RES 12B, Rules, Ethics and Skills for Securities and Derivatives Dealers of Non-Exchange Members, is a combined CMFAS examination module that merges the syllabi of RES 1B (securities) and RES 2B (derivatives) into a single sitting. It suits individuals who intend to deal in capital markets products, such as securities, units in collective investment schemes, over-the-counter derivatives and spot or leveraged foreign exchange contracts, for a principal that is not a member of an approved exchange in Singapore. Candidates who need to deal for exchange-member principals require a different module pathway, so pathway selection should be your first step. This study guide distils the combined syllabus into 30 core concepts spanning the capital markets regulatory framework, licensing and business operations, market conduct, ethics, dealing practices, CPF investing, over-the-counter derivatives and financial crime prevention. Use it to structure your revision alongside the official study guides, test yourself with the scenarios, and close gaps before you sit the 60-question multiple-choice paper.
Exam and assessment essentials
- Exam format
- 60 multiple-choice questions, computer based[1]
- Duration
- 1.5 hours[1]
- Pass mark
- 75 percent[1]
- Results
- Displayed on screen after the exam; result slips can be printed from the IBF Portal account from the next business day[1]
- Exemptions
- None available, as RES 12B is a Rules, Ethics and Skills exam[1]
- Official study material
- No separate RES 12B study guide; candidates should use the study guides for RES 1B and RES 2B[1]
- Study guide access
- Registered candidates receive PDF study guide access via the IBF Portal, expiring on the exam day; guides are updated periodically and the latest version should be used[2]
- Module pathway note
- RES 12B can serve both securities and derivatives dealing for non-exchange-member principals, in combination with the required product knowledge module(s) such as CM-EIP, CM-SIP or CM-CMP[1]
What the syllabus covers
This study map groups the official scope into revision themes. It is not an official chapter list or a prediction of question weightings.
The capital markets industry in Singapore and its participants
Explain the roles of regulators, licensed intermediaries, exchanges and market participants, and how the Securities and Futures Act frames regulated activities[1]
Licensing and business operations
Describe CMS licensing, representative notification, record-keeping, client agreements and the handling of client money and assets[1]
Market conduct under the securities and futures regime
Identify insider trading, false trading, market rigging and false or misleading statements, and apply the thresholds of liability to fact patterns[1]
Ethics, codes and standards of professional conduct for securities dealing
Apply integrity, objectivity, competence, confidentiality and professionalism to conflicts, inducements and client priority situations[1]
Securities dealing practices and skills
Handle order types, best execution, settlement, margin, short selling and corporate actions accurately through the trade lifecycle[1]
Central Provident Fund Investment Scheme (CPFIS)
Recognise eligibility, approved products and scheme-specific handling differences compared with cash trading[1]
Ethics, codes and standards of professional conduct for derivatives dealing
Manage conflicts, disclosures and fair treatment in OTC derivative and FX dealing relationships[1]
Over-the-counter derivatives and derivatives dealing practices
Explain forwards, swaps, documentation, confirmations, netting, counterparty risk, margin and leveraged FX mechanics[1]
Prevention of financial crimes
Detect money laundering stages, apply customer due diligence and beneficial ownership rules, escalate suspicions and screen for sanctions[1]
30 key concepts to understand
- Regulated activities under the SFA
- CMS licence versus representative notification
- Non-exchange versus exchange dealing pathways
- Segregation of customer assets
- Books, records and client agreements
- Order audit trails from receipt to allocation
- Insider trading
- False trading and market rigging
- False or misleading statements
- Disclosure of interests
- Fundamental ethical principles for dealing representatives
- Conflicts of interest and personal account dealing
- Client priority and fair allocation
- Order types and execution certainty
- Best execution as a process obligation
- Trade lifecycle and settlement mechanics
- Margin financing and margin calls
- CPFIS dealing essentials
- Short selling and securities borrowing
- Corporate actions and entitlements
- Forwards versus futures
- Swaps and cash-flow exchange
- OTC documentation, confirmations and netting
- Counterparty credit risk and OTC margin
- Leveraged foreign exchange trading risks
- Three stages of money laundering
- Customer due diligence and beneficial ownership
- Suspicious transaction reporting and tipping off
- Sanctions and PEP screening
- Suitability and client risk profiling
Capital markets industry and participants
1. Regulated activities under the SFA
The Securities and Futures Act defines regulated activities such as dealing in capital markets products, fund management and advising on corporate finance. Carrying on a regulated activity generally requires a capital markets services licence or a recognised exemption. Dealers must know which activities their firm is licensed for, because acting outside that perimeter exposes both firm and individual to regulatory action.[1]
Common mistake: Assuming employment by a licensed firm automatically covers every product the firm markets.
