FTT Securities & Futures Regulations 3

Question 1

What is 'market manipulation' under the SFA?

Accepted Answer

Creating a false or misleading appearance of active trading or price of a security

Answer

Market manipulation under the SFA involves creating a false or misleading appearance of active trading in, or the price of, a security. This includes wash trades, painting the tape, and other deceptive practices.

Question 2

'Insider trading' under the SFA is committed when a person:

Accepted Answer

Trades securities while in possession of material non-public information

Answer

Insider trading occurs when a person trades securities while connected to a corporation and in possession of material non-public information about that corporation.

Question 3

Which of the following is an example of 'false trading' under the SFA?

Accepted Answer

Conducting wash sales to create an appearance of active trading

Answer

False trading includes wash sales — buying and selling the same security between related parties — to create a misleading appearance of active trading without any genuine change in beneficial ownership.

Question 4

The SFA prohibits 'front running'. This means:

Accepted Answer

Trading ahead of a client's pending order to benefit from the anticipated price movement

Answer

Front running is the prohibited practice of a broker or adviser trading in their own account ahead of a client's pending order, knowing the client's order will likely move the price in a predictable direction.

Question 5

Under the SFA, 'short selling' disclosure requirements apply when:

Accepted Answer

A person sells securities they do not own or have not borrowed

Answer

Short selling — selling securities not owned or not yet borrowed — is subject to disclosure requirements under the SFA. Sellers must indicate whether a sale is a short sale when placing the order.

Singapore FTT Practice Test

Singapore FTT Practice Test

FTT Securities & Futures Regulations 3