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Financial advisory
RES5Financial Advisory Services✓M5 — RES5 — Rules, Ethics & Skills for Financial Advisory Services
The Securities and Futures Act 2001 (SFA) and the SFR(LCB) set the market-conduct standards that all capital-market participants — CMS licence holders, intermediaries, their representatives and fund-raisers — must observe. Under s196 the rules have extraterritorial reach: they apply to acts done in Singapore in respect of capital markets products listed or quoted anywhere, and to acts done outside Singapore in respect of products listed or quoted on an organised market in Singapore. So manipulating a Singapore-listed counter from abroad is still treated as an offence in Singapore. The SFA (Part 12, Division 1) names seven categories of prohibited market conduct: false trading & market rigging (s197); securities market manipulation (s198); false or misleading statements & information (s199); fraudulently inducing persons to deal (s200); employment of manipulative & deceptive devices (s201); dissemination of information about illegal transactions (s202); and insider trading (s218/219). Breaches attract fines and/or imprisonment, can be pursued by criminal prosecution or a MAS civil-penalty action, and can lead to suspension or revocation of a licence.
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The Securities and Futures Act 2001 (SFA) and the SFR(LCB) set the market-conduct standards that all capital-market participants — CMS licence holders, intermediaries, their representatives and fund-raisers — must observe. Under s196 the rules have extraterritorial reach: they apply to acts done in Singapore in respect of capital markets products listed or quoted anywhere, and to acts done outside Singapore in respect of products listed or quoted on an organised market in Singapore. So a person sitting overseas who manipulates the price of a Singapore-listed counter is treated as having committed the offence in Singapore.
Practices that give some customers an unfair advantage over the general public are strictly prohibited. The SFA (Part 12, Division 1) names seven categories of prohibited market conduct:
Breaches attract fines and/or imprisonment and can lead to suspension or revocation of a licence — the severity reflecting how seriously MAS treats market misconduct and personal liability.
False trading and market rigging (SFA s197) use artificial means to influence a product's price or create volatility without real basis, instead of letting natural supply and demand work. It covers creating (or being reckless as to creating) a false or misleading appearance of active trading or of the market/price. Two classic devices are:
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Securities market manipulation (SFA s198) is the intentional interference with the free forces of supply and demand — directly or indirectly effecting two or more transactions that raise, lower, maintain or stabilise a price on an organised market, with intent to induce others to deal.