Licensing and business operations
2. CMS licence versus representative notification
The CMS licence belongs to the firm. Individuals who perform regulated activities must be appointed as representatives and notified to MAS, tying them to a licensed principal; the notification lapses when the person leaves. Candidates should distinguish the entity-level licence, individual representative notification and temporary or exemption-based arrangements.[1]
Common mistake: Believing that passing the exam itself confers authority to deal.
Capital markets industry and participants
3. Non-exchange versus exchange dealing pathways
For principals that are not members of an approved exchange, the official pathways are RES 1B or RES 12B for securities dealing, and RES 2B or RES 12B for derivatives dealing, in each case together with the required product knowledge module(s). For principals that are members of an approved exchange, the official securities pathways are RES 1A, or RES 1B plus the SGX-ST add-on module (RES 1BE1), or RES 12B plus RES 1BE1; on the derivatives side they are RES 2A, or RES 2B plus the add-on matching the principal's exchange (RES 2BE1 for SGX-DT, RES 2BE2 for ICE Futures Singapore or RES 2BE3 for APEX), or RES 12B plus that same matching add-on. RES 12B bundles the RES 1B securities syllabus and the RES 2B non-exchange derivatives syllabus into one 60-question sitting.[1]
Common mistake: Passing RES 12B and then dealing for an exchange-member principal without also passing the required exchange add-on module.
Licensing and business operations
4. Segregation of customer assets
Firms must keep client money and client assets separate from the firm's proprietary assets, typically through trust or segregated accounts. Segregation protects clients if the dealer fails and prevents house use of client funds. Dealers should know when client monies arise during settlement and the serious consequences of commingling.[1]
Common mistake: Thinking segregation covers only cash and not securities held on behalf of clients.
Licensing and business operations
5. Books, records and client agreements
Licensed firms must maintain accurate books and records of dealings, instructions and communications for prescribed periods, and generally need a written client agreement in place before executing trades. Comprehensive records evidence how orders were received and handled, which becomes decisive in disputes, audits and market-conduct queries.[1]
Common mistake: Relying on informal messaging channels that the firm's record-keeping does not capture.
Licensing and business operations (records and audit trails)
6. Order audit trails from receipt to allocation
Every client order should be time-stamped, attributed to its channel of receipt and traceable through execution to allocation. A complete audit trail lets compliance reconstruct who instructed what and when, demonstrating fair treatment and enabling investigation of complaints or market-conduct questions quickly and credibly.[1]
Common mistake: Accepting instructions through unrecorded personal phones or private chat accounts.
Market conduct
7. Insider trading
Insider trading rules catch persons who possess material, non-public, price-sensitive information, usually because of a connection with the issuer, and then trade, procure trading, or pass the information on. Both the original tipper and the recipient who trades can be liable. The information must be genuinely material and not generally available to the market.[1]
Common mistake: Believing insider dealing is only an offence when the dealer personally profits from the trade.
Market conduct
8. False trading and market rigging
Market conduct rules prohibit transactions that do not involve a genuine change in beneficial ownership, such as wash trades and matched orders, and any practice that artificially maintains, inflates or depresses prices. The focus is on intent and effect in creating a false or misleading appearance of active trading, regardless of profit or loss.[1]
Common mistake: Assuming small trades in illiquid counters cannot move prices enough to constitute rigging.
Market conduct
9. False or misleading statements
It is an offence to make or disseminate statements that are false or misleading in a material particular, or omit material facts, where the person knows or ought reasonably to have known this and the statement is likely to induce dealing in, or affect the price of, securities. This covers research notes, investor forums and social media, not only formal corporate announcements.[1]
Common mistake: Assuming that merely repeating or forwarding someone else's inaccurate rumour is safe.
Market conduct
10. Disclosure of interests
Directors and substantial shareholders of listed companies must disclose their interests and changes in interests within prescribed timelines, and dealers may face their own reporting or pre-clearance obligations for relevant dealings. Candidates should recognise what counts as an interest, including deemed interests arising through nominees, related parties or derivative positions.[1]
Common mistake: Overlooking deemed interests held through nominees, family members or derivatives.
Ethics and professional conduct
11. Fundamental ethical principles for dealing representatives
Conduct standards are typically anchored on core principles: integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. These principles guide judgement where explicit rules are silent, such as whether to accept a costly client gift, how to handle an error made in the client's favour, or when discretion is appropriate.[1]
Common mistake: Treating ethics as only whatever is legally punishable, rather than a higher professional standard.
