Capital Markets and Corporate Finance in Singapore
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Questions and Answers

What does the secondary market primarily allow investors to do?

  • Manage or transfer their risk (correct)
  • Guarantee profit from investments
  • Acquire new shares directly from companies
  • Increase the value of their assets

Which of the following is NOT considered a common derivative product?

  • Options
  • Futures
  • Leverage certificates
  • Bonds (correct)

What is the primary focus of Chapter 1 in the Study Guide?

  • Overview of the capital markets ecosystem and regulations (correct)
  • Overview of Initial Public Offer processes
  • Documentation for equity and bond issues
  • Post listing obligations for financial entities

What role does the Singapore Exchange (SGX) play in risk management?

<p>A provider of capital-raising opportunities (C)</p> Signup and view all the answers

Which chapter discusses the roles of parties involved in equity and bond issues?

<p>Chapter 2: Raising Capital (A)</p> Signup and view all the answers

Which sector is NOT mentioned as part of the listings on the Singapore Exchange?

<p>Technology (C)</p> Signup and view all the answers

What key process is outlined in Chapter 3 of the Study Guide?

<p>Initial Public Offer and listing processes (C)</p> Signup and view all the answers

What was a significant effect of the Asian Financial Crisis of 1997 on Singapore's bond market?

<p>Diversification of financial services markets (C)</p> Signup and view all the answers

What aspect of post-listing is highlighted in Chapter 4?

<p>Delisting process and post-listing obligations (A)</p> Signup and view all the answers

Which product type is classified under risk management facilitated by SGX?

<p>Company Warrants (C)</p> Signup and view all the answers

Which component is included in the Study Guide to enhance understanding of key learning points?

<p>Practical examples and case studies (A)</p> Signup and view all the answers

What type of bonds are included in Singapore's bond market post-crisis?

<p>Quasi-government and local corporate bonds (A)</p> Signup and view all the answers

Candidates are encouraged to pursue which of the following after passing the CMFAS Examinations?

<p>IBF accredited programs leading to certification (A)</p> Signup and view all the answers

Which of the following statements about SGX is incorrect?

<p>SGX only collaborates with local businesses. (B)</p> Signup and view all the answers

Which chapter addresses the ethical principles relevant to corporate finance?

<p>Chapter 1 contains rules and regulations including ethics (B)</p> Signup and view all the answers

What is the main purpose of the Study Guide's organization?

<p>To ensure candidates grasp essential rules, ethics, and skills (B)</p> Signup and view all the answers

What is the primary purpose of the capital markets?

<p>To raise capital for business activities through securities issuance (C)</p> Signup and view all the answers

Which regulatory body is responsible for overseeing the capital markets in Singapore?

<p>Monetary Authority of Singapore (MAS) (C)</p> Signup and view all the answers

What type of securities might a company issue to raise capital in the primary market?

<p>Equity securities such as shares (C)</p> Signup and view all the answers

The process of selling financial instruments once they are issued takes place in which market?

<p>Secondary market (A)</p> Signup and view all the answers

Which of the following is NOT a component of the Representative Notification Framework under MAS?

<p>CGH Compliance Guidelines (A)</p> Signup and view all the answers

Which regulatory organization is responsible for overseeing trading activities in Singapore?

<p>Singapore Exchange Regulation Pte Ltd (SGX RegCo) (C)</p> Signup and view all the answers

What is a common type of risk that investors take on when purchasing securities?

<p>Performance risk that relates to the company's success (D)</p> Signup and view all the answers

The rules governing the operations of the Central Depository (CDP) include which of the following?

<p>CDP Clearing Rules (B)</p> Signup and view all the answers

What is the purpose of SGX RegCo's establishment?

<p>To enhance governance and segregate regulatory functions (B)</p> Signup and view all the answers

Which entity is responsible for the day-to-day regulation of the securities market in Singapore?

<p>Singapore Exchange Securities Trading Limited (A)</p> Signup and view all the answers

What distinguishes the Mainboard from Catalist on SGX-ST?

<p>Mainboard has higher entry and listing requirements than Catalist (D)</p> Signup and view all the answers

Which body has the authority to impose disciplinary actions for non-compliance with trading rules?

<p>Singapore Exchange Securities Trading Limited (D)</p> Signup and view all the answers

Which of the following entities collaborates with SGX on regulatory policies?

<p>Commercial Affairs Department (D)</p> Signup and view all the answers

What model does Catalist utilize for companies wishing to list?

<p>Companies must be brought to list by approved sponsors (C)</p> Signup and view all the answers

Which agency is NOT mentioned as collaborating with SGX?

<p>Ministry of Trade and Industry (D)</p> Signup and view all the answers

What function does SGX RegCo NOT perform?

<p>Day-to-day trading operations (A)</p> Signup and view all the answers

What is the Base Capital Requirement (BCR) for a CMS licence holder advising on corporate finance?

<p>S$250,000 (C)</p> Signup and view all the answers

Which of the following statements about the Capital Markets Services (CMS) licence holder's requirements is true?

