Under Division 1, Part VII of the Securities and Futures Act, a reference to a member in relation to a corporation means any person equivalent to a member of the company. The variances between a member of a company and a corporation shall be applied to avoid any uncertainties in determining if a person has an interest in securities or security-based activities.

A person should enter into a contract to purchase the securities, derivative contracts, or unit of a collective investment scheme to gain its corresponding interest. This interest may also arise from a right to have the securities transferred to the person or to the person’s order whether currently or some time soon; with or without the fulfillment of the condition.

Part II of the Securities and Futures act defines that a foreign corporation is a corporation formed or incorporated outside Singapore, unless another context requires otherwise. These foreign corporations may identify as market operators if permitted by authority. The permission of the Authority shall be absolute, and it shall constitute the approval of the foreign corporation to enter the organized market.

To be approved as an operator in an organized market, a person must be an approved exchange or a recognized market operator. A person shall not present himself as an approved exchange or a recognized market operator if he is not. Failure to abide by this requirement may cause liability on the part of that person and shall be convicted with a fine of $20,000 at a minimum. The Authority may exempt corporations, always in the form of writing, from the above requirements but shall be subject to such conditions or restrictions as the Authority may prescribe within regulations.

The approved exchange and each member shall reach an agreement on how the business rules shall be regulated for the time being. This shall be equally agreed upon by every member to be effectively binding.

To qualify for recognition as a collective investment scheme, the conditions that shall be met includes a manager who is in the jurisdiction of the principal place of business who is deemed fit and proper person by the Authority and who has an existing influence over the manager and over a related corporation, the representative shall be an individual resident of Singapore or a company registered under Division 2 of Part XI of the Companies Act, and lastly, disclose information on the representative and company address or contact details of an individual, and any information as prescribed by regulation.

When it becomes apparent to the trustee that the purpose or project for which the money has been borrowed has not been achieved or completed within the time stated in the prospectus within which the purpose or project is to be achieved or completed or within a reasonable time if no time was expressed, the trustee shall give shall give notice in writing to the borrowing entity requiring it to repay the money received by the borrowing entity and, within one month after such notice is given, lodge with the Authority a copy thereof for the pure intention of protecting the interests of the holders of the debentures.

An authorized benchmark submitter, whether exempt or designated, is obligated to provide information on the cautious management of risks with its business and operations, adequacy and appropriateness of the systems and controls for the scale and nature of its operations, sufficiency of financial, human, and system resources to carry on a business or activity of providing information in relation to a designated benchmark and meet contingencies or disasters, and proper appointment of proper persons are chairman, chief executive officer, directors, and key management personnel. The contingencies and disasters shall technical delays that occur when using automated apparatus.

The Authority may conduct an investigation as it considers necessary for the purpose of exercising any of its powers to perform its functions and duties under SFA; ensuring the compliance or investigating on contraventions issued under this Act, In terms of liabilities and obligations, there shall be no civil or criminal action against any person for giving assistance to the Authority in good faith who complies with a requirement imposed under the Investigation by Authority Division of the Act, and for doing or omitting to do any act as a result of compliance with a requirement by the Authority.

Under Part XI of the Securities and Futures Act, each approved exchange shall establish, keep, and administer a fidelity fund. A fidelity fund covers all asset classes of mutual funds that will provide investors diverse choices of funds to help achieve one’s investment goals. The assets of a fidelity fund shall be the property of the exchange, separated from all other properties and be held in a trust.

Fidelity funds are mainly structured as payment and shall be therefore applied as a compensation for any person, other than an accredited investor of the business, who suffers loss in monetary terms due to a defalcation perpetrated in relation to capital markets products, committed by a member of an approved exchange or by any agent of such, and of relevance to capital received by a member as a representative of another person, or a sole trustee or agents on behalf of others.

Under Part III entitled Clearing Facilities, the market collateral shall be interpreted as properties held for the sole intention of securing a liability that connects itself to the performance market contracts by an approved clearing house or recognized clearing house. These properties mentioned may be in the form of cash and its equivalents, securities, schemes, contracts, or any other asset of acceptable value of which is adequate to the clearing house.

Under Division 1, Establishment of Clearing Facilities of SFA, a person may only establish, operate or hold himself out as operating a clearing facility if that person is an approved clearing house or a recognized clearing house. An approved clearing house or a recognized clearing house possesses a set of rules to which it furnishes a participant an action towards the conformance to the obligations for any unresolved contracts to which the participant himself is a party.

Under Division 3, Part II of SFA, the obligation of an approved clearing house–along with its officers and employees–in the maintenance and strict compliance with matters regarding confidentiality, shall cover information that comes to the knowledge or in the possession of the approved clearing house and all persons involved.

Under Division 2, Part III of SFA, the approved clearing house shall present and specify business rules at the prescription of the Authority. Amendments to this set of rules provided are generally not allowed unless the Authority prescribes for the changes to be made in an accurate and precise manner. The amendment should be sourced by changes in a scope of an obligation or a restriction in alterations to the text of the rule and/or notices as issued by or for the clearing house.

