The Monetary Authority of Singapore ("MAS") has introduced new requirements effective 1 January 2012 for financial institutions that
act as intermediaries to formally assess a retail customer’s investment knowledge and experience before selling certain investment
products to the customer.
The new requirements will apply to the sale of Specified Investment Products ("SIPs") that include Listed SIPs such as Futures and
Options, and Unlisted SIPs such as Leveraged Foreign Exchange. In view of the new requirements, DBS Vickers Securities ("DBSV")
will conduct a SIP Qualification Exercise to assess whether a customer has the relevant knowledge or experience to understand the
risks and features of the Listed/Unlisted SIPs before the customer trades in such products.
This SIP Qualification Exercise would require all parties including you, your Joint Account Holder (if any), and your Account Mandate
(if any), to complete the Specified Investment Products Declaration Form (for Individual) ("SIP Form").
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 1. What are "Specified Investment Products" (SIPs)?
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As an investor, you have access to a wide range of products with varied features and risk exposures. While some of these products are listed or quoted on exchanges, other products are not. Some products may not be as widely understood as others as their structures, features and risks may be more complex in nature. These products are referred to as “Specified Investment Products” (SIPs). There are two categories of SIPs: I. Listed SIPs
The list of SIPs either listed or quoted on SGX or other securities markets or futures markets includes (but not limited to):
- Equities/Stocks listed or traded on an exchange other than SGX
- Certificates
- Exchange Traded Funds (ETFs)
- Exchange Traded Notes (ETNs)
- Extended Settlement (ES) Contracts
- Structured Warrants
- Callable Bull/ Bear Contracts
- Futures
- Options
II. Unlisted SIPs
The list of SIPs neither listed nor quoted on a securities market or futures market includes (but not limited to):
- Leveraged Foreign Exchange (LFX)
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| 2. How will the new requirements affect retail investors like me? |
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The following two new measures will apply to you if you wish to trade SIPs: I. Assessing if you have relevant knowledge and experience
To do this, you need to complete and return the Specified Investment Products Declaration Form (for Individual) (SIP Form) to declare your educational qualifications, work experience and investment or trading experience. Based on your declaration, DBSV will assess whether you can proceed to trade SIPs. If you are assessed not to have the relevant knowledge or experience to trade SIPs, we will notify you in writing and suspend your Derivatives Trading Account. This is so as to safeguard your interests.
II. Offering you financial advice (i) Local Investors Intermediaries such as DBSV will offer to provide you with financial advice on whether the SIP(s) you want to trade is suitable for you. If you would like us to provide such advice, you will need to complete the Customer Investment Profile (CIP) Form in order for us to understand your investment objectives, financial situation and particular needs. Such advice on product suitability may be chargeable. If you decide not to take up the offer of advisory service, you will have to carry out your own assessment as to whether the product is suitable for you. You may also engage the service of an independent financial adviser. In all cases and at all times, you will be responsible for your own investment decisions. Pursuant thereto and to the fullest extent permitted by the law, DBSV is hereby deemed to have notified you in writing via the SIP Form that you shall not be able to rely on Section 27 of the Financial Advisors Act (Cap 110) (as may be amended from time to time) to file a claim for loss. (ii) Overseas Investors If you are an overseas investor who does not have a physical presence in Singapore, or you are not financially dependent on a Singapore citizen or PR, pursuant to the Financial Advisors Act (FAA), we wish to inform you that DBSV and/or its Trading Representatives are exempted from certain requirements set out in the FAA, including those setting out the obligations relating to product disclosure and recommendations made to you. You are therefore solely responsible for any and all suitability and reasonableness decisions on your investments and trading, including the suitability and reasonableness of any and all opinions that you may receive from DBSV or its Trading Representatives. You are advised to seek independent advice from a financial adviser and/or a lawyer as to whether SIPs are suitable for you if you wish to trade in SIPs. (iii) Accredited Investors or Expert Investors You are not required to go through any assessment or review with DBSV if you are an Accredited Investor* or an Expert Investor** as defined under the Securities and Futures Act (SFA) or any other applicable law or regulation. *Accredited investor means —
- (i)
- an individual —
- (A)
- whose net personal assets exceed in value S$2 million (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount; or
- (B)
- whose income in the preceding 12 months is not less than S$300,000 (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount;
- (ii)
- a corporation with net assets exceeding S$10 million in value (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe, in place of the first amount, as determined by —
- (A)
- the most recent audited balance-sheet of the corporation; or
- (B)
- where the corporation is not required to prepare audited accounts regularly, a balance-sheet of the corporation certified by the corporation as giving a true and fair view of the state of affairs of the corporation as of the date of the balance-sheet, which the date shall be within the preceding 12 months;
- (iii)
- the trustee of such trust as the Authority may prescribe, when acting in that capacity; or
- (iv)
- such other person as the Authority may prescribe.
