The scope of a broker-dealer's activities may include:
- Acquiring, disposing, subscribing or underwriting capital markets products on behalf of any person;
- Inducing any person to acquire, dispose, subscribe or underwrite capital markets products;
- Providing financing to another person to buy or subscribe for capital markets products; and/or
- Providing custodial services for securities.
Capital markets products include securities, collective investment schemes, futures, over-the-counter (OTC) derivatives and leveraged foreign exchange contracts.
For example, if a company intends to buy and sell securities or derivatives contracts on behalf of investors, and the conduct of this activity is carried out with system, repetition and continuity, this company is likely to be considered as a broker-dealer and may need to be licensed.
Depending on the business model, broker-dealers are typically required to hold a CMS licence in one or more of the following regulated activities, unless an exemption applies:
- Dealing in capital markets products.
- Product financing.
- Providing custodial services.
Depending on their business model, an entity that facilitates the offer of capital markets products (e.g. shares, debentures) issued by a company to investors, and carries out this activity with system, repetition and continuity, may be carrying on regulated activities under the SFA such as dealing in capital markets products. Such SCF operators would require a CMS licence to do so unless an exemption applies.
The definitions for the above regulated activities can be found in.
In addition, the broker-dealer (including SCF operator) will have to appoint individuals who conduct regulated activities on its behalf as.
Details on how to apply for a corporate licence and appoint a representative can be found on the page and page respectively.
Different exemptions are available for different regulated activities. Examples of exemptions are as follows:
- If a company deals in bonds with accredited investors, expert investors or institutional investors.
- If a company trades for its own account or a related corporation’s account (i.e. proprietary trading) with or through regulated financial institutions.
- If a company’s main business is in fund management and holds a CMS licence for fund management, providing custodial services or product financing.
- If a company is already licensed by MAS as a bank, merchant bank, finance company or insurance company. The company will however be required to comply with the representative notification, and business conduct requirements under the SFA. The company should notify MAS by submitting within 14 days prior to commencing the regulated activity under the SFA.
More information on licensing exemptions can be found in and the .
A broker-dealer (including SCF operator) is required to put in place policies, procedures and controls which are commensurate with its nature, scale and complexity of business, including an independent compliance function in Singapore.
All broker-dealers should adhere to conduct requirements such as segregation of customers’ moneys and assets, provision of statement of accounts to customers, and best execution of customers’ trades, which serve to ensure fair dealing with customers. The broker-dealer should also ensure compliance with MAS’ requirements on anti-money laundering and countering terrorism financing.
In addition, an SCF operator should also ensure that companies making offers on its platform comply with the applicable prospectus requirements.
A broker-dealer may also carry out other regulated activities under the SFA or provide financial advisory services under the . If you wish to find out how to conduct additional regulated activities or services under the SFA or FAA with your existing CMS licence, please refer to the page.
If you wish to find out the regulated activities which broker-dealers are licensed to conduct, please refer to MAS’ , which contains an exhaustive list of financial institutions licensed or regulated by MAS, and the regulated activities they are authorised to provide.