGX is responsible for maintaining a fair, orderly, and transparent market. It achieves this by setting out the SGX-DT Rules, monitoring member compliance, and taking disciplinary actions when necessary. Crucially, while SGX has these powers, it remains under the statutory oversight of the Monetary Authority of Singapore (MAS), which ensures SGX performs its regulatory duties effectively.

Incorrect: The suggestion that SGX can override the Securities and Futures Act (SFA) is incorrect as the SFA is the primary legislation and SGX rules must align with it. The claim that SGX’s role is limited to commercial promotion is false because its SRO status specifically mandates regulatory and surveillance responsibilities. The idea that SGX regulates all financial institutions is incorrect because its jurisdiction is limited to its members and listed entities, whereas MAS is the overarching regulator for the entire financial sector in Singapore.

Takeaway: SGX acts as an SRO by regulating its members and markets to ensure integrity, operating under the continuous supervision of the Monetary Authority of Singapore (MAS).

Correct: Under the Securities and Futures Act (SFA) in Singapore, ‘Dealing in capital markets products’ is a regulated activity. However, a Capital Markets Services (CMS) license is granted in respect of specific classes of capital markets products, such as securities, exchange-traded derivatives contracts, or spot foreign exchange contracts for the purposes of leveraged foreign exchange trading. If a firm wishes to add a new class of products to its existing regulated activity, it must apply to the Monetary Authority of Singapore (MAS) for a variation of its license to include that specific product class.

Incorrect: Option b is incorrect because a firm cannot commence a new regulated activity or deal in a new product class without prior authorization from MAS; notification after the fact is insufficient. Option c is incorrect because ‘Futures Broking’ is no longer the terminology used; the current framework uses ‘Dealing in capital markets products’ as an umbrella term with specific sub-categories. Option d is incorrect because a CMS license is not a blanket approval for all product types; it is restricted to the specific classes applied for and approved by MAS.

Takeaway: A CMS license holder for dealing in capital markets products must ensure their license specifically covers the relevant product class, such as exchange-traded derivatives, before engaging in that activity.

Correct: Under SGX-DT Rules and the Securities and Futures (Licensing and Conduct of Business) Regulations, every order received by a Trading Representative must be time-stamped or have the time of receipt recorded immediately. This contemporaneous record-keeping is vital for the Monetary Authority of Singapore (MAS) and SGX to verify that client orders are handled with priority over house orders and to detect potential market misconduct such as front-running.

Incorrect: Consolidating records at the end of the day is a breach of the requirement for immediate record-keeping and compromises the integrity of the audit trail. Relying solely on exchange execution times is insufficient because it does not document the gap between client instruction and execution. While recorded phone lines are a mandatory internal control for many firms, they do not exempt the TR from the specific regulatory requirement to document the time of receipt on the order ticket or electronic order management system at the point of entry.

Takeaway: Trading Representatives must ensure the exact time of order receipt is recorded immediately to comply with SGX-DT audit trail requirements and ensure fair client treatment.

Correct: Approach Y is correct because Section 206 of the Securities and Futures Act (SFA) specifically prohibits bucketing. Bucketing involves a holder of a Capital Markets Services (CMS) license or their representative taking the opposite side of a customer’s order (either for their own account or another client’s) without executing it on a bona fide futures market or through mechanisms permitted by the exchange’s rules (such as SGX-DT’s Negotiated Large Trade facility). This prohibition is essential to maintain the integrity of the price discovery process in Singapore’s derivatives markets.

Incorrect: Approach X is incorrect because internal matching without following exchange rules constitutes bucketing, which is a criminal offense under the SFA regardless of whether it results in a better price. The claim that the FAA allows this for price improvement is false as the SFA takes precedence in market conduct. The suggestion that bucketing is allowed for Accredited Investors is incorrect; the prohibition applies across the board to maintain market transparency. Finally, the presence or absence of a commission does not change the legal definition of bucketing; the lack of bona fide exchange execution is the determining factor.

Takeaway: Under Section 206 of the SFA, bucketing is strictly prohibited in Singapore to ensure all derivatives trades are executed through bona fide exchange mechanisms or approved facilities.

Correct: Under the Securities and Futures Act (SFA) and the Representative Notification Framework (RNF), the responsibility lies with the principal (the CMS license holder) to ensure that any individual they appoint as a representative is fit and proper. This assessment includes honesty, integrity, reputation, competence, capability, and financial soundness. The principal must conduct due diligence and be satisfied with the candidate’s status before notifying MAS of the appointment. The individual can only commence regulated activities once their name is entered into the Public Register of Representatives.