**Expert investor means — - (i)
- a person whose business involves the acquisition and disposal, or the holding, of capital markets products, whether as principal or agent;
- (ii)
- the trustee of such trust as the Authority may prescribe, when acting in that capacity; or
- (iii)
- such other person as the Authority may prescribe.
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| 3. How will DBSV assess whether I can trade a SIP? |
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With the information you have declared in the relevant forms, DBSV will assess whether you have the relevant educational qualifications, work experience or investment experience in that product or similar products. We will also take into account whether you have demonstrated sufficient understanding of the product. Any inaccurate or incomplete information provided by you may affect the outcome of your assessment. In order to open a Derivatives Trading Account or maintain your existing Derivatives Trading Account to trade SIPs with us, you need to fulfill one of the following criteria: i) Educational Qualifications - (a)
- Have a diploma or higher qualifications in one of the following fields: Accountancy, Actuarial Science, Business/Business Administration/ Business Management/ Business Studies, Capital Markets, Commerce, Economics, Finance, Financial Engineering, Financial Planning, Computational Finance and Insurance; or
- (b)
- Have a professional finance-related qualification in one of the following: Chartered Financial Analyst Examination conducted by the CFA Institute, USA and the Association of Chartered Certified Accountants (ACCA) Qualifications.
ii) Work Experience
- (a)
- Have a minimum of 3 consecutive years of working experience (such working experience would also include the provision of legal advice or possession of legal expertise on the relevant areas listed below) in the past 10 years, in the development of, structuring of, management of, sale of, trading of, research on or analysis of investment products, or the provision of training in investment products (as defined in Section 2 of the Financial Advisers Act (Cap. 110)).
Work experience in Accountancy, Actuarial Science, Treasury or Financial Risk Management activities will also be considered relevant experience.
- Note: Support functions in the areas mentioned above that are administrative or clerical in nature will not be considered as relevant experience.
iii) Investment or Trading Experience - (a)
- Listed SIPs Have transacted in Specified Investment Products which are listed or quoted on a securities market or a futures market on at least six (6) occasions in the preceding 3 years with DBSV and/or other brokers.
- (b)
- Unlisted SIPs Have transacted in Specified Investment Products which are neither listed nor quoted on a securities market or a futures market (excluding Collective Investment Schemes, and Investment-Linked Life Insurance Policies) on at least six (6) occasions in the preceding 3 years with DBSV and/or other brokers.
iv) Investor Status - (a)
- You are an Accredited Investor or an Expert Investor as defined under the Securities and Futures Act (SFA) or any other applicable law or regulation.
Note:
If you are assessed not to have the relevant knowledge or experience in SIPs:
- (i)
- we advise you to undergo the applicable learning modules that are acceptable under the relevant regulatory requirements in order to gain knowledge on SIPs. If you do not pass the requisite test/quiz under the applicable learning modules, you should not proceed to trade in SIPs.
- (ii)
- DBSV shall reserve the right to reject the new Derivatives Trading Account Application or suspend the existing Derivatives Trading Account.
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| 4. When is DBSV offering advice on product suitability for its Derivatives customers?
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DBSV will offer advice from 1 Jan 2012 onwards. Should you have any other enquiry on advisory service, please contact your DBSV trading representative.
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| 5. If I declare that I have transacted on at least six (6) occasions in the preceding 3 years in ONE of the Unlisted Specified Investment Products, will I be automatically qualified to trade in ALL the Unlisted SIPs?
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No. For example, if you have declared that you have transacted on at least six (6) occasions in the preceding 3 years in LFX, you will NOT be automatically qualified to trade in other Unlisted SIPs such as NDF. You will have to meet the minimum number of 6 trades required for each product of the specific Unlisted SIPs that you wish to trade. |
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| 6. What can I do if I still wish to trade a SIP after DBSV assessed that I do not have the relevant knowledge or experience?
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If DBSV assessed that you do not have the relevant knowledge or experience in SIPs, we would like to advise you to consider carefully if you still wish to proceed. Do remember that it is your responsibility to ensure that you have a full understanding of the product and that the product is suitable for you. If you still wish to proceed, you would need to provide a written justification to the senior management of DBSV for its review.
