Chapter 4 Enforcement of Rules
4.01 General Provision
This Rules are intended to ensure the financial integrity of the Clearing House and to try to ensure its ability to discharge its clearing or other obligations to the Relevant Markets and to provide protection to its Clearing Members against unwarranted liability arising otherwise than as a consequence upon its own clearing of Contracts. To that end, the Clearing House may carry out investigations and may establish committees to hear charges or appeals and impose fines or other disciplinary actions for violations of any provision of this Rules.
4.01A Clearing House Investigations
The Clearing House may conduct an investigation if:—4.01A.1.1 the investigation involves a possible breach of the SFA, SFR, this Rulesand/or any applicable laws;4.01A.1.2 the Clearing House receives a written complaint involving a Clearing Member, director, officer, employee or agent;4.01A.1.3 there is a dispute between Clearing Members on a clearing or settlement matter; or4.01A.1.4 in the Clearing House's opinion, the circumstances warrant.
The Clearing House will conduct an investigation if the Authority or any Other Regulator directs.
The Clearing House may require a Clearing Member, any of its directors, officers, employees or agents to:—4.01A.3.1 render all assistance as the Clearing House requires, at the Clearing House's premises or elsewhere; and4.01A.3.2 provide the Clearing House with information, books and records which, in the Clearing House's opinion, may be relevant to the investigation.
A Clearing Member, director, officer, employee or agent must not wilfully make, furnish or permit the making or furnishing of any false or misleading information, statement or report to the Clearing House.
The Clearing House may appoint any person or persons to assist in its investigation (the "Clearing House Examiners").
4.01B Clearing House Inspections
The Clearing House may conduct an inspection on a Clearing Member at any time, and may appoint any person or persons to conduct the inspection (the "Clearing House Inspectors").
A Clearing Member, director, officer, employee or agent must give the Clearing House Inspector access to all information, books and records as requested. For the avoidance of doubt, reference to "information, books and records" in relation to a Bank Clearing Member shall refer to information, books and records falling within the Bank Clearing Member's business governed by this Rules.
The Clearing House will give a copy of the inspection report to the Clearing Member concerned.
4.02A Disciplinary Action
If an investigation or inspection reveals that a Clearing Member has breached any Rules, the Clearing House may take any of the following forms of disciplinary action, namely:4.02A.1.1 to charge the Clearing Member before the Disciplinary Committee;4.02A.1.2 to make an offer of composition to the Clearing Member, if an investigation or inspection reveals that the Clearing Member may have breached any Rule which is indicated in the third column of Schedule A as being compoundable; or4.02A.1.3 to issue a letter of warning to the Clearing Member.
If the Clearing Member does not accept the offer of composition or comply with the terms of the composition within the stipulated time as prescribed by the Clearing House, the Clearing House may refer the said Clearing Member to the Disciplinary Committee.
No proceeding or determination in respect of a Rule violation shall be annulled, avoided, called into question or set aside by reason of the fact that the matter under consideration may or should have been dealt with by another committee under this Rules, or that the person concerned was absent from the hearing or any adjournments thereof despite having been given notice thereof.
4.02B Composition by the Clearing House.
The Clearing House may make an offer of composition to a Clearing Member if an investigation or inspection shows that the Clearing Member may have breached any Rules. The terms of the offer of composition include payment of a specified sum to the Clearing House and may include the fulfillment of any accompanying terms that the Clearing House may prescribe.
Upon payment of the specified sum and fulfillment of the accompanying terms by the Clearing Member within the stipulated time, no further proceedings shall be taken against that Clearing Member for that Rule violation.
Acceptance of the offer of composition by the Clearing Member amounts to an admission of liability and the Member will be deemed to have committed the conduct described in the charge.
In respect of Rule violations which the Clearing House may offer composition, guidelines on the range of composition which the Clearing House may offer to a Clearing Member who has committed a Rule violation are indicated in Schedule A.
The Clearing House retains the discretion to offer composition to a Clearing Member of an amount which does not fall within these guidelines, except that the amount of composition that the Clearing House may offer to a Clearing Member shall not exceed S$10,000 for each Rule violation.
Notwithstanding that a Rule violation is indicated as being compoundable or may be compoundable under Schedule A, the Clearing House retains the discretion not to make an offer of composition to the Clearing Member but instead, to charge the Clearing Member before the Disciplinary Committee.
If the Clearing House has made an offer of composition, it will not commence disciplinary proceedings against a Clearing Member until after the stipulated period for the offer lapses.
