RES 2B, Rules, Ethics and Skills for Derivatives Dealers of Non-Exchange Members, is a CMFAS licensing examination administered by IBF Singapore for individuals dealing in capital markets products such as over-the-counter derivatives and leveraged foreign exchange trading where their principal is not a member of an approved exchange. It suits new derivatives dealers, leveraged FX dealing staff and compliance or operations personnel seeking to understand the conduct framework for non-exchange derivatives business in Singapore. This study guide organises 30 substantive concepts across the seven official syllabus domains, from the structure of the capital markets industry and licensing duties through OTC derivatives mechanics, market conduct rules, professional ethics, dealing practices and prevention of financial crimes. Each concept includes an original example and a common pitfall so you can test understanding, not just memorise definitions. Work through the concepts by domain, use the self-check scenarios to simulate application-style questions, and finish with the revision stages before your sitting. Remember that this guide supplements, and does not replace, the official IBF study guide.
Exam and assessment essentials
- Format
- 60 multiple-choice questions, computer based[1]
- Duration
- 1.5 hours[1]
- Pass mark
- 75 percent[1]
- Exemptions
- None; RES 2B is a Rules, Ethics and Skills exam[1]
- Results
- Displayed on screen after the exam; result slips printable from the IBF Portal account from the next business day[1]
- Fees
- As published at time of checking: S$207.10 (corporate member) or S$250.70 (non-corporate member), inclusive of GST; confirm current fees with IBF[1]
- Study guide access
- Registered candidates receive PDF study guide access via the IBF Portal, expiring on the registered exam day; use the latest version[2]
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 regulatory structure, the roles of MAS and other bodies, and where non-exchange derivatives dealing sits among regulated activities[1]
Licensing and business operations
Describe licensing versus exemption of institutions, representative notification duties, fit and proper expectations, and operational controls supporting compliant dealing[1]
Market conduct
Identify prohibited conduct such as false trading, manipulation, insider dealing and misleading statements, and apply these rules to derivatives dealing situations[1]
Over-the-counter derivatives
Explain the features, pricing logic, risk profile and margin mechanics of OTC products including forwards, swaps, options and leveraged foreign exchange[1]
Ethics, codes and standards of professional conduct for derivatives dealing
Apply client-primacy, integrity, competence and confidentiality standards to everyday dealing dilemmas and conflicts of interest[1]
Derivatives dealing practices and skills
Carry out client onboarding, suitability assessment, order handling, trade documentation, error handling and complaint management correctly[1]
Prevention of financial crimes
Recognise money laundering and terrorism financing typologies, spot red flags in derivatives and FX dealing, and follow reporting and screening obligations[1]
30 key concepts to understand
- Dealing in capital markets products as a regulated activity
- Distinct roles of MAS and IBF Singapore
- Where RES 2B sits in the CMFAS module family
- Licensed versus exempt institutions
- Representative notification and ongoing obligations
- Fit and proper criteria for dealing staff
- Record keeping, internal controls and the compliance function
- False trading and market rigging
- Insider dealing applied to derivatives
- Misleading statements and deceptive conduct
- Front-running client orders
- Unfair dealing practices against clients
- OTC versus exchange-traded derivatives
- FX forwards and leveraged foreign exchange mechanics
- Swaps and their hedging function
- OTC options: premium, rights and asymmetry
- Margin, margin calls and close-out mechanics
- Counterparty credit risk and its mitigation
- Trade reporting for OTC derivatives
- Primacy of client interests
- Integrity, objectivity and managing conflicts
- Competence and due care in product knowledge
- Confidentiality and proper use of client information
- Client onboarding, KYC and suitability for leveraged products
- Churning and excessive trading
- Order handling, execution and confirmations
- Complaints handling and documentation of interactions
- The three stages of money laundering
- Red flags and suspicious transaction reporting
- Terrorism financing and sanctions screening
Capital markets industry and participants
1. Dealing in capital markets products as a regulated activity
Under Singapore's securities and futures framework, dealing in capital markets products, including OTC derivatives and spot foreign exchange for leveraged FX trading, is a regulated activity when carried on as a business. A firm must generally be licensed or operate under an exemption, and individuals acting for it must be properly appointed. RES 2B tests the rules governing how this activity is conducted.[1]
Common mistake: Assuming that passing RES 2B by itself authorises you to deal; authorisation comes through the firm's licence and your appointment, not the exam result.