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| 7. If I have already gone through a similar assessment process with a broker, must I go through the assessment again if I trade SIPs through another broker? |
Yes. Each broker has an obligation to conduct its own assessment. The outcome of the assessments conducted by another broker is non-transferable. |
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| 8. After I am assessed to be able to trade SIPs, how often will I be required to go through the assessment process again? |
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After you are assessed to be able to trade SIPs, we will conduct a review on your Investment or Trading Experience once every 3 years for accounts trading in Listed SIPs, and once every year for accounts trading in Unlisted SIPs. If you are trading in both Listed and Unlisted SIPs, we will conduct the review annually. You will be able to continue trading SIPs if you fulfill any one of the following criteria: Educational Qualifications - (a)
- Have a diploma or higher qualifications in one of the following fields: Accountancy, Actuarial Science, Business/Business Administration/ Business Management/ Business Studies, Capital Markets, Commerce, Economics, Finance, Financial Engineering, Financial Planning, Computational Finance and Insurance; or
- (b)
- Have a professional finance-related qualification in one of the following: Chartered Financial Analyst Examination conducted by the CFA Institute, USA and the Association of Chartered Certified Accountants (ACCA) Qualifications.
Work Experience
- (a)
- Have a minimum of 3 consecutive years of working experience (such working experience would also include the provision of legal advice or possession of legal expertise on the relevant areas listed below) in the past 10 years, in the development of, structuring of, management of, sale of, trading of, research on or analysis of investment products, or the provision of training in investment products (as defined in section 2 of the Financial Advisers Act (Cap. 110)). Work experience in Accountancy, Actuarial Science, Treasury or Financial Risk Management activities will also be considered relevant experience.
Note: Support functions in the areas mentioned above that are administrative or clerical in nature will not be considered as relevant experience.
Investment or Trading Experience
- (a)
- For Listed SIPs, transacted in Listed SIPs for at least two (2) times during the preceding 3 years with DBSV, or at least six
(6) times in the preceding 3 years with DBSV and/or other brokers.
- (b)
- For Unlisted SIPs, transacted in the specific product of the Unlisted SIPs at least six (6) times in the preceding 3 years with DBSV and/or other brokers.
Investor Status
- (a)
- You are an Accredited Investor or an Expert Investor as defined under the Securities and Futures Act (SFA) or any other applicable law or regulation.
Note: - (i)
- If you have been assessed to fulfill the Educational Qualifications (as stated above) based on your initial declaration, you would be exempted from subsequent assessment until you have declared otherwise.
- (ii)
- If you are an Accredited Investor or an Expert Investor, you do not have to go through the Client Knowledge and Experience Assessment unless there is a change in your investor status in your annual declaration.
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| 9. I have a Derivatives Joint Account with another person, what happens if one of us is not qualified to trade SIPs? |
If your Derivatives Trading Account is a Joint Account, the assessment of knowledge or experience in SIPs is also applicable to the Joint Account Holder. If the Joint Account Holder is assessed not to have the relevant knowledge or experience in SIPs, DBSV shall have the right to reject the Derivatives Account Application or suspend the existing Derivatives Trading Account. |
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| 10. What happens if my Account Mandate is not qualified to trade SIPs? |
If you have mandated a third party to trade on your behalf, the assessment of knowledge or experience in SIPs is also applicable to the Account Mandate. If your Account Mandate is assessed not to have the relevant knowledge or experience in SIPs, DBSV shall have the right to reject the Derivatives Account Application or suspend the existing Derivatives Trading Account. In this scenario, if you would like to trade SIPs, you can either trade on your own or, change your Account Mandate. If you wish to change your Account Mandate, your new Account Mandate has to declare his educational qualifications, work experience, investment or trading experience in the relevant forms for DBSV’s assessment. |
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| 11. I received a letter informing me that I am not qualified to trade SIPs and hence my existing Derivatives Trading Account will be suspended. What happens next? |
Your Derivatives Trading Account will be suspended as advised in the letter and you will not be allowed to place any new trade. However, if you have open positions in the suspended Derivatives Trading Account, you will be allowed to liquidate your positions. If you wish to withdraw your funds after your account is suspended, please send us your withdrawal request as per usual practice. |
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| 12. My Derivatives Trading Account has been suspended, does it mean that the account is closed? |
When your Derivatives Trading Account is suspended, it does not mean that your account is closed. Your funds with us will still be maintained in your Derivatives Trading Account but you will not be allowed to place any new trade. Should you fulfill the requirements to trade in SIPs at a later date, you may request to reinstate your account status to enable trading. |
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| 13. Why is my Derivatives Trading Account suspended or rejected? |
There are two possible reasons why your Derivatives Trading Account is suspended or rejected:
- (a)
- You did not complete or return the relevant forms as requested.
- (b)
- You are not qualified to trade SIPs. You will receive a letter to notify you that your account will be suspended.
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| 14. How do I reinstate my Derivatives Trading Account status if I have fulfilled the requirements to trade SIPs at a later date? How long does it take? |
To reinstate your Derivatives Trading Account status, you are required to resubmit the relevant forms for our assessment. Once we have assessed that you are qualified, we will reinstate your account status and notify you. This whole process should take about 7 working days from the date we receive the relevant forms. |
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