In conducting their activities, commodity groups must take account of the Singapore market misconduct regime relating to capital markets products and financial benchmarks, as well as Singapore’s insider trading prohibitions.
The aim of implementing controls for compliance with these frameworks should not be solely to safeguard against ‘rogue trader’ incidents of market misconduct, but also to ensure that all business-as-usual processes operate in a compliant manner and do not inadvertently trigger market misconduct offences. The importance of a compliant approach is highlighted by the MAS’ continued focus on enforcement action in this area, as highlighted in its inaugural enforcement report published in March 2019.
As part of their market conduct control framework, commodity groups should also ensure they do not exceed position limits set by exchanges or trading platforms, a consideration which is relevant even when trading through an exchange member.
Finally, as the Singapore market conduct regime has extraterritorial effect and substantively overlaps with similar frameworks in other jurisdictions (e.g., the Market Abuse Regulation in the European Union, which is itself extraterritorial), commodity groups should assess the requirements of all the key jurisdictions in which they operate on a cumulative basis.
Our more detailed guidance on market conduct considerations can be downloaded below.
Reed Smith LLP is licensed to operate as a foreign law practice in Singapore under the name and style, Reed Smith Pte Ltd (hereafter collectively, "Reed Smith"). Where advice on Singapore law is required, we will refer the matter to and work with Reed Smith's Formal Law Alliance partner in Singapore, Resource Law LLC, where necessary.
Client Alert 2019-223