.jpg)
Singapore Exchange Limited (SGX) is inviting public comments on proposed amendments to the Futures Trading Rules in relation to the dissolution of the SGX-Derivatives Trading (SGX-DT) Compensation Fund.
The SGX-DT Compensation Fund (the Fund) was originally set up on 25 November 1986 by the Singapore International Monetary Exchange (SIMEX). SIMEX was the predecessor of the Singapore Exchange Derivatives Trading Ltd (SGX-DT). The principal purpose of the Fund was to provide compensation to investors, the exchange or the clearing house in a case where loss was incurred through the default or defalcation of any of SIMEX's derivatives members. The Fund is due to expire on 24 November 2007.
SGX has reviewed the purpose for the Fund and proposes to discontinue the Fund, in order to apply the Fund's assets more effectively, by combining the resources available under the Fund with those under the Clearing Fund.
One of the key reasons for discontinuing the Fund is the existence of the Fidelity Fund under the Securities and Futures Act (SFA). The Fidelity Fund acts to protect retail investors from default or defalcation by their brokers. SGX believes the Fidelity Fund already provides protection for individual investors and should be sufficient to meet potential claims.
The Singapore Exchange Derivatives Clearing Ltd (SGX-DC) is the central counterparty and clearing house for all SGX-DT trades. It plays a critical role in managing systemic risk. SGX intends to apply the Fund's assets to and concentrate resources in the clearing house. The monies will provide additional protection to maintain the integrity of the clearing system. At the same time, the Fidelity Fund will continue to provide protection to retail investors.
It is therefore proposed that the assets from the dissolution of the Fund be allocated to SGX-DC's Clearing Fund for the protection of the entire clearing system. This will benefit all investors. At present, the Fund's net assets amount to approximately S$33 million.
The consultation paper, which explains the rationale and proposed amendments in detail, will be available on SGX website at www.sgx.com from 16 July 2007. Market participants and members of the public can forward their feedback and suggestions on the above proposed amendments from today to 6 August 2007 via email and either by post/courier or fax:
Email: rules@sgx.com
Post/Courier: Singapore Exchange Limited
2 Shenton Way, SGX Centre 1, #19-00
Singapore 068804
Attn: Glenn Seah
Regulatory Policy
Risk Management & Regulation Group
Fax: 6538 8273