Ethics and professional conduct
12. Conflicts of interest and personal account dealing
Firms must identify, manage and where necessary disclose conflicts between the firm, its staff and clients, for instance when house or staff accounts could compete with client orders. Personal account dealing rules typically require pre-clearance and prohibit front-running, meaning trading ahead of a client order to capture its market impact.[1]
Common mistake: Believing small personal trades are exempt because they are unlikely to move the market.
Ethics and professional conduct
13. Client priority and fair allocation
When orders compete, client interests take priority over the firm's or staff's own interests, and partial fills should be allocated fairly rather than favouring particular accounts. Gifts and inducements from clients or counterparties must be controlled because even modest benefits can compromise objectivity over time and create perception problems.[1]
Common mistake: Allocating better prices to high-commission or favoured accounts ahead of others.
Securities dealing practices and skills
14. Order types and execution certainty
Market orders seek immediate execution at the best available price and carry price uncertainty; limit orders cap or floor the price but may never execute. Dealers must understand how each order type behaves in fast or thin markets and explain the trade-off between execution certainty and price control clearly to clients before accepting instructions.[1]
Common mistake: Promising a client that a market order will fill at or near the last traded price.
Securities dealing practices and skills
15. Best execution as a process obligation
Dealers must take reasonable steps to obtain the best possible result for client orders, weighing price alongside costs, speed and likelihood of execution, and handling orders in sequence of receipt where relevant. Best execution is a documented process, covering routing decisions and periodic review, rather than a guarantee of the best price available anywhere that day.[1]
Common mistake: Equating best execution with a guaranteed top-of-book price at the moment of the order.
Securities dealing practices and skills
16. Trade lifecycle and settlement mechanics
A securities trade moves from execution through confirmation and contracting to settlement, with the central depository recording scripless share ownership in Singapore. Dealers must know cut-off times, contractual settlement dates, the consequences of failed settlement and the point at which a client actually obtains ownership rights in the shares purchased.[1]
Common mistake: Telling clients they can use shares or proceeds before settlement has actually occurred.
Securities dealing practices and skills
17. Margin financing and margin calls
Margin trading lets clients buy securities partly with borrowed funds, using the holdings as collateral. Falling prices reduce the equity ratio; a breach of the maintenance level triggers a demand for top-up or forced liquidation. Dealers must explain that gearing magnifies losses as well as gains and that clients remain liable for any shortfall after liquidation.[1]
Common mistake: Assuming the dealer firm absorbs the loss when a margin account is liquidated at a deficit.
Central Provident Fund Investment Scheme
18. CPFIS dealing essentials
The CPF Investment Scheme allows eligible CPF members to invest part of their savings in approved instruments such as listed shares, unit trusts and bonds, subject to scheme rules on eligible balances and permitted products. Dealers handling CPFIS orders must verify eligibility, deal only in approved products and follow the scheme's distinct application and settlement processes.[1]
Common mistake: Processing CPFIS orders identically to cash trades and ignoring scheme-specific eligibility and product restrictions.
Securities dealing practices and skills
19. Short selling and securities borrowing
Selling securities the seller does not own risks failed delivery unless the position is covered through borrowing or arranged stock by the settlement date. Covered and naked short selling face different regulatory treatment, and dealers must ensure clients understand borrowing costs, buy-in consequences and the theoretically unlimited loss potential of short positions.[1]
Common mistake: Assuming short sales settle like ordinary purchases and that arranging stock to deliver is optional.
Securities dealing practices and skills
20. Corporate actions and entitlements
Dividends, rights issues, bonus issues, splits and takeovers alter holdings and require timely client notification and accurate option processing. Dealers must distinguish entitlement, ex and record dates, track election deadlines for choices such as subscribing to rights, and know how unexercised entitlements are treated at lapse.[1]
Common mistake: Confusing cum-rights and ex-rights prices when explaining a client's entitlement value.
OTC derivatives and dealing practices
21. Forwards versus futures
Forwards are customised, privately negotiated agreements to buy or sell an asset at a fixed price on a future date, carrying counterparty performance risk; futures are standardised, exchange-traded and guaranteed by a clearing house with daily mark-to-market. Since RES 12B targets non-exchange dealing, forwards and other OTC structures dominate the relevant syllabus.[1]
Common mistake: Assuming a forward is riskless because the price is locked in; counterparty performance risk remains.
