On 24 August 2015, the Monetary Authority of Singapore (“MAS”) issued a new consultation paper on the draft legislative amendments to Part XII (Market Conduct) of the Securities and Futures Act (Chapter 289 of Singapore) (“SFA”) and a proposed amendment to Section 324 of the SFA (“MAS Consultation Paper”). The consultation closed on 23 September 2015.
The MAS Consultation Paper may be obtained from the MAS’ website here.
This Update looks at the key proposals in the MAS Consultation Paper.
Proposed Amendments to Part XII of the SFA
No requirement of material price impact
The MAS proposes to revise Section 199 of the SFA to clarify that there is no requirement of material price impact to establish a case of false or misleading disclosure. Materially false or misleading disclosures which wrongly influence investors to trade may not necessarily result in observable significant price movements in the counter as the extent of price movements may be dependent on other unrelated market factors.
Definition of “persons who commonly invest”
A statutory definition of “persons who commonly invest” will be introduced at Section 214 of the SFA (in relation to the insider trading provisions) to ensure that the standard market knowledge reflects the majority of market participants.
The proposed definition provides that “persons who commonly invest” refers to members of the public who deal in the relevant asset class on a regular basis. The level of knowledge and qualities possessed by such persons would be as follows:
- rational and economically motivated investors (who may or may not be investment professionals) with some experience and knowledge of investing in the relevant asset class;
- awareness of the prevailing price of the relevant asset class from time to time; and
- knowledge of or the ability to obtain generally available information concerning the relevant industry of the asset class in question and in particular, information concerning the company in question, with the ability to draw inference from and assess the reliability of the said information.
The MAS intends to issue guidelines setting out such level of knowledge and qualities possessed by “persons who commonly invest”.
Revision of civil penalty ceiling
The civil penalty ceiling will be increased to the greater of S$2 million (currently, S$50,000) or 3 times the amount of profit gained or loss avoided by a person in breach of the insider trading provisions.
Priority for MAS’ civil penalty claims
The MAS proposes that its claims should have priority over private claims that accrue subsequently after contravention, similar to claims made by the Government under the Government Proceedings Act (Chapter 121 of Singapore). The proposed new provision provides that MAS’ claims may be recovered by the MAS as if it were a debt due to the Government.
Proposed Amendment to Section 324 of the SFA
Power of court during market misconduct investigations
Following the MAS’ announcement on 17 March 2015 that it would jointly investigate market misconduct offences with the Commercial Affairs Department of the Singapore Police Force, the MAS Consultation Paper also contains a proposed amendment to Section 324 of the SFA to support market misconduct investigations carried out with powers under the Criminal Procedure Code.