Capital markets industry and participants
2. Distinct roles of MAS and IBF Singapore
The Monetary Authority of Singapore is the regulator: it licenses institutions, receives representative notifications and enforces conduct rules. IBF Singapore administers the CMFAS examinations, provides study guides and issues results. The exam is a competency gateway; regulatory standing flows from MAS processes, not from IBF. Confusing the two roles leads to wrong assumptions about who approves you to deal.[1]
Common mistake: Thinking the exam administrator grants or renews your authority to conduct regulated activities.
Capital markets industry and participants
3. Where RES 2B sits in the CMFAS module family
The CMFAS framework combines rules, ethics and skills modules with product knowledge modules. For non-exchange derivatives dealing, the rules module is RES 2B (or the combined RES 12B), paired with a product knowledge module such as CM-SIP, CM-EIP or CM-CMP depending on the products dealt. Exchange-member routes use RES 2A, or RES 2B with an exchange add-on such as RES 2BE1 for SGX-DT members.[1]
Common mistake: Studying exchange trading system content for RES 2B; that material belongs to the separate add-on modules.
Licensing and business operations
4. Licensed versus exempt institutions
Capital markets services licensees hold a licence for specific regulated activities, but certain institutions, such as banks, may instead operate under statutory exemptions. Exemption from licensing does not exempt the institution's staff from conduct requirements or, in relevant cases, from having representatives properly notified. Know the distinction because client-facing obligations attach to both structures.[1]
Common mistake: Concluding that an exempt institution means lighter conduct obligations for the individuals dealing there.
Licensing and business operations
5. Representative notification and ongoing obligations
Individuals conducting regulated activities must be notified to MAS as representatives of their institution. The notification is not a one-off: changes such as ceasing employment or relevant disciplinary matters must be notified within the required timeframe. Candidates should understand that the notification framework underpins public accountability of dealing staff.[1]
Common mistake: Treating the representative notification as permanent status that survives moving between institutions without any filing.
Licensing and business operations
6. Fit and proper criteria for dealing staff
Representatives must remain fit and proper, assessed on factors including honesty, integrity, reputation, competence and financial soundness. This is a continuing standard, not a one-time entry test. Events such as serious disciplinary findings or personal insolvency can raise fit and proper questions even for an already-notified representative.[1]
Common mistake: Assuming fit and proper assessment happened only at the point of first registration and never applies again.
Licensing and business operations
7. Record keeping, internal controls and the compliance function
Firms conducting derivatives dealing must maintain records sufficient to reconstruct transactions and review conduct, supported by internal controls and an independent compliance oversight. Records of orders, quotes, confirmations and client instructions allow surveillance for market misconduct and timely error resolution. Candidates should connect operational discipline to the regulatory purpose behind it.[1]
Common mistake: Viewing record keeping as administrative burden rather than as the evidential backbone for conduct and complaint reviews.
Market conduct
8. False trading and market rigging
Conduct rules prohibit transactions that do not involve a genuine change in beneficial ownership, that artificially maintain prices, or that create a false or misleading appearance of trading activity. These prohibitions apply to derivatives markets, not only to shares. Intent and effect both matter, and engineered trades between related accounts are a classic red flag.[1]
Common mistake: Believing manipulation rules concern only exchange-listed securities; derivatives markets are equally covered.
Market conduct
9. Insider dealing applied to derivatives
Dealing, or procuring dealing, on materially price-sensitive information that is not generally available is prohibited. For derivatives dealers this extends beyond shares: positions in derivatives referencing listed entities can constitute insider dealing. Connected persons and those receiving information from them face the strictest position, and tipping others is also caught.[1]
Common mistake: Assuming insider rules stop at the underlying shares and do not reach options or other derivatives linked to the same information.
Market conduct
10. Misleading statements and deceptive conduct
Making false or misleading statements, or recklessly disseminating predictions that induce others to deal, is prohibited. For dealers this covers overstating product performance, understating leverage risk, or citing fabricated market moves to push a trade. The prohibition targets conduct likely to induce dealing, whether the statement is to one client or the market.[1]
Common mistake: Repeating an unverified rumour to a client as fact, assuming responsibility lies only with whoever originated it.
Market conduct
11. Front-running client orders
Front-running occurs when a dealer takes a personal position, or routes another order, ahead of a client's order to profit from the expected price impact of that client's execution. It breaches conduct standards because the dealer exploits confidential knowledge of client activity for private benefit at the client's potential expense.[1]
Common mistake: Thinking front-running is acceptable if the client still receives the originally quoted price; the abuse lies in exploiting the client's order flow.
Market conduct
12. Unfair dealing practices against clients
Beyond headline misconduct rules, dealers must not employ practices that disadvantage clients, such as trading against them using undisclosed positions, misrepresenting execution conditions, or failing to pass on better available terms. Fair dealing requires that the client's economic outcome reflects genuine market conditions rather than the dealer's structural advantage.[1]
Common mistake: Assuming any price quoted and accepted is automatically fair, regardless of what prices were actually available.