OTC derivatives and dealing practices
22. Swaps and cash-flow exchange
Swaps are OTC agreements to exchange streams of cash flows, most commonly fixed for floating interest payments on a notional principal, or payments in two currencies. Swaps let parties transform interest-rate or currency exposure without exchanging the underlying principal, and their value moves with expected future rates or exchange rates over the remaining term.[1]
Common mistake: Confusing the notional amount with money actually exchanged; usually only net cash flows are paid.
OTC derivatives and dealing practices
23. OTC documentation, confirmations and netting
OTC derivative dealings are governed by bilateral master agreements and trade confirmations, with netting arrangements offsetting multiple exposures into a single payable or receivable. Prompt confirmation matching reduces operational and legal risk, and firms follow prescribed trade reporting practices so regulators can observe market-wide exposures.[1]
Common mistake: Treating the confirmation as administrative paperwork rather than the legally binding record of agreed terms.
OTC derivatives and dealing practices
24. Counterparty credit risk and OTC margin
Unlike exchange-cleared trades, each OTC counterparty bears the other's default risk for the remaining life of the contract. Exposure is managed through credit assessment, dealing limits, collateral or margin and netting. Dealers must recognise that mark-to-market gains on an OTC position are only realised if the counterparty ultimately performs.[1]
Common mistake: Treating an OTC derivative's paper gain as risk-free cash owed to the client.
OTC derivatives and dealing practices
25. Leveraged foreign exchange trading risks
Leveraged FX trading lets clients control positions many times their deposited margin, so small currency movements produce proportionally large gains or losses, potentially exceeding the deposit. Dealers must explain margin requirements, overnight financing costs, stop-loss discipline and total loss exposure honestly, especially to retail clients new to gearing.[1]
Common mistake: Presenting leverage purely as an opportunity without quantifying how fast losses can exceed deposits.
Prevention of financial crimes
26. Three stages of money laundering
Laundering typically proceeds through placement of criminal proceeds into the financial system, layering through complex transfers and transactions that obscure origin, and integration where funds appear legitimate. Securities and derivatives accounts can be used at every stage, so dealers must recognise typologies and apply controls proportionate to assessed risk.[1]
Common mistake: Thinking laundering requires cash; securities churn, cancellations and third-party payments can serve the same purpose.
Prevention of financial crimes
27. Customer due diligence and beneficial ownership
Firms must identify and verify clients using reliable, independent sources, understand the purpose of the relationship, and identify beneficial owners, the natural persons who ultimately own or control the account, even behind corporate vehicles or intermediaries. Higher-risk relationships attract enhanced diligence, and monitoring must continue throughout, not only at onboarding.[1]
Common mistake: Treating KYC as a one-off account-opening formality rather than continuous, risk-based monitoring.
Prevention of financial crimes
28. Suspicious transaction reporting and tipping off
When staff know or suspect funds relate to criminal conduct, the concern must be escalated internally and, where warranted, reported to the authorities through the firm's designated channel. Reports are made on suspicion rather than proof, and tipping off the client that a report is contemplated is itself prohibited, so discretion is essential.[1]
Common mistake: Declining to escalate because the pattern might have an innocent explanation; suspicion alone triggers the reporting duty.
Prevention of financial crimes
29. Sanctions and PEP screening
Firms must screen clients, related parties and transactions against applicable sanctions lists and identify politically exposed persons, who carry elevated corruption risk and warrant enhanced due diligence. Screening occurs at onboarding and on an ongoing basis, since lists change, and any match must be escalated and resolved before dealings continue.[1]
Common mistake: Screening only at account opening and missing clients or counterparties added to lists later.
Licensing and business operations
30. Suitability and client risk profiling
Before recommending products, dealers should gather information on the client's objectives, experience, financial situation and risk tolerance, and ensure recommendations are consistent with that profile. Complex or higher-risk products call for stronger safeguards and disclosure. Suitability is a continuing duty that must be revisited as circumstances change, not a one-time signature exercise.[1]
Common mistake: Completing a risk questionnaire as paperwork and then recommending products inconsistent with the recorded profile.
How to revise for RES 12B
1. Map the combined syllabus first
Download both the RES 1B and RES 2B study guides, since RES 12B has no guide of its own. List the domains that appear in both, such as capital markets framework, licensing, market conduct, ethics and financial crime, and plan to study each overlap once but test yourself on it from both perspectives.
2. Do a structured first pass through the rules domains
Work through regulatory framework, licensing, business operations and market conduct chapter by chapter, building a one-page summary per domain in your own words. Flag every statutory or MAS notice reference so you can revisit exact conditions during revision.