Incorrect: The suggestion that trading can begin before MAS notification is incorrect because the individual must be an appointed representative on the Public Register first. The claim that fit and proper criteria exclude civil matters is false, as financial integrity and soundness are core components of the MAS Guidelines on Fit and Proper Criteria. The idea that individuals apply for their own licenses is incorrect; under the RNF, the principal notifies MAS of the appointment of a representative rather than the individual applying for a standalone license.

Takeaway: The principal is responsible for ensuring representatives meet all fit and proper criteria and must complete the RNF notification process before the individual performs regulated activities.

Correct: Under the Securities and Futures Act (SFA), the Monetary Authority of Singapore (MAS) is the primary regulator for the capital markets. It has the legal authority to supervise all regulated activities, including derivatives trading. MAS has the power to issue written directions, conduct inspections, and enforce compliance to maintain market integrity, protect investors, and ensure the overall stability of Singapore’s financial system.

Incorrect: The suggestion that MAS is only an advisory body is incorrect because it has clear statutory enforcement powers under the SFA. The idea that MAS only supervises exchange-traded derivatives is false, as the SFA covers both exchange-traded and OTC derivatives. Finally, while the Commercial Affairs Department (CAD) investigates financial crimes, it does not take over the regulatory and supervisory functions of MAS, which remains the primary supervisor for financial institutions.

Takeaway: MAS holds comprehensive statutory authority under the Securities and Futures Act to supervise derivatives market participants and enforce standards for financial stability and investor protection.

Correct: According to SGX-DT Rules, a Trading Member is strictly responsible for all orders entered into the Quest system through any User ID assigned to that Member. This accountability remains regardless of whether the order was entered by a human dealer, an automated trading algorithm, or even if the order was unauthorized, as the Member is expected to maintain robust internal controls over its system access.

Incorrect: The suggestion that responsibility is limited only to executed trades is incorrect because the act of entering orders (even if cancelled) can impact market integrity and is subject to SGX-DT oversight. The idea that responsibility transfers to the SGX upon order acceptance is false, as the exchange provides the platform but the Member remains liable for the input. Regarding Direct Market Access (DMA), the Trading Member remains responsible for all orders routed through its connection to Quest, regardless of any agreements signed with third-party clients.

Takeaway: Trading Members in Singapore are held strictly accountable for all activities and orders transmitted to the Quest system via their assigned User IDs to ensure market stability and integrity.

Correct: Under Section 197 of the Securities and Futures Act (SFA), it is an offense to create a false or misleading appearance of active trading in any capital markets products. This includes wash trades, which are transactions involving no change in beneficial ownership. According to Section 204 of the SFA, the criminal penalty for an individual who contravenes these market conduct provisions is a fine not exceeding $250,000 or imprisonment for a term not exceeding 7 years, or both.

Incorrect: The suggestion that this is merely a regulatory breach of SGX rules is incorrect because market rigging is a statutory offense under the SFA with specific criminal sanctions. The claim that this is a disclosure violation or insider trading is incorrect as Section 197 specifically targets the creation of false market appearances. The idea that wash trades are permitted for liquidity purposes is false, as the SFA prohibits transactions that create a misleading appearance of market activity regardless of the stated intent to provide liquidity.

Takeaway: Section 197 of the SFA prohibits wash trades and other fictitious devices that create a false appearance of active trading, carrying severe criminal penalties including significant fines and imprisonment.

Correct: Under the Securities and Futures Act (SFA) and the Securities and Futures (Licensing and Conduct of Business) Regulations, an exemption from the requirement to hold a Capital Markets Services (CMS) license is granted to persons who carry on business in dealing in capital markets products (which includes derivatives) with institutional investors only. This is because institutional investors, such as banks and statutory boards, are deemed to have the sophistication and resources to protect their own interests without the full regulatory oversight required for retail-facing entities.

Incorrect: Dealing exclusively with accredited investors does not provide an automatic blanket exemption from licensing for a Singapore-based entity; while certain ‘overseas person’ exemptions exist, they are subject to specific conditions and are not a general rule for local operations. The SFA does not distinguish between individuals and corporate entities in a way that forces all corporations to be licensed while exempting representatives based on client type; representatives must generally be appointed by a principal. Furthermore, the definition of capital markets products under the SFA includes both exchange-traded and OTC derivatives, and the licensing exemptions for dealing with institutional investors apply across these product categories.

Takeaway: Under the SFA, entities dealing in capital markets products exclusively with institutional investors are generally exempt from the requirement to hold a Capital Markets Services license.