A short position transpires when a person is interested in a value of a capital market product that is less than the quantity a person has to bring about at some point in the future. It is an investor approach wherein they sell what they borrowed in a short amount of time. The amount should be netted against the long interest of the product and shall not constitute the whole sum of the selling transaction. Its varying significance is required to be reported to MAS.

A trustee’s obligation as a legal owner of specified capital markets products held in a trust or collective investment scheme includes the disclosure of short sell orders and reports on short positions which transpires from trusts for which it acts as a trustee. A trustee is responsible for determining whether an order is a short sell order by considering the aggregated quantity of specified capital market products.

The persons legally responsible for reporting short positions are those who deliver specified market products that may indicate a short position as a result of the transaction. They must report the short position to MAS by preparing a Short Position Reporting Form that will be submitted within two (2) days after the position day. The Short Position Reporting Form shall indicate the position day, the stock code of the specified capital markets product, and the number of shares in the short position by the reporting person.

Due to the high risk of market volatility, short selling is a method for investors to reduce the probable losses. Short selling may be classified into two (2): covered or uncovered. Covered short selling is defined as the arranged borrowing of capital market products by the seller before any short sale is made. Essentially, it is the buying back of the borrowed shares for the purpose of settling an existing short position and selling it short at the quantity it was originally bought.

In the reporting of short positions, the person shall report its short positions to MAX given that the calculated amount of the short position is equivalent to or exceeds the short position threshold on position day. The short position threshold shall be measured at the lower of 0.2% of total issued shares in the relevant class of shares or units of a business or real estate business trust or an aggregate amount of SGD2,000,000.

A collective investment scheme is defined as an arrangement under which the participants do not have day-to-day control over the management of the property, wherein the property is managed as a whole by or on behalf of a manager and/or the contributions of the participants are to be pooled, and of which the effect of the arrangement and its purported purpose is to enable the participants to participate in receiving payments which surfaces from the acquisition, holding, management, disposal, exercise, redemption, or expiry of rights, interests, or titles in the property or to receive those payments, whether or not the participants will receive benefit or the purpose is realized.

The purpose of laws is to provide control and authority over its constituents. The prescribed laws specified in the Securities and Futures Act are the act itself, the Banking Act, the Finance Companies Act, the Financial Advisers Act, the Insurance Act, the Monetary Authority of Singapore Act, Payment Services Act 2019, and/or any other written law as prescribed by the Authority. These prescribed laws govern the Securities and Futures Act and its parts, divisions, and subdivisions.

A derivative contract is an arrangement under which a party to the contract is required to discharge obligations of the contract at some point in the future and its value is derived from either an underlying thing or the fluctuating values of the underlying thing. An underlying thing can be a unit in a collective investment scheme, a commodity, a financial instrument, a credit to any person, or an arrangement, property, or transaction which is prescribed to be an underlying thing by the regulations, specifically the ruling made under section 341.

A futures exchange must be able to guarantee each futures contract they authorize and govern the trading transactions in selecting the daily settlement price of which should be reliable in exhibiting the prevailing market conditions and no known susceptibility as to manipulation and misrepresentations. The futures exchange responsible for the establishment of the daily settlement price should be able to operate and determine the risks which arise from fluctuations and price movements to provide a reasonable price based in the market.

An alternative product is defined by the Act as a relevant product other than a futures contract or excluded warrant. Before removing the alternative product from the list of an organized market, an exchange ensures that there remains no outstanding investor positions in the alternative product, ascertain the product will not cause any interference or heavy disturbance to any other market, and guarantee that this process is not in the breach of any legal obligation appropriated to the exchange.

All transactions in financial markets should be confirmed in writing or electronic means by the parties and should be addressed to the back office or settlements department of the counterparty. The content of the confirmation shall be modified in accordance to the products dealt with for correct content and format for any particular product, and shall include the date of transaction, by which means affected, name and location of counterparty, rate, amount and currency, type and size of deal, relevant dates, standard terms applicable set out in the relevant master agreement, and all other relevant information.

There are additional powers granted to the Authority when it comes to supervising auditors. If an auditor of an approved exchange shall be made aware that there are irregularities in any matters that, in the auditor’s opinion unfavorably affects or may do so in the financial position of the approved exchange to a material extent, matters that may constitute a breach of any provision of this Act or an offence involving fraud or dishonestly, or any irregularity that has a material effect on the approved exchange accounts of the approved exchange, including any irregularity that affects the funds of the investors.

The Regulation of RMO includes the obligations of a recognized market operator. The obligations of the RMO includes ensuring that there is fairness, order and transparency in the market, managing any risks associated with its business and operations in a prudent manner, and ensuring that access for participation in its facilities is subject to an objective criteria in protecting the interests of the investing public.

Emergency is defined as any threatened or actual market manipulation or cornering. It specifically includes any act of any government affecting any commodity or financial instrument, major market disturbances that will avert the accuracy of an organized market in reflecting supply and demand of an instrument or an undesirable situation that the Authority deems as an emergency.

A general principle states that corporations operating markets that are systemically important will be regulated by MAS as approved changes. There are factors for consideration that apply to this principle for a market operator to be regulated by MAS. The factors are as listed: size and structure, nature of services and securities or futures contracts traded in a market operation, and nature of the investors and participants who may use or have interest in the market operation.