MAS seeks stricter rules to curb market abuse
It aims to tackle challenge of identifying individuals
Financial institutions face tougher new measures aimed at making it easier to detect and investigate cases of market abuse.
The move has been initiated by the Monetary Authority of Singapore (MAS), which noted yesterday that probes into possible wrongdoing have been impeded by problems getting information on individuals who control or own trading accounts.
Its consultation paper proposes a client identification rule, which aims to alleviate challenges in identifying ultimate beneficial owners of orders and trades executed in accounts held in the name of foreign intermediaries. Financial institutions will be required to provide information on such owners to the MAS or other law enforcement agencies within five business days on request.
If a bank's customer does not want to disclose client identities to the financial institution, it can be provided directly to the law enforcement agency.
At present, records of communication on broker-assisted orders and trades are usually not recorded or retained by a bank, especially if communication is through personal devices such as mobile phones.
The MAS proposes that financial institutions record all communication - including on personal devices - between trading representatives and the people instructing the orders or trades for any capital market product in a customer's account.
This should be carried out even if communication does not result in a transaction. Such records will need to be kept for five years.
A number of financial institutions permit payments in trading accounts to be made in cash or by third parties, a practice the MAS believes could be exploited.
It has proposed that financial institutions keep a centralised, electronic register of all payments received in cash or from third parties into customer accounts. This must be produced to law enforcement agencies upon request.
The consultation period on the proposals ends on Sept 5.
Separately, the MAS and the Singapore Exchange Regulation have released a guide to assist brokers on best practices for trade surveillance operations.
Suggestions include having strong senior management oversight, sound detection mechanisms and assessment frameworks, sufficient resources for trade surveillance and prompt and confidential communication on potential market misconduct.
An MAS spokesman said the proposals and guide are part of the central bank's broader efforts to enhance surveillance and risk management practices.
"They will also strengthen MAS' ability to monitor and take swift action to investigate market abuse cases in Singapore, such as trading irregularities and price manipulation," he said. - THE STRAITS TIMES