Capital Markets in Singapore Chapter 1
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What should a candidate understand about the capital markets industry in Singapore?

Basic features, including primary and secondary markets, exchanges, and financial intermediaries.

What are the basic features of the capital markets?

  • Primary and secondary markets
  • Exchanges (over the counter and regulated)
  • Financial intermediaries
  • All of the above (correct)

    • What is the objective of the CMFAS RES 1B exam?

    To test candidates on their knowledge and understanding of the regulatory framework, laws, and regulations governing securities dealing, ethical codes, standards of professional conduct, and fundamental skills relating to securities dealing.

    How many multiple-choice questions are included in the RES 1B exam?

    <p>60 questions</p> Signup and view all the answers

    Candidates will be tested on the amount of penalties applicable under the laws and regulations in the RES 1B exam.

    <p>False</p> Signup and view all the answers

    What is the passing mark for the RES 1B exam?

    <p>75%</p> Signup and view all the answers

    When should candidates ensure they have the latest version of the Study Guide?

    <p>Before attempting the exam</p> Signup and view all the answers

    Which entity is responsible for the records of movement in the custodian accounts?

    <p>Finance Companies</p> Signup and view all the answers

    What is the primary function of the capital markets?

    <p>Provide opportunities for businesses to raise capital</p> Signup and view all the answers

    Singapore Exchange Limited (SGX) operates equity, fixed income, and derivatives markets to lower regulatory standards.

    <p>False</p> Signup and view all the answers

    Investors buying securities instruments in the primary market are not exposed to any risks.

    <p>False</p> Signup and view all the answers

    What are the six guiding principles adopted by SGX in conducting its market regulation?

    <p>Disclosure-Based Regulation, Comprehensive Risk Management, Risk-Based Targeting of Regulatory Activities, Balanced Approach to International Best Practice, Transparency, SGX as a Frontline Regulator and Managing Regulatory Conflict</p> Signup and view all the answers

    What is an Initial Public Offering (IPO) in the context of the capital markets?

    <p>Issuing new shares to the public for the first time</p> Signup and view all the answers

    What is the name of the market where buyers and sellers can congregate to efficiently discover prices and quantities of capital markets products? It is known as the _______________ market.

    <p>exchange</p> Signup and view all the answers

    SGX Securities Trading Limited is the only approved securities exchange in Singapore and is responsible for setting the rules and membership and trading requirements of the exchange. SGX-ST can mete out disciplinary action for non-compliance with any of the ________.

    <p>requirements</p> Signup and view all the answers

    Match the type of bank with its description:

    <p>Qualifying Full Banks/Full Banks = Offer the whole range of banking business and can take deposits of any amount in any currency Wholesale Banks = Provide the full range of banking business but are restricted in their deposit taking activities Merchant Banks = Licensed under the Banking Act and not allowed to accept Singapore deposits or borrow Singapore dollars</p> Signup and view all the answers

    Which of the following are covered in the SGX-ST Listing Manual?

    <p>Acquisitions</p> Signup and view all the answers

    What is CDP and when was it established?

    <p>Central Depository (Pte) Limited; 1987</p> Signup and view all the answers

    CDP holds the book-entry securities deposited with it as a bare trustee for the collective benefit of depositors. Securities are immobilized at CDP where ownership is transferred via __________.

    <p>book-entry</p> Signup and view all the answers

    Match the following entities with their descriptions:

    <p>SGX-DT = Establishes, conducts, and regulates a futures market SGX-DC = Provides clearing for products listed and traded on SGX-DT and OTC derivatives trades SGX RegCo = Independent regulatory subsidiary to enhance governance of SGX</p> Signup and view all the answers

    What is the purpose of a secondary listing on SGX-ST Mainboard?

    <p>To list on an acceptable exchange</p> Signup and view all the answers

    Global Depositary Receipts (GDRs) can only be offered to institutional and accredited investors.

    <p>True</p> Signup and view all the answers

    What is the key requirement for an entity seeking to list on SGX-ST Mainboard via an IPO?

    <p>Meet the quantitative criteria</p> Signup and view all the answers

    For a Catalist listing, a company must comply with listing requirements even though there is no minimum ____________ entry criteria set by SGX-ST.

    <p>quantitative</p> Signup and view all the answers

    What is the BCR for a clearing member?

    <p>5 million</p> Signup and view all the answers

    What is the BCR for a non-member?

    <p>1 million</p> Signup and view all the answers

    What is the BCR for an introducing broker?

    <p>500,000</p> Signup and view all the answers

    What is the BCR for others?

    <p>50,000</p> Signup and view all the answers

    What is the definition of a clearing member?

    <p>A corporation which is a member of an approved clearing house.</p> Signup and view all the answers

    What are the minimum requirements for Mining, Oil and Gas (MOG) companies to be listed?

