Futures Trading Act · 1996 Revised Edition · Part V · Conduct of Futures Business
39. Risk disclosure by futures broker, futures pool operator and futures trading adviser
Feedback & supportLast amended by an amending law of 1995.
No futures broker shall open a futures trading account or leveraged foreign exchange trading account for a customer unless he —
futures broker
“futures broker” means any person, whether as principal or agent, who —(a)carries on the business of soliciting or accepting orders, for the purchase or sale of any commodity under a futures contract on any Futures Exchange or futures market whether or not that person accepts any money, securities or property (or extends credit in lieu thereof) to margin, guarantee or secure any contract or transaction that may result therefrom; or(b)carries on the business of leveraged foreign exchange trading,whether the business is part of, or is carried on in conjunction with, any other business;
furnishes the customer with a separate written risk disclosure document which shall be in such form and manner as may be prescribed by the Authority; and
receives from the customer an acknowledgment signed and dated by the customer that he has received and understood the nature and contents of the risk disclosure document.
No futures pool operator shall, directly or indirectly, solicit, accept or receive funds, securities or other property from a prospective participant in a pool that it operates or that it intends to operate unless on or before the date it engages in that activity the futures pool operator —
futures pool operator
“futures pool operator” means any person who carries on a business, in the nature of a unit trust or other interest to which Division 6 of Part IV of the Companies Act applies, and who in connection therewith accepts or receives from other persons funds, security or property, either directly or through capital contributions, the sale of shares or other forms of security or otherwise for the purpose of trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading but does not include such persons as the Authority may by regulations prescribe;
delivers or causes to be delivered to the prospective participant a risk disclosure document which shall be in such form and contain such information as the Authority may prescribe; and
receives from the prospective participant an acknowledgment signed and dated by him that he has received and understood the nature and contents of the risk disclosure document.
No futures trading adviser shall solicit or enter into an agreement with a prospective client for the purpose of managing his futures trading account or foreign exchange trading account or guiding the client’s futures trading account or foreign exchange trading by means of a systematic programme that recommends specific transactions unless at or before the time he engages in the solicitation or enters into the agreement (whichever is the earlier) the futures trading adviser —
futures trading adviser
“futures trading adviser” means any person who —(a)carries on the business of advising other persons (directly or indirectly, through any publication or writing, or by whatever means or media) concerning futures contracts, foreign exchange trading or leveraged foreign exchange trading, including advice on whether to engage in trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading;(b)as part of a regular business, issues or promulgates any analysis or report concerning futures markets or foreign exchange markets; or(c)pursuant to a contract or an arrangement with a client, undertakes on behalf of the client (whether on a discretionary authority granted by the client or otherwise) trading in futures contracts, foreign exchange trading or leveraged foreign exchange trading for the purposes of managing the client’s funds,but does not include —(i)a bank that is licensed under the Banking Act or a merchant bank approved under the Monetary Authority of Singapore Act;(ii)an accountant or advocate and solicitor in practice whose carrying on of that business is solely incidental to the practice of his profession;(iii)a futures broker or futures pool operator (referred to in this sub-paragraph as the licensee) so long as any activity referred to in paragraph (a), (b) or (c) carried out by the licensee is wholly incidental to the carrying on of the business for which he is so licensed;(iv)a person who carries on the business of printing or publishing a newspaper and is the holder of a permit therefor issued under the Newspaper and Printing Presses Act (referred to in this definition as the proprietor) and the author of any advice, analysis or report published in that newspaper (referred to in this definition as the author) where —(A)insofar as the newspaper is distributed generally to the public, it is distributed only to subscribers to, and purchasers of, the newspaper for value;(B)the advice is given or the analysis or report is issued or promulgated only through that newspaper;(C)the proprietor receives no commission or other consideration for giving the advice or for issuing or promulgating the analysis or report other than the consideration received from the sale of the newspaper and advertisements placed in the newspaper;(D)the author of the advice, analysis or report receives no commission or other consideration in respect of the advice, analysis or report other than the consideration received from the proprietor of the newspaper; and(E)the proprietor and the author of the advice, analysis or report has no interest, directly or indirectly, in any futures contract referred to in the advice, analysis or report; and(v)such other person carrying on such business as the Authority may by regulations prescribe, so long as any activity referred to in paragraph (a), (b) or (c) carried out by that person is wholly incidental to the carrying on of such prescribed business;
delivers or causes to be delivered to the prospective client a risk disclosure document in respect of those purposes which shall be in such form and contain such information as the Authority may prescribe; and
receives from the prospective client an acknowledgment signed and dated by him that he has received and understood the nature and contents of the risk disclosure document.
Except as may be provided by any regulations made under this Act, no futures trading adviser shall solicit, accept or secure from an existing or prospective client moneys, securities or other property in the futures trading adviser’s name to purchase, margin, guarantee or secure any interest of the client in a futures contract or a transaction in foreign exchange trading or leveraged foreign exchange trading.
futures contract
“futures contract” means a contract the effect of which is that —(a)one party agrees to deliver a specified commodity, or a specified quantity of a specified commodity, to another party at a specified future time and at a specified price payable at that time pursuant to terms and conditions set forth in the business rules or practices of a Futures Exchange or a futures market; or(b)the parties will discharge their obligations under the contract by settling the difference between the value of a specified quantity of a specified commodity at the time of the making of the contract and at a specified future time, such difference being determined in accordance with the business rules or practices of the Exchange or futures market at which the contract is made,and includes a futures option transaction;
Subsection (4) shall not apply to a futures broker who carries on the business of a futures trading adviser.