4.03A Disciplinary Committee Powers
The Clearing House may initiate disciplinary proceedings and charge a Clearing Member before the Disciplinary Committee if the Clearing House is of the opinion that the Clearing Member has committed any of the following: —4.03A.1.1 breaches the SFA;4.03A.1.3 breached any relevant laws or regulations that govern the Clearing Member's other business activities;4.03A.1.4 breached the rules of any other exchange;4.03A.1.5 engaged in fraud or dishonesty, whether in or out of Singapore;4.03A.1.6 breached directors' duties;4.03A.1.7 engaged in conduct that has the effect of circumventing the SFA, SFR, this Rules and/or any other applicable laws or regulations; or4.03A.1.8 engaged in conduct detrimental to the financial integrity, reputation, interests or operation of the Clearing House.
The Disciplinary Committee shall, as a tribunal of first instance hear and determine charges brought by the Clearing House against a Clearing Member pursuant to Rule 4.03A.1. The Disciplinary Committee may exercise its powers against a Clearing Member if it is satisfied, on a balance of probabilities, that the Clearing Member has committed any of the matters set out in Rule 4.03A.1.
The Disciplinary Committee may exercise its powers against a Clearing Member if a director, officer, employee or agent breaches, or causes the Clearing Member to breach this Rules.
A former Clearing Member, is bound by this Rules in respect of acts or omissions occurring before expulsion. The Clearing House and the Disciplinary Committee retain their respective jurisdiction notwithstanding expulsion.
The powers of the Disciplinary Committee include:—4.03A.4.1 expelling a Clearing Member. The Disciplinary Committee may order a Clearing Member to be expelled notwithstanding that he has resigned;4.03A.4.2 suspending a Clearing Member;4.03A.4.3 imposing a fine not exceeding S$250,000 per charge, or in the case of multiple charges, not exceeding S$1,000,000 per hearing, or, in the case of a delivery contract, any other amount as specified in the relevant contract specifications on a Clearing Member;4.03A.4.4 reprimanding (publicly or privately) a Clearing Member;4.03A.4.5 requiring an education program to be undertaken;4.03A.4.6 requiring a compliance program to be undertaken;4.03A.4.7 imposing any restrictions or conditions on activities that a Clearing Member undertakes or in the case of a Bank Clearing Member, its business governed by this Rules;4.03A.4.8 requiring reimbursement or compensation to be paid;4.03A.4.9 ordering payment of fines by instalments, which shall not exceed 12 months from the date of imposition of the fine, unless otherwise permitted by the Disciplinary Committee;4.03A.4.10 ordering a stay of the penalty imposed, pending an appeal to the Appeals Committee;4.03A.4.11 requiring any director or in the case of a Bank Clearing Member, any director or person in a senior management position who is responsible for its business governed by this Rules, to step down from day-to-day conduct of the business affairs of the Clearing Member; and4.03A.4.12 confirming, changing, or discharging the appointment of a manager to manage the business of the Clearing Member or in the case of a Bank Clearing Member, its business governed by this Rules. The Disciplinary Committee will fix the remuneration of the manager, which must be paid by the Clearing Member. The Clearing Member is solely responsible for the manager's acts and defaults. The manager must carry out directions given by the Disciplinary Committee in relation to the business of the Clearing Member, including carrying on the business of the Clearing Member in accordance with instructions.
4.03A.54.03A.5 Mandatory Minimum Penalties to be Imposed by Disciplinary Committee for certain Rule Violations.
Where a mandatory minimum penalty has been stipulated for a particular Rule violation in the seventh column of Schedule A, the Disciplinary Committee:a. shall impose a penalty not lower than such minimum amount; andb. may choose to impose, in addition to the penalty in Rule 4.03A.5(a), any one or more of the sanctions as set out in Rule 4.03A.4.
4.04A Disciplinary Committee Proceedings
4.04A.7 Decision of Disciplinary Committee4.04A.7.1 [deleted]4.04A.7.2 The Disciplinary Committee shall provide written grounds of its decision, which shall include any sanctions imposed against the Clearing Member, within a reasonable period after the conclusion of the hearing.4.04A.7.3 The Disciplinary Committee shall cause its written grounds of decision to be published, unless the sanction imposed involves the issuance of a private reprimand. Where a private reprimand is issued by the Disciplinary Committee, the Disciplinary Committee shall determine whether the written grounds of decision are to be published in part or in whole.4.04A.7.4 Each Clearing Member irrevocably consents to the publication of the Disciplinary Committee's written grounds of decision pursuant to Rule 4.04A.7.3. The consent will remain valid and effective notwithstanding that the Clearing Member ceases to be a Clearing Member. A Clearing Member cannot initiate any action or proceeding against the Clearing House or the Disciplinary Committee for such publication.