    <p>Substantiated resources by an independent person's report</p> Signup and view all the answers

    What is the definition of a trading member?

    <p>A corporation which is a member of an approved exchange.</p> Signup and view all the answers

    Promoters of an MOG company can sell any of their shareholdings immediately after IPO.

    <p>False</p> Signup and view all the answers

    What is the definition of a non-member?

    <p>A corporation which is not a member of an approved exchange.</p> Signup and view all the answers

    What is the definition of an introducing broker?

    <p>A corporation that does not carry any customer's positions in its own books, and either solicits or accepts orders for the purchase or sale of capital markets products from any customer.</p> Signup and view all the answers

    Before registering with Catalist, the company has to lodge an Offer Document on SGX’s Catalodge website for a period of at least __ days for public comments.

    <p>14</p> Signup and view all the answers

    Match the following listing requirements with their respective boards: Mainboard or Catalist?

    <p>Established Companies = Mainboard Fast Growing Companies = Catalist Exchange-regulated, sponsor-supervised = Catalist Less stringent admission criteria = Catalist</p> Signup and view all the answers

    What does the term 'Listing' mean in the context of SGX-ST?

    <p>Being listed on the official boards of SGX-ST.</p> Signup and view all the answers

    How can listed issuers announce material information to the public?

    <p>Through the SGXNet system accessible on the SGX website.</p> Signup and view all the answers

    Shareholders are entitled to vote on resolutions at general meetings by a show of hands.

    <p>False</p> Signup and view all the answers

    What type of securities can be listed on SGX-ST besides Mainboard and Catalist?

    <p>Debt securities</p> Signup and view all the answers

    Listed issuers are required to hold all general meetings in _________ unless prohibited by laws and regulations.

    <p>Singapore</p> Signup and view all the answers

    Study Notes

    CMFAS Examination RES 1B - Rules, Ethics and Skills for Securities Dealers of Non-Exchange Members

    • The objective of the CMFAS RES 1B Exam is to test candidates on their knowledge and understanding of the regulatory framework, including laws and regulations, and associated codes, notices, practice notes, and guidelines governing securities dealing, ethical codes, standards of professional conduct, and fundamental skills relating to securities dealing.

    • Candidates are required to pass the relevant modules of the CMFAS examinations pertaining to the regulated activity that they intend to conduct.

    • Once they have passed the relevant CMFAS examinations, candidates must ensure that their notification to act as an appointed representative is lodged with the Monetary Authority of Singapore (MAS) on the Public Register via the Representative Notification Framework (RNF), before they can commence any dealings in regulated activities.

    Study Guide Overview

    • The Study Guide consists of 7 chapters, covering rules and regulations governing securities dealings, ethical codes and conduct, and elementary skills relating to securities dealings in Singapore.

    • Chapter 1: The Capital Markets Industry in Singapore and Participants in the Capital Markets provides an overview of the capital markets eco-system, regulatory bodies, and the relevant legislation and rules governing the conduct of capital markets activities in Singapore.

    • Chapter 2: Licensing and Business Operations outlines the obligations and regulatory requirements governing the business operations of Capital Markets Services licence holders and representatives in securities dealing.

    • Chapter 3: Market Conduct provides an overview of the rules and regulations prohibiting market misconduct in relation to securities dealing.

    • Chapter 4: Ethics, Codes and Standards of Professional Conduct for Securities Dealing defines ethics and ethical behavior in the context of securities dealing, discusses ethical issues or ethical dilemmas faced by securities dealing representatives, and the applicable ethical codes and professional standards of conduct that securities dealing representatives should uphold in their professional capacities.

    • Chapter 5: Securities Dealing Practices and Skills describes key aspects of the client onboarding process, client servicing and communication requirements, best execution practices, and some aspects of risk management and internal controls to securities dealing.

    • Chapter 6: Central Provident Fund Investment Scheme (CPFIS) provides an overview of CPFIS.

    • Chapter 7: Prevention of Financial Crimes provides an overview of the relevant legislation, rules, and regulations for the prevention of money laundering and countering the financing of terrorism.

    Study Guide Updates and Exam Information

    • The Study Guide is updated at appropriate intervals to reflect changes and developments in the financial industry.

    • The RES 1B Exam is conducted at the IBF Assessment Centre and includes questions that test candidates' knowledge, understanding, and application of the relevant rules, ethics, and skills for securities exchange dealing.

    • The examination comprises 60 multiple-choice questions and multiple response questions for a duration of 1 hour 30 minutes.

    • The passing mark is 75%.### The Capital Markets Industry in Singapore and Participants in the Capital Markets

    Introduction

    • The capital markets provide opportunities for businesses to raise capital to fund their business activities.
    • The primary market involves the issuance of securities instruments, such as shares, bonds, and company warrants.
    • Investors buy these instruments, taking on risk as the price of financial instruments fluctuates with the company's performance.

