The Capital Markets Industry & Participants

The capital markets are the mechanism through which savings and investments are channelled between suppliers of capital (investors) and those who need capital (companies and governments). They serve two broad functions: capital raising (the primary market, where new securities such as shares and bonds are issued) and trading/liquidity (the secondary market, where existing securities change hands).

In Singapore, the capital markets sit within a broader financial system that also includes the banking, insurance and asset-management sectors. A well-functioning capital market lowers the cost of capital for issuers, gives investors a way to deploy savings and manage risk, and supports price discovery so that securities trade at prices reflecting available information.

The securities market deals in equities (shares), debt securities (bonds) and related instruments. Alongside it sit the derivatives (futures) markets and fund-management activities. The RES dealer papers cover both arms: securities traded on SGX-ST and cleared through CDP, and derivatives traded on SGX-DT, IFSG or APEX and cleared through SGX-DC, ICE Clear Singapore or APEX Clear.

The Monetary Authority of Singapore (MAS) is Singapore's central bank and integrated financial regulator. MAS administers the Securities and Futures Act (SFA), the principal statute governing capital markets activities, exchanges, clearing facilities, market conduct and the licensing of intermediaries.

Under the SFA, MAS licenses and supervises intermediaries, approves and oversees market infrastructure (such as approved exchanges and approved clearing houses), and enforces rules against market misconduct (for example insider trading, market manipulation and false trading). MAS's objectives include fostering a sound and progressive financial services sector and maintaining confidence in Singapore's markets.

The SFA is complemented by subsidiary legislation (regulations) and by MAS notices and guidelines. Firms conducting regulated activities must hold the appropriate authorisation and their representatives must meet fit-and-proper and competency requirements — including passing the relevant CMFAS examinations such as RES 1A.