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On 6 February 2009, the SGX Appeals Committee fined UOB Kay Hian Pte Ltd (“UOBKH”) a total of $115,000 for breaching SGX’s directives for the administration of the Trading Representative Examination on SGX Extended Settlement Contracts (“ES Contracts”). In addition, UOBKH is required to re-administer the examination for the TRs who sat for the examinations held on four particular days. The ES Contracts examination prepares Trading Representatives (“TRs”) for the trading of the to-be-launched Extended Settlement Contract (“ES Contract”). The ES Contract will be the first marginable futures contract listed on SGX’s securities trading platform.
Pursuant to a two-week investigation, SGX preferred eight charges against UOBKH, as a Trading Member of SGX-ST, for breaching three of SGX’s requirements for the administration of the Examination, in that it had failed to :-
- take all adequate measures to safeguard the integrity of the examination and ensure that the examination was properly conducted and supervised by appropriate persons on three days;
- ensure the strict confidentiality of the examination papers, which led to the improper disclosure of the examination papers of four of its TRs to other TRs; and
- immediately notify SGX of a possible leakage of examination materials.
SGX proceeded with four charges against UOBKH at the hearing before the SGX-ST Disciplinary Committee. The SGX-ST Disciplinary Committee found that the four charges had been established and imposed a total fine of $150,000 and issued an order for UOBKH to re-administer the examination for the TRs who sat for the examinations held on four particular days. The SGX-ST Disciplinary Committee’s Grounds of Decision is attached at Appendix 1.
UOBKH appealed against the penalties imposed and the order to re-administer the examinations. The SGX Appeals Committee* subsequently reduced UOBKH’s total fine to $115,000 but maintained the SGX-ST Disciplinary Committee’s order for reexaminations. Details of the penalties imposed for each charge is set out in Appendix 2.
*The SGX Appeals Committee’s Grounds of Decision is still pending.
“Member firms must make sure that their staff understand the new products in order to be able to advise their customers. The examination is a means to ensure that the TRs are familiar with ES Contracts. This is a serious matter.” said Ms Yeo Lian Sim, Senior Executive Vice President and Head of Risk Management and Regulation, SGX.
The ES Contract examination questions and answers are prepared by the Exchange, while Trading Members are responsible for administering the examination to their TRs in accordance with various requirements laid down by SGX.