    The Primary Market

    • The primary market is where businesses raise capital through the issuance of securities instruments.
    • Examples of securities instruments include:
      • Shares / common stock / equity securities
      • Bonds / fixed income securities
      • Company warrants

    The Secondary Market

    • The secondary market is where trading activity takes place outside of the initial capital-raising activities.
    • It allows investors to manage or transfer their risk to other parties.
    • Risk transfer or risk management can also be achieved by trading in futures or derivatives products.

    Exchanges

    • Primary and secondary market activities can take place in the over-the-counter (OTC) markets or on regulated exchanges.
    • The OTC market is also known as the "call around" market.
    • An exchange provides a centralized market where buyers and sellers can congregate to discover prices and quantities.

    Financial Intermediaries

    • Financial intermediaries connect businesses that need to raise capital with public investors.
    • Examples of financial intermediaries include:
      • Banks or financial institutions with a capital markets services (CMS) licence to advise on corporate finance.
    • They help businesses raise capital through new securities, such as through an Initial Public Offering (IPO).### Capital Markets Industry in Singapore
    • The capital markets industry in Singapore has various financial intermediaries, including banks, broker/dealer companies, and providers of custodial services.

    Banks

    • There are three types of banks licensed under the Banking Act 1970:
      • Qualifying Full Banks/Full Banks: provide the whole range of banking business, including capital markets products, custodial business, underwriting, corporate finance activities, and insurance products.
      • Wholesale Banks: provide the full range of banking business, but are restricted in their deposit-taking activities.
      • Merchant Banks: licensed under section 55S of the Banking Act, and are not allowed to accept Singapore deposits or borrow Singapore dollars from the public.

    Capital Markets Services (CMS) Licence Holders

    • CMS licence holders include:
      • Broker/dealer companies: do not engage in deposit-taking activities, but specialise in matching buyers with sellers.
      • Corporate finance advisory companies: provide corporate finance advisory services, including acting as issue managers or sponsors for listings.
      • Providers of custodial services: required to hold a CMS licence, serve institutional and individual clients, and provide general custodial services.

    Others (Non-CMS Licence Holders)

    • Finance companies: licensed under the Finance Companies Act 1967, and are not required to apply for a CMS licence for regulated activities.
    • Remote trading and clearing members: exempted from holding a CMS licence, provided they meet certain criteria, such as being incorporated outside of Singapore and not serving customers resident in Singapore.

    Regulatory Framework and Regulatory Bodies

    • Singapore's regulatory framework for capital markets seeks to promote a sound, stable, and progressive financial services sector.
    • The regulatory framework aims to:
      • Keep risks at acceptable levels
      • Maintain a safe and efficient financial market infrastructure
      • Ensure fair, orderly, and transparent organised markets
      • Keep customers well-informed and empowered
    • Regulatory bodies responsible for the trading and clearing of securities and derivatives include:
      • Monetary Authority of Singapore (MAS)
      • Singapore Exchange Limited (SGX)
      • SGX RegCo
      • SGX-ST
      • CDP
      • SGX-DT
      • SGX-DC

    Roles of the Regulatory Bodies

    • Monetary Authority of Singapore (MAS):
      • Acts as the central bank of Singapore
      • Conducts integrated supervision of financial services and financial stability surveillance
      • Manages the official foreign reserves of Singapore
      • Develops Singapore as an international financial centre
      • Responsible for administering the Securities and Futures Act (SFA) and other relevant legislations
    • Singapore Exchange Limited (SGX):
      • Operates equity, fixed income, and derivatives markets
      • Provides listing, trading, clearing, settlement, depository, and data services
      • Has six guiding principles for its regulation:
        • Disclosure-based regulation
        • Comprehensive risk management
        • Risk-based targeting of regulatory activities
        • Balanced approach to international best practice
        • Transparency
        • SGX as a frontline regulator and managing regulatory conflict
    • Singapore Exchange Securities Trading Limited (SGX-ST):
      • Undertakes the day-to-day regulation of the securities market
      • Administers the SGX-ST rules
      • Sets the rules and membership and trading requirements of the exchange
      • Allows companies and investors to achieve capital-raising and investment objectives
    • The Central Depository (Pte) Limited (CDP):
      • Provides integrated clearing, settlement, and depository facilities for the securities market
      • Holds the book-entry securities deposited with it as a bare trustee for the collective benefit of depositors
      • Immobilizes securities and facilitates settlement of trades through book-entry

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    CMFAS Examinations Study Guide RES 1B PDF

    Description

    This quiz covers the introduction to the capital markets industry in Singapore, institutional participants, and the regulatory framework. Test your knowledge of the capital markets in Singapore!

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