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Interpretation of this Part
175. In this Part, “member”, in relation to an approved exchange, means a person who —(a) holds membership of any class or description of the approved exchange, whether or not the person holds any share in the share capital of such exchange; and (b) is licensed by the Authority to carry on the business of dealing in capital markets products.[2/2009; 4/2017]
Establishment of fidelity fund
176.—(1) Each approved exchange must establish, keep and administer a fidelity fund (called in this Part a fidelity fund or fund).[2/2009] (2) The assets of the fidelity fund of an approved exchange —(a) are the property of the exchange; (b) must be kept separate from all other property of the exchange; and (c) must be held in trust for the purposes set out in this Part.[2/2009]
Moneys constituting fidelity fund
177. The fidelity fund of an approved exchange consists of —(a) all moneys paid to the exchange by its members in accordance with this Part; (b) all moneys paid to the fund by the exchange; (c) all interest and profits from time to time accruing from the investment of the fund; (d) all moneys recovered by or on behalf of the exchange in the exercise of any right of action conferred by this Part; (e) all moneys paid by an insurer pursuant to a contract of insurance or indemnity entered into by the exchange under section 194; and (f) all other moneys lawfully paid into the fund.[2/2009]
Fund to be kept in separate bank account
178. All moneys forming part of a fidelity fund must, pending the investment or application thereof in accordance with this Part, be kept in a separate bank account in Singapore.
Payments out of fidelity fund
179. Subject to this Part, there is to be paid out of the fidelity fund of an approved exchange as required and in such order as the exchange considers proper —(a) the amount of all claims, including costs, allowed by the exchange or established against the exchange under this Part; (b) all legal and other expenses incurred in investigating or defending claims made under this Part or incurred in relation to the fund or in the exercise by the exchange of the rights, powers and authorities vested in it by this Part in relation to the fund; (c) all premiums payable in respect of contracts of insurance or indemnity entered into by the exchange under section 194; (d) all expenses incurred or involved in the administration of the fund, including the salaries and wages of persons employed by the exchange in relation thereto; and (e) all other moneys payable out of the fund in accordance with this Act.[2/2009]
Accounts of fund
180.—(1) An approved exchange must establish and keep proper accounts of its fidelity fund and must, within 5 months from the last day of each financial year of that exchange, cause a balance sheet in respect of such accounts to be made out as at the last day of that financial year.[2/2009] (2) The approved exchange must appoint an auditor to audit the accounts of the fidelity fund.[2/2009] (3) The auditor appointed by the approved exchange must —(a) regularly and fully audit the accounts of the fidelity fund; and (b) audit each balance sheet and cause it to be laid before the exchange not later than 3 months after the balance sheet was made out.[2/2009]
Fidelity fund to consist of amount of $20 million, etc.
181. The fidelity fund of an approved exchange must consist of an amount of not less than —(a) $20 million; or (b) such other amount as the Authority may, by order in the Gazette, specify in substitution of the amount specified under paragraph (a), to be paid to the credit of the fund on the approval of the exchange under this Act or at any time after its approval as determined by the Authority. [2/2009]
Provisions if fund is reduced below minimum amount
182. If the fidelity fund of an approved exchange is reduced below the minimum amount referred to in section 181, the exchange must take steps to make up the deficiency —(a) by transferring an amount that is equal to the deficiency from other funds of the exchange to the fidelity fund; and (b) in the event that there are insufficient funds to transfer under paragraph (a), by requiring each member of the exchange to contribute to the fund such amount as the exchange may determine.[2/2009]
Levy to meet liabilities
183.—(1) If at any time a fidelity fund is not sufficient to satisfy the liabilities that are then ascertained of an approved exchange in relation thereto, the approved exchange —(a) may impose on every member a levy of such amount as it thinks fit; or (b) if ordered by the Authority, must impose a levy of such amount which must in the aggregate be equivalent to the amount so specified in the order.[2/2009] (2) The amount of the levy must be paid within the time and in the manner specified by the approved exchange either generally or in relation to any particular case.[2/2009] (3) No member of an approved exchange may be required to pay by way of levy under this section more than $300,000 in the aggregate in any particular case.[2/2009]
Power of approved exchange to make advances to fund
184.—(1) An approved exchange may, out of its general funds, give or advance any sum of money to its fidelity fund on such terms as it thinks fit.[2/2009] (2) Any sum of money advanced by an approved exchange under subsection (1) may be repaid out of the fidelity fund to the general funds of the approved exchange.[2/2009]
Investment of fund
185. Any moneys in a fidelity fund that are not immediately required for any purpose referred to in this Part may be invested by an approved exchange in any manner in which trustees are for the time being authorised by law to invest trust funds.[2/2009]
Application of fund
