18.7 Doing Business with the Public
18.7.1 Approval of Customer's Options Trading Account(1) No Trading Member shall accept an order from a customer to purchase or write an Option unless the following conditions are satisfied:—(a) the customer has opened an Options trading account with the Trading Member on such terms as may from time to time be approved or prescribed by the OCC; and(b) such customer owns a Securities Account.(2) No Trading Representative of a Trading Member shall recommend to a customer or execute on behalf of a customer an opening Option transaction unless the customer has opened an Options trading account.
18.7.2 Diligence in Opening Account
Before opening an Options trading account, a Trading Member shall exercise due diligence to learn the essential facts concerning the customer. A record of this information shall be maintained by the Trading Member. Based upon such information, an Executive Director of the Trading Member shall approve in writing the opening of the customer's Options trading account.
18.7.3 Undertaking to be Obtained(1) Upon the approval of the customer's Options trading account, a Trading Member shall obtain from the customer a written undertaking, agreement and acknowledgement that:—(a) all Options transactions shall be subject to the Rules and Directives of SGX-ST and the Regulations;(b) the customer will not violate, either alone or in concert with others, the individual position limits established pursuant to this Rule;(c) the customer has received the documents furnished in accordance with Rule 18.7.4 and has read and understood the contents thereof and is aware of the special risks involved in the trading of Options as outlined therein;(d) if at any time the customer should exceed the individual position limits prescribed by SGX-ST, his outstanding Options positions in excess of the individual position limit shall be liable to be closed out by the Trading Member and any losses, charges and expenses arising from the closing of his Options positions shall be charged to his account; and(e) the customer shall at all times promptly furnish, maintain and top-up such deposits and margins as shall be required by the Trading Member from time to time in respect of the short positions in his Options trading account.(2) The OCC may from time to time make such changes and/or prescribe additional items to be included in the said written undertaking, agreement and acknowledgement as it may deem necessary for the efficient functioning of the Options Market.
18.7.4 Documents to be Furnished(1) Prior to the approval of the customer's Options trading account, a Trading Member shall furnish the customer with a current Explanatory Booklet. Thereafter each new or revised current Explanatory Booklet and any updates and addenda thereto shall be distributed to every customer having an Options trading account as soon as possible upon receipt of the revised Explanatory Booklet or updates and addenda thereto by the Trading Member.(2) Prior to the approval of the customer's Options trading account, a Trading Member shall furnish the customer with a risk disclosure statement which shall be in such form and manner as may from time to time be approved or prescribed by the OCC.
18.7.5 Contract Statements to Customers
The contract statements for the Option transactions of a Trading Member's customer shall be sent to the customer by the OCC on behalf of the said Trading Member on the next Market Day after an Option transaction date indicating, in respect of each Option transaction:—(1) the Option transaction date and quantity of Options purchased or written;(2) the underlying securities;(3) the Expiration Month;(4) the Exercise Price;(5) the aggregate Premium due, commission, clearing fees, stamp duties (if any) and any other charges; and(6) whether the transaction is an opening or closing transaction.
18.7.6 Required Courses/Fees(1) No Trading Representative of a Trading Member shall solicit orders for, advise on trades concerning, or trade for the public in, Options unless he has successfully completed such course or courses of studies as may from time to time be required by SGX-ST to deal in Options.(2) SGX-ST may at any time from time to time prescribe a fee which shall be payable before approval for Option trading privileges is granted or continued.
18.7.7 Transfers of Options Positions
A customer who intends to transfer his outstanding Options position from one Trading Member to another shall obtain the consent to the transfer from the Trading Member with whom he has his outstanding Options positions and shall obtain the transferee Trading Member's consent to accept his outstanding Options positions before the transfer.
18.7.8 Transactions with Issuers
No Trading Member shall accept an order for the account of any company which is the issuer of underlying securities or for the account of any subsidiary of such company for the writing or purchase of an Option with respect to underlying securities of that issuer.
18.7.9 Due Authorisation for Option Transactions
No Option transactions shall be effected on behalf of customers without proper authorisation being given by the customers.
18.7.10 Taking of Orders by Customers
When taking an order, the Trading Member shall establish proper procedures to ensure that the customers' orders shall contain the following details:—(1) whether it is a Call or Put Option;(2) the underlying security;(3) the Expiration Date;(4) the Exercise Price;(5) the number of Options to be written or purchased; and(6) whether the transaction is an opening or closing transaction. Where the customer fails to specify whether it is an opening or closing transaction, the transaction will be deemed to be an opening transaction.
18.7.11 Communication with the Public(1) Any communication of the Trading Member with the public which discusses the uses or advantages of Options shall include a warning to the effect that Options may not be suitable for every investor and shall reflect the special risks attendant on Options transactions and Options investment strategies.(2) Any statement in such communication that refers to the potential opportunities presented by Options trading shall be balanced by a statement of the corresponding risks.(3) Past performance figures, including annualised rates of return, shall be truthful, factual and accurate.(4) Projections or predictions of future events shall be clearly labelled or indicated as forecasts and shall contain the bases or assumptions upon which the projection, prediction or forecast is made.