CMFAS Securities Regulations M1 3 — Questions and Answers
Question 1: What is the 'fit and proper' requirement for representatives?
- Physical fitness standards
- Meeting criteria of honesty, integrity, competence, and financial soundness (Correct answer)
- Having a university degree
- Being a Singapore citizen
Correct answer: Meeting criteria of honesty, integrity, competence, and financial soundness
The 'fit and proper' criteria assess whether a person has the honesty, integrity, reputation, competence, and financial soundness to carry out regulated activities.
Question 2: How long must financial institutions retain records of transactions under the SFA?
- 1 year
- 3 years
- 5 years (Correct answer)
- 10 years
Correct answer: 5 years
Financial institutions are generally required to retain transaction records for a minimum of 5 years under SFA regulations.
Question 3: What is the penalty for insider trading under the SFA?
- A warning letter only
- Fine only
- Fine and/or imprisonment (Correct answer)
- Community service
Correct answer: Fine and/or imprisonment
Insider trading is a serious offence under the SFA that can result in substantial fines and/or imprisonment.
Question 4: What is a 'connected person' in securities regulation?
- Any person with internet access
- A person related to or associated with an insider who has access to non-public information (Correct answer)
- A registered shareholder
- A licensed broker
Correct answer: A person related to or associated with an insider who has access to non-public information
A connected person is someone who is related to or has a close association with a person possessing inside information.
Question 5: What does 'continuous disclosure' require of listed companies?
- Publishing daily advertisements
- Promptly disclosing material information that may affect share prices (Correct answer)
- Releasing financial reports every week
- Revealing all trade secrets
Correct answer: Promptly disclosing material information that may affect share prices
Continuous disclosure requires listed companies to promptly announce any material information that could affect their share price, ensuring all investors have equal access.
Question 6: Which of the following is an exempt financial institution under the SFA?
- A private tuition centre
- Banks licensed under the Banking Act (Correct answer)
- Retail shops
- Food manufacturers
Correct answer: Banks licensed under the Banking Act
Banks licensed under the Banking Act are exempt from holding a separate CMS licence for certain regulated activities, as they are already regulated by MAS.
CMFAS Securities Regulations M1 3
What is the 'fit and proper' requirement for representatives?