<p>The activities conducted must fall under the regulated activities in the SFA. (B)</p> Signup and view all the answers

If a corporate finance adviser holds multiple regulated activities, what will their Base Capital Requirement be based on?

<p>The highest BCR among all activities (C)</p> Signup and view all the answers

What is the role of the Monetary Authority of Singapore (MAS) in approving CMS licence applicants?

<p>MAS ensures that applicants will operate honestly and fairly. (B)</p> Signup and view all the answers

Options on equity indices like SGX Nifty are categorized under which type of derivatives?

<p>Securities-based derivatives (A)</p> Signup and view all the answers

What must be true about the substantial shareholders and officers of a CMS licence applicant?

<p>They must be deemed 'fit and proper' by MAS. (D)</p> Signup and view all the answers

Which of the following is NOT a reason MAS would reject a CMS licence application?

<p>The applicant has experience in the relevant field. (B)</p> Signup and view all the answers

What is one of the conditions for an applicant to be considered for a CMS licence?

<p>The applicant must operate primarily in Singapore. (A)</p> Signup and view all the answers

What is the time frame for a CMS licence holder to inform MAS of any change in particulars?

<p>14 days (D)</p> Signup and view all the answers

Which of the following is NOT a required change that must be reported to MAS?

<p>The number of employees (A)</p> Signup and view all the answers

What may cause a CMS licence to lapse?

<p>Winding up or dissolving of the licence holder (B)</p> Signup and view all the answers

What action may MAS take if it believes that a CMS licence holder has not acted in the best interest of its customers?

<p>Suspend or revoke the CMS licence (B)</p> Signup and view all the answers

What can happen if a CMS licence holder continues business after its licence has lapsed?

<p>They may face heavy financial penalties (C)</p> Signup and view all the answers

Which particular information must be reported if the business operates under a different name?

<p>Name under which the business is carried on (B)</p> Signup and view all the answers

What is the primary reason MAS requires updates on changes in particulars?

<p>For publication and communication with the investing community (C)</p> Signup and view all the answers

Which of the following may NOT lead to the revocation of a CMS licence?

<p>Reporting changes in particulars swiftly (B)</p> Signup and view all the answers

Flashcards

CMFAS Examinations

Exams for those wanting to be Corporate Finance Advisors.

IBF Certification

Credential given by the IBF for passed programs.

Corporate Finance Study Guide

A guide of 9 chapters on corporate finance.

Capital Markets in Singapore

Overview of Singapore's capital market system.

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Raising Capital (Equity/Bonds)

Discusses process and documents for raising funds.

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Initial Public Offering (IPO)

Process of a company going public.

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SGX-ST Listing

Listing companies' equity, and bonds on SGX-ST.

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Post-Listing Obligations

Responsibilities after listing on the stock exchange.

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Primary Market

Where businesses raise capital by issuing securities like stocks, bonds, and warrants.

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Secondary Market

Market for trading securities after initial public offerings.

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Capital Markets

Markets for raising and trading capital (money).

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Securities

Financial instruments representing an ownership stake or debt.

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Singapore Exchange (SGX)

A major stock exchange in Singapore.

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Monetary Authority of Singapore (MAS)

Singapore's central bank, regulates capital markets.

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Securities and Futures Act (SFA)

Singapore law governing securities and futures trading.

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Investment Risk

Possibility an investment's value could decrease.

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Risk Management in Secondary Market

Investors can manage or transfer investment risk to other parties by trading securities in secondary markets or via futures/derivatives.

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Derivatives

Financial contracts whose values are derived from an underlying asset (e.g., futures, options, warrants, leverage certificates).

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SGX (Singapore Exchange)

A major exchange in Singapore offering capital raising and risk management products in the Asia-Pacific region.

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SGX-ST

Securities Trading arm of SGX.

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Bond Market Diversification (Singapore)

Singapore's bond market, once dominated by government bonds, now offers a wide range of bond types (govt, quasi-govt, corporate, and structured).

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Asian Financial Crisis (1997)

A financial crisis that highlighted the need for diversification in Asian financial markets.

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Capital Raising

The process of raising capital through issuing securities to investors (e.g., shares, bonds).

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SGX RegCo

An independent subsidiary of SGX, established in 2017, responsible for the regulatory functions of the exchange and its oversight. It has its own board of directors and is separate from SGX's commercial and operational activities.

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SGX-ST Trading Rules

Rules governing the access to and conduct within the securities market of the SGX-ST, which Trading Members must adhere to.

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Mainboard (SGX-ST)

A listing segment of SGX-ST catering to more established companies with higher entry requirements like minimum profit and market capitalization.

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Catalist (SGX-ST)

A listing segment of SGX-ST catering to smaller or fast-growing companies with a different listing process, requiring approved sponsors and IPOs.

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What is the role of SGX in the Singapore capital market?

SGX plays a critical role as a stock exchange, facilitating fundraising and investment for companies and individuals. They also play a regulatory role, ensuring fair and transparent market practices through their subsidiary SGX RegCo.

