Singapore legislation
Clause 37
Clause 37
Segregation of customer’s funds by futures broker
(1)
Subject to this section, every futures broker shall —
treat and deal with all money, securities or property received by him from a customer to margin, guarantee or secure contracts in futures trading, or accruing to a customer as a result of such trading, as belonging to that customer; and
account in a separate trust account, designated or evidenced as such, for all the money, securities or property received from the customer or accruing to the customer pursuant to paragraph (a),and shall not commingle that money, security or property with the funds of the futures broker or use them to margin, guarantee or to secure the contracts or extend the credit of any customer or person other than the person for whom they are held.
(2)
Notwithstanding subsection (1), the money, securities or property received by a futures broker from his customers may, for convenience and for the benefit of his customers, be commingled and deposited in the same account or accounts with —
any bank;
a clearing house, whether in or outside Singapore;
another futures broker; or
any person who may be approved by the Authority for the purpose.
(3)
Subject to any regulations made under this Act, a futures broker shall not withdraw money received by him and deposited in a separate trust account pursuant to subsection (1), otherwise than for the purpose of —
making a payment to, or in accordance with the instructions of, a person entitled to the money;
purchasing, margining, guaranteeing, securing, transferring, adjusting or settling dealings in futures contracts effected by the broker on the instructions of a customer of the futures broker;
defraying brokerage and other proper charges incurred in respect of dealings in futures contracts effected by the futures broker on the instructions of a customer of the broker;
reimbursing himself to the extent of any residual financial interest that he may have in the account as is mentioned in subsection (4);
investing the money in such manner as may be prescribed; or
making a payment that is otherwise authorised by law.
(4)
Notwithstanding subsection (1), a futures broker may have a residual financial interest in a customer’s trust account and from time to time may advance from his own funds sufficient money to prevent any or all customers’ trust accounts from becoming under-margined.
(5)
The Authority may exempt a futures broker or any class of futures brokers or any transaction or class of transactions relating to trading in futures contracts from the requirements in subsection (1) subject to such terms and conditions as in the opinion of the Authority provides reasonable protection for customers.
(6)
Money, securities or property received from a customer and held by a futures broker in a separate trust account under subsection (1) shall not be available for payment of the debts of the futures broker to a creditor of the futures broker or be liable to be attached or taken in execution under the order or process of any court at the instance of such creditor unless the creditor is a customer of the futures broker and the debt owed to the creditor was incurred in connection with trading in futures contracts.
(7)
Nothing in this section shall take away or affect a lawful claim or lien that a futures broker has against, or on, any money, securities or property held in an account under subsection (1).
(8)
Nothing in this Act or any written law shall prevent an Exchange or a clearing house, with the approval of the Authority, from using the money, securities or property in a trust account to meet the obligations of a futures broker, being a member of the Exchange or the clearing house, who defaults, if —
the default of the futures broker is directly attributable to the failure of his customer to meet the obligations under a futures contract; and
the failure to use the money, securities or property in a trust account might jeopardise the financial integrity of the Exchange or the clearing house.
(9)
In this section, “customer” means a person on whose account a futures broker carries on trading in futures contracts but does not include directors, employees and representatives and related corporations of the futures broker.