Segregation of customer’s funds by broker
Open ↗30.—(1) The Board may, with the approval of the Minister, make regulations to provide that every commodity broker must treat and deal with all money, securities or property received by the commodity broker from a customer in such manner and in such separate accounts as may be prescribed.
(2) Without limiting subsection (1), the regulations may provide —(a)
for the circumstances in which funds, securities or property received from a customer may be segregated and deposited in the same account;
(b)
for the circumstances in and purposes for which funds may be withdrawn from separate trust accounts;
(c)
for the exemption by the Board of any commodity broker or class of commodity brokers, or any transaction or class of transactions relating to trading in commodity contracts, from any of the provisions of the regulations; and
(d)
that a contravention thereof shall be punishable with a fine not exceeding $30,000 or with imprisonment for a term not exceeding 3 years or with both.
(3) Money, securities or property received from a customer and held by a commodity broker in a separate trust account under any regulations made under subsection (1) —(a)
is not available for payment of the debts of the commodity broker to a creditor of the commodity broker; or
(b)
is not liable to be attached or taken under or pursuant to an enforcement order or process of any court at the instance of the creditor,
unless the creditor is a customer of the commodity broker and the debt owed to the creditor was incurred in connection with trading in any commodity contract.
[Act 25 of 2021 wef 01/04/2022]
(4) This section does not take away or affect a lawful claim or lien that a commodity broker has against, or on, any money, securities or property held in an account under any regulations made under subsection (1).
(5) This Act or any written law does not prevent a commodity market or a clearing house, with the approval of the Board, from using the money, securities or property held in a trust account to meet the obligations of a commodity broker, being a member of the market or the clearing house, who defaults, if —(a)
the default of the commodity broker is directly attributable to the failure of the commodity broker’s customer to meet the obligations under a commodity contract; and
(b)
the failure to use the money, securities or property held in a trust account may jeopardise the financial integrity of the market or the clearing house.
(6) In this section, “customer” means a person on whose account a commodity broker carries on trading in any commodity contract, but does not include directors, employees and representatives and related corporations of the commodity broker.
Nature of pool and segregation of funds by pool operator, etc.
Open ↗31.—(1) All money, securities or other property received by a commodity pool operator from existing or prospective pool participants for the purchase of an interest in a pool must be received in the pool’s name.
(2) No commodity pool operator may commingle the property of any pool that it operates or intends to operate with the property of any other person.
(3) The Board may by regulations provide for the capital, structure, minimum financial requirements, organisation and conduct of a pool operated by a commodity pool operator and for the exemption of certain pools from the requirements of this section.
Risk disclosure
Open ↗32.—(1) No commodity broker may open a commodity contract account for a customer unless the commodity broker furnishes the customer with a separate written risk disclosure document which must be in such form and manner as may be prescribed by the Board, and receives from the customer an acknowledgment signed and dated by the customer that the customer has received and understood the nature and contents of the disclosure document.
(2) No commodity pool operator may, directly or indirectly, solicit, accept or receive funds, securities or other property from a prospective participant in a pool that the commodity pool operator operates or that the commodity pool operator intends to operate unless, on or before the date it engages in that activity, the commodity pool operator delivers or causes to be delivered to the prospective participant a risk disclosure document which must be in such form and contain such information as the Board may prescribe, and receives from the prospective participant an acknowledgment signed and dated by the prospective participant that the prospective participant has received and understood the nature and contents of the disclosure document.
(3) No commodity trading adviser may solicit or enter into an agreement with a prospective client for the purpose of managing the prospective client’s commodity trading account or guiding the prospective client’s commodity trading by means of a systematic programme that recommends specific transactions unless the commodity trading adviser, at or before the time the commodity trading adviser engages in the solicitation or enters into the agreement (whichever is the earlier), delivers or causes to be delivered to the prospective client a risk disclosure document in respect of those purposes which must be in such form and contain such information as the Board may prescribe, and receives from the prospective client an acknowledgment signed and dated by the prospective client that the prospective client has received and understood the nature and contents of the disclosure document.
(4) Except as may be provided by any regulations made under this Act, no commodity trading adviser may solicit, accept or secure from an existing or prospective client money, securities or other property in the commodity trading adviser’s name to purchase, margin guarantee or secure any interest of the client in a commodity contract.
Offences
Open ↗33. A person who contravenes any of the provisions of this Part shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $30,000 or to imprisonment for a term not exceeding 3 years or to both.