The Clearing House or the Clearing Member charged may appeal to the Appeals Committee against the decision of the Disciplinary Committee.
4.06A Appeals Proceedings
4.06A.3 Appeals By Rehearing
The Appeals Committee will determine the appeal by way of rehearing. It will only rehear that part of the decision of the Disciplinary Committee appealed against.
4.06A.8 Decision of Appeals Committee4.06A.8.1 [deleted]4.06A.8.2 The Appeals Committee shall provide written grounds of decision,which shall include any sanctions imposed against the Clearing Member, within a reasonable period after the conclusion of the hearing.4.06A.8.3 The Appeals Committee shall cause its written grounds of decision to be published, unless the sanction imposed involves the issuance of a private reprimand. Where a private reprimand is issued by the Appeals Committee, the Appeals Committee shall determine whether the written grounds of decision are to be published in part or in whole.4.06A.8.4 Each Clearing Member irrevocably consents to the publication of the Disciplinary Committee's written grounds of decision pursuant to Rule 4.06A.8.3. The consent will remain valid and effective notwithstanding that the Clearing Member ceases to be a Clearing Member. A Clearing Member cannot initiate any action or proceeding against the Clearing House or the Appeals Committee for such publication.
4.07A Payment of Costs
The Disciplinary Committee or Appeals Committee may require the Clearing Member charged to pay all or part of the costs of the investigation, inspection or hearing.
The Disciplinary Committee or Appeals Committee may order the costs awarded to be paid within fourteen (14) days.
Where an order for costs of the proceedings has been imposed against a Clearing Member and the Clearing Member does not make payment within the specified period, the outstanding sum shall be a debt payable to the Clearing House. The Clearing House may commence legal action to recover that debt, subject to any subsequent payments made by the Clearing Member. The Clearing House shall be entitled to claim reasonable interest, a month after the payment is due, based on the sum outstanding.
A fine must be paid within fourteen (14) days from the date of notice, or such longer time as the chairman of the Disciplinary Committee or the Appeals Committee (as applicable), or his nominee, permits.
If the fine remains unpaid after the deadline, the Clearing Member's access to the clearing system established and maintained by the Clearing House may be suspended. The suspension ends upon full payment of the fine.
Where a fine has been imposed against a Clearing Member and the Clearing Member does not make payment within the specified period, the outstanding sum shall be a debt payable to the Clearing House. The Clearing House may commence legal action to recover that debt, subject to any subsequent payments made by the Clearing Member. The Clearing House shall be entitled to claim reasonable interest, a month after the payment is due, based on the sum outstanding.
4.09 [Rule has been deleted.]
4.09A Notification of Decision
The Clearing House will notify all Clearing Members and Authorised Clearing Members of all charges established by the Disciplinary Committee (together with such details as the Clearing House thinks appropriate).
The Clearing House may make the decision public (together with such details as the Clearing House thinks appropriate). For avoidance of doubt, this includes publication of the following information:—4.09A.2.1 the particulars of the Clearing Member charged;4.09A.2.2 the particulars of the charge;4.09A.2.3 the underlying facts in respect of the charge;4.09A.2.4 the findings and decision of the Disciplinary Committee or the Appeals Committee (as applicable);4.09A.2.5 the basis of the findings and decision of the Disciplinary Committee or the Appeals Committee (as applicable); and4.09A.2.6 the powers exercised by the Disciplinary Committee or the Appeals Committee (as applicable).
This Rule operates as irrevocable consent by a Clearing Member and an Authorised Clearing Member for the Clearing House to publish or notify a decision. The consent remains valid and effective notwithstanding that the person ceases to be a Clearing Member or Authorised Clearing Member. A Clearing Member or Authorised Clearing Member cannot initiate any action or proceeding against the Clearing House or members of the Disciplinary Committee or Appeals Committee for publishing or notifying a decision under this Rule.
4.09B Limitation of Liability
No liability (whether in contract, tort or otherwise) shall be incurred by the Disciplinary Committee, Appeals Committee, the Clearing House, or a manager appointed under Rule 4.03A.4.12 for anything done or omitted to be done with reasonable care and in good faith in the course of or in connection with:(1) the exercise or purported exercise of any power under the Rules;(2) the performance or purported performance of any function or duty under the Rules; or(3) the compliance or purported compliance with the Rules.
4.10 Classification of Offences
Offences under this Rules shall be classified into major offences and minor offences.
Major offences may be dealt with by expulsion, suspension, fine not exceeding S$250,000 or, in the case of a delivery contract, as provided in the relevant Contract Specifications or by both suspension and fine.