Over-the-counter derivatives
13. OTC versus exchange-traded derivatives
OTC derivatives are bilateral, privately negotiated contracts, so terms can be customised, but pricing is less transparent and each party bears the other's credit risk until settlement. Exchange-traded products are standardised, centrally cleared and margined through a clearing house. RES 2B focuses on the OTC world precisely because these structural differences change the risk and conduct picture.[1]
Common mistake: Assuming OTC trades enjoy the same clearing house protections and price transparency as exchange-traded contracts.
Over-the-counter derivatives
14. FX forwards and leveraged foreign exchange mechanics
An FX forward locks in an exchange rate today for settlement at a future date; the forward rate reflects the spot rate adjusted for interest rate differentials between the currencies. Leveraged FX dealing lets a client control a large notional with a small margin deposit, so both gains and losses are calculated on the full notional, magnifying percentage outcomes dramatically.[1]
Common mistake: Treating the margin deposit as the price or maximum exposure; exposure runs on the entire notional amount.
Over-the-counter derivatives
15. Swaps and their hedging function
A swap is an OTC contract exchanging streams of cash flows, most commonly fixed for floating interest payments on a notional amount in an interest rate swap, or cash flows in two currencies in a currency swap. Swaps let parties transform their risk profile without exchanging the underlying principal, which is why corporates and institutions use them for hedging rate or currency exposure.[1]
Common mistake: Assuming swaps involve exchanging principal amounts; typically only the differential cash flows are exchanged.
Over-the-counter derivatives
16. OTC options: premium, rights and asymmetry
An option grants the buyer the right, not the obligation, to buy or call or sell or put an underlying at a strike price, in exchange for a premium paid upfront. The buyer's maximum loss is the premium, while the seller's potential loss can far exceed the premium received. OTC options allow customised strikes, tenors and exercise arrangements compared with listed options.[1]
Common mistake: Confusing buyer and seller risk profiles; the writer of an OTC option faces losses that can be many times the premium.
Over-the-counter derivatives
17. Margin, margin calls and close-out mechanics
Leveraged FX accounts typically require an initial margin to open a position and a maintenance level to keep it open. Losses are realised against margin as the market moves; if equity falls below the maintenance level, the client faces a margin call and may face close-out if it is not met. In fast or gapping markets, losses can exceed the margin deposited, and stop-loss orders do not guarantee exit at the trigger price.[1]
Common mistake: Assuming a stop-loss guarantees execution at the stop price; slippage or gaps can produce a materially worse exit.
Over-the-counter derivatives
18. Counterparty credit risk and its mitigation
Because OTC contracts are bilateral, each party bears the risk that the other defaults while the contract has positive value to it. Exposure changes with market moves, so it is monitored on a mark-to-market basis and managed through margin or collateral, netting arrangements and carefully drafted documentation that governs what happens on default. Understanding this risk explains much OTC dealing practice.[1]
Common mistake: Believing a signed contract eliminates counterparty risk; the contract defines the exposure but does not guarantee performance.
Over-the-counter derivatives
19. Trade reporting for OTC derivatives
Singapore's regulatory regime for OTC derivatives is built around transparency, and specified OTC derivative transactions are subject to reporting obligations designed to give regulators visibility of the OTC market. Reporting supports systemic risk monitoring and market integrity. Candidates should understand the purpose and general obligations, and rely on firm compliance for the current technical details of scope, which parties are responsible, timing and data fields.[1]
Common mistake: Assuming only exchange-traded trades are visible to regulators; the OTC reporting regime exists precisely to close that visibility gap.
Ethics and standards of professional conduct
20. Primacy of client interests
Professional conduct standards require a dealer not to place their own interests or the firm's ahead of the client's in advisory and dealing decisions. In practice this means recommending products that fit the client's objectives and risk capacity, passing on fair terms, and never exploiting information asymmetry. Revenue pressure never justifies conduct that harms the client.[1]
Common mistake: Rationalising an unsuitable recommendation because the client agreed to it; the duty to act in the client's interest comes first.
Ethics and standards of professional conduct
21. Integrity, objectivity and managing conflicts
Dealers must act with integrity and keep their judgement objective, which means identifying conflicts of interest, refusing inducements that could compromise advice, and disclosing material conflicts where they cannot be avoided. Personal trading, gifts and incentive schemes are common conflict sources that firms control through policies the dealer must follow.[1]
Common mistake: Believing a conflict is resolved simply by not mentioning it; unmanaged and undisclosed conflicts are the core ethical breach.