Correct: According to the Securities and Futures (Licensing and Conduct of Business) Regulations in Singapore, when there is a change in the particulars of a representative (which includes residential address, educational qualifications, or name), the principal firm must notify MAS of such changes within 14 days of the occurrence.

Incorrect: The 30-day timeframe is incorrect as it exceeds the statutory 14-day limit set by MAS for representative particulars. Limiting notifications only to fit and proper status is incorrect because administrative details like residential addresses are mandatory disclosures. While some urgent notifications have short windows, the standard requirement for general particulars is 14 days, not 7 business days, and it is not restricted solely to name changes.

Takeaway: Principal firms in Singapore must notify MAS of any changes to a representative’s registered particulars within 14 days of the change occurring.

Correct: Under SGX-DT rules, block trades (Negotiated Large Trades) must meet specific Minimum Volume Thresholds (MVT) and be reported within a strict timeframe, typically 15 minutes. A real-time monitoring system ensures that these quantitative requirements are met and that the price is fair relative to the current market, preventing off-market trades that could distort the market or disadvantage other participants.

Incorrect: Reporting at the end of the day is incorrect because SGX-DT requires prompt reporting, usually within 15 minutes of the trade being negotiated. Ignoring volume thresholds during low volatility is a direct breach of SGX-DT Trading Rules, as the MVT is a mandatory requirement for block trades. Manual overrides for preferred clients are not permitted under the rules, as the MVT is a hard requirement and 24-hour disclosure is far beyond the required reporting window.

Takeaway: Block trades on SGX-DT must strictly adhere to minimum volume thresholds and be reported promptly to ensure market transparency and regulatory compliance.

Correct: Under the Securities and Futures (Licensing and Conduct of Business) Regulations, specifically Regulation 16, a CMS licensee is required to deposit all customer moneys into a trust account maintained with a specified financial institution, such as a bank in Singapore, no later than the business day following receipt. This segregation is a fundamental control designed to protect customer assets from the firm’s creditors and prevent the firm from using client funds for its own business purposes.

Incorrect: Consolidating customer funds with operational funds is a direct violation of the segregation requirements under the SF(LCB)R. Relying solely on annual audits is insufficient as the regulations require the maintenance of proper books and records to ensure ongoing compliance. Transferring funds to a proprietary account, even if offshore or intended for the customer’s benefit, breaches the trust status and the specific rules regarding the handling of customer assets.

Takeaway: The mandatory segregation of customer moneys into designated trust accounts is the primary regulatory safeguard against the misappropriation of client assets under Singapore law.

Correct: According to the MAS Guidelines on Fit and Proper Criteria (FSG-G01), the assessment of a person’s honesty, integrity, and reputation involves professional judgment. Firms must consider all relevant factors, including whether the person has been disciplined by professional bodies. A past censure does not result in automatic disqualification; instead, the firm must evaluate the seriousness of the incident, the time elapsed, and the individual’s subsequent conduct to determine if they are fit for the specific role.

Incorrect: The guidelines do not limit the reputation pillar only to criminal convictions; any past conduct that casts doubt on integrity, including professional censures, must be considered. There is no rule stating that a professional censure leads to automatic disqualification or a mandatory failure of competence. Furthermore, the primary responsibility for conducting due diligence and ensuring a representative is fit and proper rests with the financial institution, not MAS.

Takeaway: The Fit and Proper assessment is a principle-based, holistic evaluation where firms must exercise judgment regarding an individual’s past conduct and its impact on their current integrity and reputation.

Correct: According to the MAS guidelines and the standards set by the Institute of Banking and Finance (IBF) for Capital Markets Services (CMS) representatives, the CPD requirement is 6 hours per calendar year. When a representative moves from one firm to another, the requirement remains 6 hours for that year. The representative is permitted to count relevant CPD hours earned at their previous firm during the same calendar year toward this total, as long as they can provide evidence of completion.

Incorrect: Pro-rating CPD hours based on the date of appointment is not a standard regulatory practice for CMS representatives in Singapore; the full annual requirement must be met. There is no automatic grace period or exemption based on seniority or years of experience in the market. While a firm may choose to have its own internal training, the MAS guidelines do not prohibit the recognition of relevant CPD hours earned at a previous employer within the same calendar year.

Takeaway: CPD requirements for derivatives dealers in Singapore are based on a full calendar year and allow for the transfer of documented, relevant hours between employers.

Correct: In accordance with the Monetary Authority of Singapore (MAS) guidelines on Individual Accountability and Conduct and the Securities and Futures Act (SFA), financial institutions must have robust systems to manage conflicts of interest. When a dealer has a personal connection to a client, the onboarding process—specifically the Customer Knowledge Assessment (CKA) which determines if a client has the requisite knowledge to trade complex derivatives—must be handled or verified by an independent party to ensure the assessment is objective and not biased by the dealer’s personal relationship or performance targets.