Minor offences may be dealt with by a fine not exceeding S$10,000 or suspension for not more than one (1) year, or both.
4.11 Continuous Offences
Each occasion on which a rule violation occurs or is repeated shall be regarded as a distinct offence. Where the rule violation concerned results in a condition or state of affairs that unless rectified is liable to continue, the Clearing Member shall be liable to pay, on being called upon to do so by the Clearing House or, if the Clearing Member has been charged, the relevant body hearing the matter, a fine not exceeding S$250,000 in the case of a major offence, or a fine not exceeding S$10,000 in the case of a minor offence, as the Clearing House or the relevant body hearing the matter may determine, for every day during which the said rule violation, condition or state of affairs continues.
4.12 Major Offences
It shall be a major offence for a Clearing Member charged to:—126.96.36.199 be guilty of fraud or any act of bad faith or of any dishonest conduct;188.8.131.52 make a material mis-statement to the Clearing House, SGX RegCo, any committee, any person or entity referred to under Rule 1.01.8, or their respective employees and members;184.108.40.206 not to take steps to prevent further Contracts having to be cleared by it after its insolvency;220.127.116.11 refuse to appear before the Clearing House, in connection with any investigation, or any committee at a duly convened hearing, or in connection with any investigation, refuse to fully answer all questions or produce all books and records at any audit hearing or investigation, or give false testimony, or fail to produce any books or records requested by the Clearing House staff in connection with an investigation within thirty (30) days after such request is made or fail to appear at a scheduled staff interview unless good cause is shown for such failure to appear;18.104.22.168 make use of or reveal any confidential information obtained by reason of participating in any investigative proceeding or hearing;22.214.171.124 fail to maintain minimum financial requirements or fail to maintain the required Clearing Fund Deposit;126.96.36.199 commit an act which is substantially detrimental to the interests of the Clearing House;188.8.131.52 refuse to comply with a final arbitration award;184.108.40.206 refuse, after hearing, to comply with an order of any hearing committee;220.127.116.11 violate any provision under this Rules which cites such violation as a major offence;18.104.22.168 fail to comply with any written directive from the Clearing House or any other officer or committee of the Clearing House (including but not limited to any Circular, notice, letter or memorandum signed by the Clearing House or such officer or committee); and22.214.171.124 fail or neglect to maintain or keep complete and accurate records in accordance with the SFA and/or SFR or this Rules.
For the avoidance of doubt, it shall be a major offence for a Clearing Member to:—126.96.36.199 make, or cause to be made, a false or misleading entry, in hardcopy or electronic form, in any books, records, reports, slips, documents, or statements relating to the business, affairs, transactions, conditions, assets or accounts ("the Documents") of a Clearing Member;188.8.131.52 omit from making, for whatever reason, a material entry in any of the Documents; or184.108.40.206 alter or destroy any of the Documents without a valid reason.
Without prejudice to the foregoing, it may, at the determination of the Clearing House, be a major offence if a Clearing Member commits an offence or violation as a member of any Relevant Market.
4.13 Minor Offences
Without prejudice to this Rules, it shall be an minor offence for a Clearing Member to:—4.13.1 be guilty of dishonourable or uncommercial conduct;4.13.2 make a false entry on a clearing sheet;4.13.3 fail to answer Customers' complaints promptly;4.13.4 violate any rule, the violation of which is not a major offence; and4.13.5 make a mis-statement to the Clearing House, SGX RegCo, any committee, any person or entity referred to under Rule 1.01.8, or their respective employees and members.
4.15 Clearing Member's Indemnity
Each Clearing Member indemnifies each of the Clearing House, its related corporations, SGX RegCo, any person or entity referred to under Rule 1.01.8, and their respective directors, officers, employees, representatives and agents ("Indemnified Persons") against any loss or liability reasonably incurred or suffered by an Indemnified Person where such loss or liability arose out of or in connection with:—220.127.116.11 any breach by the Clearing Member of its obligations under this Rules; or18.104.22.168 any wilful, unlawful, reckless or negligent act or omission by the Clearing Member.
Without prejudice to the generality of Rule 4.15.1, in the event that any legal, arbitration or other proceedings are brought to impose any liability on all or any of the Indemnified Persons for an alleged failure on the part of any Indemnified Person to prevent or to require action by a Clearing Member or any of its directors, officers, employees, representatives or agents, the Clearing Member shall reimburse the relevant Indemnified Persons for:—22.214.171.124 all expenses and legal fees incurred by or on behalf of the Indemnified Person in connection with such proceedings;126.96.36.199 any payment made by or on behalf of the Indemnified Person with the approval of the Clearing Member in connection with any settlement of such proceedings; and188.8.131.52 any payment made by or on behalf of the Indemnified Person as a result of any order, award or judgment made in such proceedings.