Ethics and standards of professional conduct
22. Competence and due care in product knowledge
Professional standards require dealers to maintain the knowledge and diligence appropriate to their role, understanding product mechanics, risks and applicable rules before transacting. A competent dealer recognises the limits of their own expertise and escalates or declines when a product or client situation exceeds it, rather than improvising.[1]
Common mistake: Presenting partial product understanding as full advice; competence includes knowing what you do not know.
Ethics and standards of professional conduct
23. Confidentiality and proper use of client information
Information about clients, their positions and their instructions must be used only for authorised purposes and protected from misuse. This overlaps market conduct rules, since misusing client order information enables front-running, but confidentiality is a standalone duty covering even non-market information about a client's affairs.[1]
Common mistake: Assuming confidentiality only applies to identity details rather than to positions, strategies and order information.
Derivatives dealing practices and skills
24. Client onboarding, KYC and suitability for leveraged products
Proper onboarding establishes the client's identity, financial situation, investment objectives, knowledge and experience, and risk tolerance before any dealing. For leveraged FX and OTC derivatives, suitability assessment is especially important because gearing can produce losses exceeding a retail client's capacity. Risk profiles must be refreshed as circumstances change, not left static.[1]
Common mistake: Reusing a stale risk profile from years earlier when the client's financial situation has clearly changed.
Derivatives dealing practices and skills
25. Churning and excessive trading
Churning is dealing in a client's account at a frequency or size inconsistent with the client's objectives and resources, primarily to generate commissions or spreads. It is both an ethical breach and conduct misconduct. Dealers must be able to show that each trade has a rationale connected to the client's strategy, not to the dealer's revenue.[1]
Common mistake: Pointing to the client's signed blanket agreement as cover; consent does not make excessive trading appropriate.
Derivatives dealing practices and skills
26. Order handling, execution and confirmations
Sound dealing practice requires accurate capture of client instructions, timely execution on fair terms, and prompt confirmations so the client can verify what was done. Errors must be identified and corrected transparently, with the dealer bearing the cost of their own mistakes rather than passing them to the client. Documentation of instructions protects both parties.[1]
Common mistake: Acting on vague or informal instructions without recording them, then disputing what was actually agreed.
Derivatives dealing practices and skills
27. Complaints handling and documentation of interactions
Firms must handle client complaints fairly, promptly and through a documented process, and dealers should record material client interactions so disputes can be reconstructed. Good complaint practice treats the record as evidence, the timeline as critical, and resolution or escalation as obligatory rather than optional. Personal, undocumented settlements are prohibited territory.[1]
Common mistake: Resolving an angry client verbally with no record, leaving the firm unable to evidence what was agreed.
Prevention of financial crimes
28. The three stages of money laundering
Money laundering typically proceeds through placement, introducing illicit funds into the financial system; layering, obscuring their origin through movements and transactions; and integration, returning them as apparently legitimate wealth. Derivatives and FX dealing can be exploited at every stage, so dealers must understand how trading activity can be used to disguise the source of funds.[1]
Common mistake: Assuming laundering detection is only a bank teller concern; trading patterns themselves are a recognised laundering channel.
Prevention of financial crimes
29. Red flags and suspicious transaction reporting
Dealers must recognise indicators such as third-party funding from unrelated parties, reluctance to provide source-of-funds information, transactions inconsistent with the client profile, and unusual urgency without commercial rationale. Suspicion must be escalated internally and reported through the firm's suspicious transaction reporting procedures, and tipping off the client about a report is itself prohibited.[1]
Common mistake: Telling the client that a suspicious transaction report may be filed; tipping off undermines the reporting regime.
Prevention of financial crimes
30. Terrorism financing and sanctions screening
Terrorism financing differs from laundering because funds often originate from legitimate sources but are destined for illicit purposes, so transaction legitimacy alone is not reassurance. Firms screen clients and counterparties against prescribed lists and watch for small, purpose-driven transfers and unusual geographic patterns. Sanctions screening blocks dealings with designated parties regardless of the transaction's economic sense.[1]
Common mistake: Assuming AML checks catch terrorism financing automatically; clean-source funds require purpose and sanctions screening as a separate discipline.
How to revise for RES 2B
1. Stage 1: Map the official syllabus before studying
Download the current RES 2B study guide through your IBF Portal account after registration. Organise your notes under its seven official syllabus domains, placing counterparty risk and related concepts within the relevant OTC derivatives, licensing and dealing-practice topics.