3. Convert ethics into scenario drill
For each ethical principle, write two short fact patterns from your own experience or imagination and decide the correct action. Ethics questions are usually fact-based, so practising the reasoning, not memorising wording, is what lifts accuracy on conflicts, inducements and client priority items.
4. Drill dealing mechanics with hypothetical numbers
Practise margin equity ratios, settlement date calculation under a stated convention, corporate action entitlements and OTC netting using clearly hypothetical figures. Redo each calculation type until you can complete it in under a minute, since these items are quick marks when the mechanics are automatic.
5. Blast through financial crime content with flashcards
Money laundering stages, CDD elements, beneficial ownership, red flags, STR escalation and sanctions screening are high-recall material. Build compact flashcards and review them daily in the final fortnight; these questions reward precise recognition of red-flag patterns and the reporting and tipping-off rules.
6. Finish with timed mocks and a version check
Sit at least two timed 60-question mocks matching the official format, review every error against the study guides, and retest weak domains. Before exam day, log into the IBF Portal to confirm you have the latest study guide version, since guides are updated periodically and access expires on your exam day.
Test your understanding
These original learning scenarios are for revision; they are not official examination questions.
1. While processing settlement for a corporate client, a dealer sees documents revealing an unannounced acquisition of a listed target. The client says nothing is confidential, so the dealer mentions it to a colleague, who immediately buys the target's shares. What has gone wrong and what should the dealer have done?
Show answer and explanation
The information is material, non-public and price-sensitive, obtained through a connection with the parties, so both the tip and the colleague's trade raise insider trading concerns. The dealer should not have disclosed it, should not trade or enable trading, and should escalate the confidentiality issue under firm policy rather than relying on the client's informal assurance.[1]
2. Hypothetically, a client deposits S$20,000 and buys S$40,000 of shares using 50 percent margin financing. The share price then falls 20 percent, so the holding is worth S$32,000. If the firm's maintenance requirement is hypothetically 40 percent, what is the position and what happens next?
Show answer and explanation
The loan stays at S$20,000 while security value falls to S$32,000, so equity is S$12,000, a ratio of 12,000 divided by 32,000, which is 37.5 percent. That breaches the hypothetical 40 percent maintenance level, so the firm issues a margin call for top-up or may force-sell collateral. Note gearing magnified the 20 percent price fall into a 40 percent equity fall.[1]
3. A long-dormant account is funded by a remittance from an unrelated company. The client immediately requests withdrawal of the full amount to a different beneficiary and resists explaining the purpose. How should the dealing representative respond?
Show answer and explanation
Third-party funding without apparent reason, rapid pass-through of funds, an unexplained change of beneficiary and reluctance to explain are classic red flags. The dealer should not process the instruction without escalation, should document the basis for concern, refer the matter to the firm's designated officer for possible suspicious transaction reporting, and must not tip off the client.[1]
Frequently asked questions
Which study guide should I use to prepare for the RES 12B exam?
There is no separate RES 12B study guide. Because RES 12B is a combined module of RES 1B and RES 2B, the official guidance is to use the study guides for those two modules. Registered candidates receive PDF access via the IBF Portal, and access expires on the exam day, so confirm you have the latest versions.[1][2]
Can I get an exemption from the RES 12B examination?
No. The IBF states there are no exemptions for RES 12B because it is a Rules, Ethics and Skills exam, and the same applies to the related RES modules. All candidates must sit and pass the paper itself.[1]
How is RES 12B different from taking RES 1B and RES 2B separately?
RES 12B covers the combined syllabus of RES 1B and RES 2B in a single 60-question, 1.5-hour sitting, which is efficient for dealers whose role spans both securities and non-exchange derivatives dealing. Taking RES 1B and RES 2B separately involves two sittings with the same combined content coverage.[1]
Besides passing RES 12B, what else do I need to deal in capital markets products in Singapore?
After passing the relevant modules, candidates must lodge a notification with MAS before carrying out regulated activities. Depending on the products, a product knowledge module such as CM-EIP, CM-SIP or CM-CMP is also required, and the individual must be notified as a representative of a CMS-licensed principal. Check the current MAS and IBF requirements for your role.[1]
What is the pass mark for RES 12B and how do I get my results?
The pass mark is 75 percent. Results are displayed on the computer screen immediately after the exam, and candidates can print their result slips from their IBF Portal account from the next business day.[1]
Official sources and review notes
Public IBF and SCI sources were checked on 16 September 2026 for syllabus scope and assessment details, with additional primary references where listed. References identify the relevant syllabus or subject source; explanations and examples are original teaching material. This guide selects important concepts and does not replace the full official study text. Confirm the applicable edition and any updates with the administrator before your assessment.