Singapore legislation
Regulation 9
Regulation 9
Prescribed inter‑bank purchase and sale business
Subregulation 1
Subject to paragraph (3), the business of purchasing and selling any asset is a prescribed business for a merchant bank in Singapore, if the business is carried on under the following arrangement:
for the purpose of making funds of the merchant bank (A) available to another bank or merchant bank (B), A purchases, or appoints B or another person as an agent of A to purchase on A’s behalf, an asset for an amount of money (the original price), in circumstances where the asset is existing at the time of the purchase;
B —
purchases the asset from A at a price (the marked‑up price) that is greater than the original price; and
sells the asset, or appoints A or another person as an agent of B, to sell the asset on behalf of B;
both A and B do not derive any gain or suffer any loss from any movement in the market value of the asset other than the difference between the marked‑up price and the original price (which represents the profit or return to A for making funds available to B);
B is not required to pay the marked‑up price or any part of the marked‑up price to A until after the date of the sale mentioned in sub‑paragraph (b)(ii).
Subregulation 2
Subject to paragraph (3), the arrangement set out in paragraph (1), in circumstances where the roles of A and B are reversed, is also a prescribed business for a merchant bank in Singapore.
Subregulation 3
The merchant bank must notify the Authority of its —
intention to commence the business mentioned in paragraph (1); or
commencement of the business within 14 days after the date of its commencement.