The Clearing Member shall render such co-operation as the Indemnified Person reasonably requires in respect of such proceedings including without limitation the production of any document or records.
Without prejudice to Rule 4.15.2, the Clearing Member shall pay to an Indemnified Person, if the Indemnified Person so requires, the costs incurred by or on behalf of the Indemnified Person of producing or obtaining, pursuant to a court order or other legal process, records relating to the business or affairs of a Clearing Member or any of its directors, officers, representatives, employees or agents, regardless of the party requiring such production or obtainment.
4.16 Complaints by Clearing Members
It is the policy of the Clearing House to maintain a forum for the resolution of any dispute between Clearing Members arising out of transactions on the Clearing House or of other matters pertaining to the Clearing House.
Any Clearing Member who has a dispute, grievance or complaint against another Clearing Member may refer the matter to arbitration in accordance with Chapter 5 or may file a written complaint with the Clearing House as appropriate.
A Clearing Member who fails to exhaust the procedures set out above and in Chapter 5 may be found to have engaged in conduct which is substantially detrimental to the interest of the Clearing House.
A Clearing Member found guilty of having engaged in conduct which is substantially detrimental to the interest of the Clearing House may, in addition to the disciplinary actions prescribed for a major offence, be required to pay the Clearing House an amount computed to include the costs and expenses, including legal fees on an indemnity basis, incurred by the Clearing House in defending or responding to any proceeding by such Clearing Member.
A Clearing Member who believes that another Clearing Member or the Clearing House or its officials, officers, employees or representatives has acted in contravention of the law or this Rules may, without violating this Rule, complain directly to the Authority.
4.17 Supply of Information
For the purposes of this Rule:—
"Reciprocal Arrangement" means any agreement or arrangement between the Clearing House, any Relevant Market and/or any governmental agency or regulatory authority (including, without limitation, a futures exchange, organised market, or clearing house) in Singapore or elsewhere whose functions include the regulation of trading in commodities (in Singapore or elsewhere) which provides for the disclosure of information between the Clearing House, the Relevant Market and/or the other agency or authority relation to dealings in commodities (in Singapore or elsewhere).
Without derogating from the powers of the Clearing House or any Relevant Market (where the Clearing Member is also a member) to obtain information and to conduct inspections and investigations relative to the affairs of a Clearing Member, the Clearing House may request in particular that a Clearing Member provide specified information relating to the terms and circumstances of, and parties to, any dealings in commodities by Customers and/or former Customers of that Clearing Member.
Such request shall be in writing and the Clearing Member shall provide the information to the Clearing House within such period as is specified by the Clearing House being a period of not less than two (2) Business Days of receipt of the request.
Subject to the other provisions of this Rules, the Clearing House shall take all reasonable measures to protect from unauthorised use or disclosure of information provided to the Clearing House in confidence by or on behalf of a Clearing Member pursuant to this Rules. Disclosure of information by the Clearing House is authorised if it:184.108.40.206 is pursuant to a Reciprocal Arrangement;220.127.116.11 is required to be disclosed by the Clearing House under any law (in or out of Singapore) or any order of any court or authority or regulatory body (each in or out of Singapore);18.104.22.168 is publicly available at the time of disclosure to or by the Clearing House and/or any Relevant Market;22.214.171.124 is for the purposes of monitoring compliance with and/or the enforcement of this Rules or the adjudication of a matter;126.96.36.199 is, without prejudice to the generality of Rule 188.8.131.52 above, approved by the Authority and is to any governmental agency or regulatory authority (in or out of Singapore) including, without limitation, a futures exchange or clearing house, that requests that the Clearing House provide the information for the proper exercise of powers relating to:—a. the governance of a Clearing Member; orb. the trading of commodities or clearing of contracts in commodities (in or out of Singapore),184.108.40.206 is in connection with the discharge of its regulatory obligations under the Securities and Futures Act or when compelled under applicable laws to do so or pursuant to any cross-border regulatory sharing arrangement subject to its obligation to maintain confidentiality under the Securities and Futures Act;220.127.116.11 is to any of SGX-DC's related corporations;18.104.22.168 is authorised by the Authority to be disclosed or furnished under the Securities and Futures Act; or22.214.171.124 is specifically authorised under this Rules.
Nothing in this Rule 4.17 limits what may at common law otherwise constitute, for the purposes of this Rule, authorised use or disclosure of information.