CMFAS RES 1A The Trading System & Infrastructure question: trading account at Broker B and sells shares through Broker B

CMFAS RES 1AThe Trading System & Infrastructure

Mdm Seah holds a direct securities account with CDP, linked to her trading account at Broker A. She opens a second trading account at Broker B and sells shares through Broker B on the first day, assuming that the shares sitting in her CDP account will simply be delivered. What does the guide say about the linkage?

A One CDP direct account covers every broker automatically once it is opened
B The Broker B trading account must itself be linked to her CDP account; each linkage covers one trading account
C Broker B can instruct CDP once Broker A releases its linkage, which happens automatically when a sale is executed
D Linkage is needed for buy contracts only, since a sale simply removes securities from the account

Show the answer and explanation

Answer: B. The Broker B trading account must itself be linked to her CDP account; each linkage covers one trading account

RES 1B ch.1.3.1.4. Investors who hold direct accounts with CDP should ensure that the trading accounts they maintain with SGX-ST members are linked to their direct securities accounts before trading. The linkage is effectively a standing instruction covering both sell and buy contracts executed through that particular trading account.

Common mistake

The linkage is set up per trading account and before trading, not worked out at settlement.

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Related CMFAS RES 1A questions

On access to the exchange and to the depository A 'married deal' or negotiated off-market transaction reported to SGX is one where Mr Ismail holds Singapore listed shares and corporate bonds in a direct securities account with CDP, and has just started buying shares on an overseas exchange through the same broker. He notices that the overseas holdings do not appear in his CDP statement, and asks whether CDP can hold them and why his Singapore trades and his foreign trades are handled differently. Which answer reflects the guide?

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Original study material mapped to the public CMFAS RES 1A syllabus. Unofficial, not endorsed by MAS or IBF. Verify figures and rules against current guidance before relying on them.