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How does SGX maintain a stable market?

SGX collaborates with other regulatory agencies like MAS, CAD, and ACRA by sharing information and coordinating regulatory activities.

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CMS Licence

A license required by the Monetary Authority of Singapore (MAS) to conduct regulated activities in Singapore's capital markets. These activities include dealing in securities, giving advice, and managing funds.

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Base Capital Requirement (BCR)

The minimum amount of capital a CMS licence holder must have to operate in the Singapore capital markets. The specific amount varies depending on the regulated activities they conduct.

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Corporate Finance Advisor

A licenced individual or firm that provides advice on raising capital, mergers and acquisitions, and other financial strategies for corporations.

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SFA Second Schedule

A list of regulated activities that require a CMS licence in Singapore. Examples include trading securities, providing investment advice, and fund management.

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Fit and Proper Person

Criteria used by MAS to ensure individuals involved in capital markets possess suitable qualifications, experience, and ethical standards.

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SFA Section 86

Section in the Securities and Futures Act (SFA) that outlines the process and criteria for applying for a Capital Markets Services (CMS) licence.

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Regulated Activities

Activities in the capital markets that are strictly controlled by the MAS, requiring licences and adherence to specific rules.

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SFA Third Schedule

A list of specified persons who are exempt from the requirement to hold a CMS licence under certain conditions.

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Change of Particulars

A CMS licence holder must notify MAS within 14 days of any changes to their company information, such as their name, address, or the type of regulated activity they are licensed for.

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Lapsing of CMS License

A Capital Markets Services (CMS) licence can be automatically cancelled if the holder is dissolved or wound up, or if other conditions defined by MAS occur.

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Revocation/Suspension of CMS License

MAS can revoke or suspend a CMS license if the holder, their representatives, or officers acted unfairly or breached the conditions of their license.

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Why is Reporting Changes Important?

Reporting changes to MAS is critical because this information is used to inform investors and market participants about the impact of those changes.

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Consequences of Ignoring License Rules

If a CMS licence holder continues to operate after their license has lapsed, been suspended, or revoked, they face heavy financial penalties.

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Who is MAS?

The Monetary Authority of Singapore (MAS) is the central bank of Singapore and the primary regulator of the financial industry.

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Purpose of SFA

The Securities and Futures Act (SFA) is the main law regulating securities and futures trading in Singapore.

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Why is it important for investors to know about license status?

Knowing about the status of a CMS licence holder helps investors avoid dealing with errant companies that may have been suspended or revoked.

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Study Notes

Capital Markets and Corporate Finance in Singapore

  • Primary Market: Businesses raise capital through securities (shares, bonds, warrants). Investors buy these, taking on risk tied to company performance.
  • Secondary Market: Allows investors to manage or transfer risk through trading in securities, futures, options, or derivatives. SGX (Singapore Exchange) is a key platform in the Asia Pacific region.

Debt Capital Markets in Singapore

  • Significant diversification in financial services markets, especially after the 1997 Asian Financial Crisis.
  • Singapore's bond market offers various securities, including government, quasi-government, and corporate bonds.

Regulatory Bodies and Oversight

  • MAS (Monetary Authority of Singapore): Key regulatory body governing capital markets activities.
  • SGX (Singapore Exchange): Provides capital raising and risk management opportunities.
  • SGX RegCo (Singapore Exchange Regulation Pte Ltd): Independent subsidiary focusing on regulatory functions, separated from commercial activities.
  • SGX-ST (Singapore Exchange Securities Trading Limited): Securities subsidiary of SGX, responsible for securities market regulation, rules, and membership.
  • CAD (Commercial Affairs Department): Collaborates with SGX on regulatory policies, risk management, and enforcement.
  • ACRA (Accounting and Corporate Regulatory Authority): Collaborates with SGX.

Capital Markets Services (CMS) Licence

  • Base Capital Requirement (BCR): S$250,000 for corporate finance advisors. Higher BCR applies if conducting multiple activities.
  • General Criteria: Focus on applicant reputation, established track record (at least 5 years), supervision by home regulatory authority, and "fit and proper" individuals (officers, employees, representatives).
  • Notification of Changes: Changes to business particulars (name, address, activities) must be reported to MAS within 14 days.
  • Lapsing/Revocation/Suspension: Licence lapses on winding up, dissolution, or other MAS-prescribed occurrences. MAS can revoke/suspend for lack of efficiency, honesty, fairness, or acting against customer interests.

Key Legislation and Rules

  • Securities and Futures Act (SFA) and Regulations: Key legislation governing capital markets activities in Singapore.

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Related Documents

CMFAS RES 4 Study Guide (6 June 2024) PDF

Description

This quiz explores the intricacies of capital markets and corporate finance in Singapore. It covers the primary and secondary markets, the role of regulatory bodies like MAS and SGX, and the evolution of the debt capital markets post-1997. Test your knowledge on how these components contribute to Singapore's financial landscape.

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