CMFAS RES 1A The Capital Markets Industry & Participants question: wholesale bank to place S$150,000 in a Singapore dollar fixed deposit and to open

CMFAS RES 1AThe Capital Markets Industry & Participants

A Singapore resident asks a wholesale bank to place S$150,000 in a Singapore dollar fixed deposit and to open an interest-bearing Singapore dollar savings account in his personal name. What does the guide say about these two requests?

A Both may be done if the client is an accredited investor, since the SGD deposit restrictions protect retail depositors only
B The fixed deposit may be placed, but a wholesale bank may not open any SGD savings account for an individual
C Both may be done, because wholesale banks provide the full range of banking business, including retail SGD deposits
D Neither: SGD fixed deposits start at S$250,000, and a resident individual's SGD savings account cannot pay interest without MAS approval

Show the answer and explanation

Answer: D. Neither: SGD fixed deposits start at S$250,000, and a resident individual's SGD savings account cannot pay interest without MAS approval

RES 1B ch.1.2.1.2 and RES 2B ch.1.2.1.2. Wholesale banks provide the full range of banking business but are restricted in deposit taking: foreign currency deposits in any amount, Singapore dollar fixed deposits of at least S$250,000, and no interest on a Singapore dollar savings or current account opened for a Singapore resident natural person except with prior MAS approval. This is why many wholesale banks target high net worth clients through their private banking arms.

Common mistake

The restriction bites on Singapore dollar deposit taking, not on whether the account may exist.

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