Incorrect: Simply declaring the interest to human resources after the fact does not mitigate the immediate risk of an improper suitability assessment. Increasing commission rates is not a valid regulatory tool for managing ethical conflicts and does not address the integrity of the account opening process. While a conflict exists, immediate closure and mandatory debarment are extreme first steps; the primary regulatory requirement is to first ensure the conflict is managed through independent oversight and internal disciplinary frameworks before escalating to such measures.

Takeaway: To ensure compliance with Singapore’s regulatory standards, any account opening involving a conflict of interest must be subject to independent verification and approval to maintain the integrity of the Customer Knowledge Assessment process.

Correct: Under Section 218 of the Securities and Futures Act (SFA), an insider trading offense by a connected person is established if they possess information that is not generally available, and that information is price-sensitive (meaning a reasonable person would expect it to have a material effect on the price or value of the securities). Furthermore, the person must know, or ought reasonably to know, that the information is not generally available and is material.

Incorrect: Specific intent to defraud or cause market disruption is not a required element for insider trading under the SFA, as the focus is on the information advantage. The amount of profit made or loss avoided is not an element of the offense itself, though it may influence the calculation of civil penalties or criminal fines. Section 218 explicitly prohibits the connected person from trading themselves; it is not limited to tipping third parties.

Takeaway: Insider trading under the SFA is defined by the possession of non-public, price-sensitive information and the awareness (actual or constructive) of the nature of that information by the trader.

Correct: Under the Securities and Futures Act (SFA) and the Securities and Futures (Licensing and Conduct of Business) Regulations, a Singapore-based intermediary must comply with local conduct of business rules regardless of where the trade is executed. This includes strict adherence to MAS requirements for the segregation of customer moneys and assets, ensuring that client collateral for overseas trades is handled with the same level of protection as local trades.

Incorrect: The approach of applying only foreign laws is incorrect because the MAS maintains jurisdiction over the conduct of its licensees operating within Singapore, even for cross-border activities. Delegating all compliance to an overseas broker is a failure of the licensee’s duty, as the Singapore firm remains responsible for its own regulatory reporting and AML obligations. The MAS Guidelines on Fair Dealing and other conduct requirements cannot be waived simply because a product is foreign-listed; the intermediary must always act in the client’s best interest.

Takeaway: Singapore-based intermediaries must comply with the SFA and MAS conduct requirements for all derivatives trades, even when those trades are executed on overseas exchanges for local clients.

Correct: Under the Securities and Futures Act (SFA) and the opt-in regime for Accredited Investors (AI), individuals who meet the quantitative criteria (such as net personal assets exceeding S$2 million, with the primary residence contributing no more than S$1 million) are not automatically treated as AIs. The financial institution must inform the individual of the consequences of being treated as an AI, including the loss of certain regulatory protections under the FAA and SFA, and obtain a signed ‘opt-in’ confirmation from the client.

Incorrect: Automatic classification based on asset thresholds is no longer the standard for individuals under the current SFA opt-in regime; an active election is required. Institutional Investor status is reserved for specific entities like banks, insurance companies, and statutory boards, and does not apply to individuals regardless of their wealth. The ‘opt-out’ model is incorrect because the law requires an ‘opt-in’ process where the client must proactively choose to be treated as an AI after receiving a risk disclosure.

Takeaway: In Singapore, meeting the financial threshold for Accredited Investor status does not grant the status automatically; individuals must be given a disclosure of waived protections and must proactively opt-in in writing.

Correct: According to SGX-DT Trading Rules, Negotiated Large Trades (NLTs) must be registered with the Exchange within a specific timeframe, which is generally 30 minutes from the time the trade is agreed. This requirement ensures market transparency and timely oversight. Operational issues, such as waiting for sub-account allocation details from a client, do not justify a delay beyond the prescribed reporting window.

Incorrect: The suggestion that the timeframe is extended to 60 minutes for multiple sub-accounts is incorrect as the standard 30-minute rule applies to the initial trade registration. Delaying reporting until the end of the trading day based on price limits is a violation of the prompt reporting rules. Waiting for a signed client confirmation before reporting is also incorrect, as the obligation to report to the Exchange is triggered by the execution agreement between the parties, not the completion of back-office documentation.

Takeaway: Trading Members must report Negotiated Large Trades to SGX-DT within 30 minutes of execution to comply with transparency and regulatory reporting standards in Singapore.