2. Stage 2: Build product mechanics first
Work through the over-the-counter derivatives domain by hand-calculating forward and margin outcomes on hypothetical numbers: margin percentages, notional P&L on leveraged FX, swap cash flow differentials and option payoffs for buyer and seller. These mechanics underpin conduct and suitability questions, so secure them before touching rules content.
3. Stage 3: Learn the conduct and licensing rules as tests, not lists
For each prohibition, write the trigger condition in one sentence: what act, what state of mind, what market effect. Do the same for licensing and representative notification duties. Converting rules into if-then statements makes multiple-choice distractors easier to eliminate under time pressure.
4. Stage 4: Drill the ethics and practices domains with scenarios
For primacy of client interest, churning, front-running and complaint handling, write your own two-line dilemmas and resolve them, then compare with the self-check scenarios here. RES exams reward recognising the conduct issue embedded in a short fact pattern, so practise spotting the issue in the first read.
5. Stage 5: Consolidate financial crime typologies
Create a one-page table of red flags by category: funding source, transaction pattern, client behaviour and geographic or sanctions indicators. Note the escalation path and the tipping-off prohibition. This domain is dense with similar-sounding concepts, so the comparison table prevents confusion between laundering, terrorism financing and sanctions breaches.
6. Stage 6: Simulate exam conditions and close gaps
In the final week, attempt mixed-question practice within the 60-question, 90-minute pacing, which averages 90 seconds per question including review time. Log every wrong answer against its syllabus domain, revisit only the weak domains in the study guide, and re-verify any exam-day logistics or fee details directly with IBF rather than third-party summaries.
Test your understanding
These original learning scenarios are for revision; they are not official examination questions.
1. Mei passes RES 2B on Monday and wants to begin taking client orders for leveraged FX at her new employer on Tuesday. Her colleague says passing the exam means she is authorised. Is this correct?
Show answer and explanation
No. Passing RES 2B satisfies an examination requirement, but she must be properly notified to MAS as a representative of a licensed or exempt institution and be appointed by the firm before conducting regulated dealing. Because she is dealing in capital markets products, a product knowledge module is also required in her pathway. Confirm her exact module combination with the employer and administrator.[1]
2. A client posts 10,000 dollars of initial margin on a leveraged FX position with a 200,000 dollar notional. The exchange rate moves three percent against the client. How much of the margin remains, and what does this illustrate?
Show answer and explanation
A three percent adverse move on a 200,000 dollar notional produces a loss of 6,000 dollars, leaving 4,000 dollars, or forty percent, of the original margin. This illustrates gearing: percentage gains and losses apply to the full notional, so a small rate move consumes a large share of the deposit, and fast markets can even threaten losses beyond initial margin.[1]
3. A new client funds a leveraged FX account from an account belonging to an unrelated third party and refuses to explain the relationship. The dealer suspects laundering. What should the dealer do?
Show answer and explanation
The dealer should not process the funding or proceed with the relationship until concerns are resolved. They must escalate internally to the firm's compliance or money laundering reporting function and follow suspicious transaction reporting procedures, while maintaining confidentiality with the client. Tipping off the client that a report may be filed is itself prohibited, so the dealer must not mention any reporting obligation.[1]
Frequently asked questions
What is the format and pass mark of the RES 2B exam?
RES 2B is a computer-based exam of 60 multiple-choice questions over 1.5 hours, with a pass mark of 75 percent. Results appear on screen immediately after the exam, and result slips can be printed from your IBF Portal account from the next business day.[1]
Can I get an exemption from RES 2B based on other qualifications?
No. IBF states there are no exemptions for RES 2B because it is a Rules, Ethics and Skills exam, so all candidates for this pathway must sit and pass it directly.[1]
What is the difference between RES 2A and RES 2B?
RES 2A covers rules, ethics and skills for derivatives dealers whose principal is a member of an approved exchange and includes trading systems and infrastructure content. RES 2B is for dealers of non-exchange members and covers over-the-counter derivatives instead of exchange trading systems. Exchange-specific rules sit in add-on modules such as RES 2BE1, RES 2BE2 and RES 2BE3.[1]
Do I need any other modules besides RES 2B to deal in capital markets products?
Yes. For non-exchange derivatives dealing, RES 2B or the combined RES 12B must be paired with a product knowledge module such as CM-SIP, CM-EIP or CM-CMP, depending on the products dealt. Confirm the exact combination applicable to your role with your employer and the relevant MAS requirements.[1]
How do I get the official RES 2B study guide and make sure it is current?
After registering for the exam, you receive access to the PDF study guide through your IBF Portal account, and access expires on your registered exam day. IBF updates study guides at intervals to reflect industry changes, so download the latest version before you start and re-check for updates before your sitting.[2]
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.