SGX Trading Rules Flashcards

What is 'securities borrowing and lending' (SBL)?

Answer: The temporary transfer of securities from a lender to a borrower in exchange for collateral and a fee, often used by short sellers to borrow shares they wish to sell

Securities borrowing and lending (SBL) involves the temporary transfer of securities (usually shares or bonds) from a lender to a borrower. The borrower typically pays a fee and provides collateral. SBL is commonly used by short sellers who need to borrow shares before selling them short.

What is a 'real estate investment trust manager's' primary duty under Singapore law?

Answer: To manage the REIT's assets in the best interests of unitholders and in accordance with the trust deed and MAS requirements

A licensed REIT manager's primary fiduciary duty is to manage the trust's assets in the best interests of unitholders, in accordance with the REIT's trust deed, the CIS Code, and MAS licensing conditions. This includes making sound investment decisions and maintaining proper governance.

What is 'leveraged trading' in the context of CFDs offered in Singapore?

Answer: Trading in which the investor controls a larger position than their capital outlay using margin, amplifying both potential profits and losses

Leveraged trading through CFDs allows investors to control a large notional position by depositing only a fraction of its value as margin. If the market moves favourably, returns are amplified; if unfavourably, losses are also amplified and may exceed the initial margin deposited.

What must a CMS licence holder do before offering a complex financial product to a retail client?

Answer: Conduct a Customer Knowledge Assessment (CKA) or Customer Account Review (CAR) to ensure the client has the knowledge and experience to understand the product's risks

Before allowing a retail client to transact in specified investment products (SIPs) — complex products such as structured warrants, CFDs, and unlisted products — CMS holders must conduct a CKA or CAR to assess whether the client has sufficient knowledge or experience to understand the risks involved.

What is a 'voluntary conditional offer' in a take-over context?

Answer: A take-over offer that is conditional on the offeror acquiring a sufficient number of shares to achieve a specified level of control, such as more than 50% of voting rights

A voluntary conditional offer is a take-over bid made voluntarily (not because of a mandatory obligation) that is conditional on the offeror achieving a minimum acceptance level — typically more than 50% of voting shares — sufficient to give the offeror control of the company.

What is the significance of 'acting in concert' under the Singapore Code on Take-overs and Mergers?

Answer: Persons acting in concert are treated as a single entity for the purpose of calculating shareholding thresholds, meaning their combined holdings determine whether a mandatory offer is triggered

Under the Code, persons acting in concert (co-operating to obtain or consolidate control of a company) have their shareholdings aggregated. If the combined holding of concert parties reaches or exceeds 30%, a mandatory general offer is triggered, preventing parties from circumventing the threshold by splitting holdings.