Singapore legislation
Regulation 34
of Securities and Futures (Licensing and Conduct of Business) Regulations
Regulation 34
Mortgage of customer’s assets
Subregulation 1
Despite regulations 26 and 27 and subject to paragraphs (2), (3) and (4) and any agreement between the holder of a capital markets services licence and its customer, where the holder is owed money by its customer, the holder may mortgage, charge, pledge or hypothecate the customer’s assets but only for a sum not exceeding the amount owed by the customer to the holder.
Subregulation 2
The holder of a capital markets services licence must, before mortgaging, charging, pledging or hypothecating a retail customer’s assets —
inform the retail customer that the holder may mortgage, charge, pledge or hypothecate the retail customer’s assets but only for a sum not exceeding the amount owed by the customer to the holder;
explain to the retail customer the risks of mortgaging, charging, pledging or hypothecating the retail customer’s assets; and
obtain the retail customer’s written consent to mortgage, charge, pledge or hypothecate the retail customer’s assets.
Subregulation 3
For the purposes of paragraph (1), a sum for which a customer’s assets are mortgaged, charged, pledged or hypothecated does not exceed the amount owed by the customer to the holder by reason only of an excess arising on any day through the reduction of the amount owed by the customer to the holder on that day, if the holder pays or transfers to the mortgagee, chargee or pledgee concerned money or assets of an amount sufficient to reduce such excess as promptly as practicable after the excess occurs and, in any event, no later than the next business day.
Subregulation 4
The holder of a capital markets services licence may mortgage, charge, pledge or hypothecate the assets of multiple customers together if and only if —
the sum of the claims to which such customers’ assets are subject as a result of such mortgage, charge, pledge or hypothecation does not exceed the aggregate amounts owed by the customers to the holder; and
the claim to which each customer’s assets are subject as a result of such mortgage, charge, pledge or hypothecation does not exceed the amount owed by the customer to the holder.