186.—(1) Subject to this Part, a fidelity fund must be held and applied for the purpose of compensating any person (other than an accredited investor) who suffers pecuniary loss because of a defalcation committed —(a) in the course of, or in connection with, a dealing in capital markets products; (b) by a member of an approved exchange or by any agent of such member; and (c) in relation to any money or other property which, after the establishment of the fidelity fund was entrusted to or received —(i) by that member or by any of its agents for or on behalf of any other person; or (ii) by that member either as the sole trustee or as trustee with any other person or persons, or by any of its agents as trustee or for or on behalf of the trustees of that money or property.[2/2009; 4/2017] (2) Subject to this Part, the fidelity fund is to be applied for the purpose of paying to the Official Assignee or a trustee in bankruptcy within the meaning of the Insolvency, Restructuring and Dissolution Act 2018 an amount not greater than the amount that the Official Assignee or the trustee in bankruptcy (as the case may be) certifies is required in order to make up or reduce the total deficiency arising because the available assets of a bankrupt, who is a member of an approved exchange, are insufficient to satisfy any debts arising from dealings in capital markets products that have been proved in the bankruptcy by creditors of the bankrupt member.[2/2009; 4/2017; 40/2018] (3) Subsection (2) applies in the case of a member of an approved exchange who has made a voluntary arrangement with the member’s creditors under Part 14 of the Insolvency, Restructuring and Dissolution Act 2018 in like manner as that subsection applies in the case of a member who has become bankrupt.[2/2009; 40/2018] (4) For the purposes of subsection (3) —(a) a reference to a trustee in bankruptcy in subsection (2) is deemed to be a reference to a nominee within the meaning of Part 14 of the Insolvency, Restructuring and Dissolution Act 2018; (b) a reference to debts proved in bankruptcy in subsection (2) is deemed to be a reference to debts provable in relation to a voluntary arrangement within the meaning of Part 14 of the Insolvency, Restructuring and Dissolution Act 2018; and (c) a reference to the bankrupt in subsection (2) is deemed to be a reference to the person who made the voluntary arrangement under Part 14 of the Insolvency, Restructuring and Dissolution Act 2018.[40/2018] (5) Subject to this Part, the fidelity fund is to be applied for the purpose of paying to a liquidator of a member of an approved exchange that is being wound up an amount not greater than the amount that the liquidator certifies is required to make up or reduce the total deficiency arising because the available assets of the member are insufficient to satisfy any debts arising from dealings in capital markets products that have been proved in the liquidation of the member.[2/2009; 4/2017] (6) Where a claim has been made for compensation in respect of a pecuniary loss under subsection (1), no claim for a payment under subsection (2) or (5) may be made in respect of the same pecuniary loss. (7) Where a claim has been made for a payment in respect of a deficiency referred to in subsection (2), no claim for compensation under subsection (1) or for a payment under subsection (5) may be made in respect of the same deficiency. (8) Where a claim has been made for a payment in respect of a deficiency referred to in subsection (5), no claim for compensation under subsection (1) or for a payment under subsection (2) may be made in respect of the same deficiency. (9) Moneys paid under subsection (2) or (5) may only be applied by the Official Assignee, a trustee in bankruptcy, a nominee or a liquidator (as the case may be) for the purpose of satisfying debts arising from dealings in capital markets products, and for no other purpose.[4/2017] (10) Subject to the provisions of this section, the amount or the sum of the amounts that may be paid out of the fidelity fund under this Part for the purpose of —(a) compensating pecuniary loss under subsection (1); or (b) making a payment under subsection (2) or (5), must not, in respect of each member, exceed the prescribed amount. (11) Subject to the provisions of this section —(a) the amount that may be paid out of the fidelity fund to each claimant under subsection (1) in relation to each member; or (b) the amount that the Official Assignee, a trustee in bankruptcy, a nominee or a liquidator may pay to each creditor of a member from any amount paid to the Official Assignee, trustee in bankruptcy, nominee or liquidator (as the case may be) under subsection (2) or (5), must not exceed the prescribed amount. (12) For the purposes of subsections (10) and (11), any amount paid out of the fidelity fund, to the extent to which the fund is subsequently reimbursed therefor, is disregarded. (13) In this section, “agent”, in relation to a member of an approved exchange —(a) means a person who is a director, an officer, an employee or a representative of the member; and (b) includes a person who has been, but at the time of any defalcation in question has ceased to be, a director, an officer, an employee or a representative of the member if, at the time of the defalcation, the person claiming compensation has reasonable grounds for believing that person to be a director, an officer, an employee or a representative of the member.[2/2009] (14) In this section, any reference to dealing in capital markets products is a reference to such dealing which is done or to be done —(a) on the approved exchange which establishes, keeps and administers the fidelity fund; or (b) through a trading linkage of the approved exchange with an overseas exchange.[4/2017]
Claims against fund
187.—(1) Subject to this Part, every person who suffers pecuniary loss referred to in section 186 is entitled to claim compensation out of the fidelity fund and to take proceedings in the General Division of the High Court under this Act against an approved exchange to establish such claim.[2/2009; 40/2019] (2) A person does not have any claim against the fidelity fund in respect of a defalcation in respect of money or other property which prior to the commission of the defalcation had, in the due course of the administration of a trust, ceased to be under the sole control of the director or directors of the member of an approved exchange.[2/2009] (3) Subject to this Part, the amount which any claimant is entitled to claim as compensation out of a fidelity fund is the amount of the actual pecuniary loss suffered by the claimant (including the reasonable costs of and disbursements incidental to the making and proof of the claimant’s claim) less the amount or value of all moneys or other benefits received or receivable by the claimant from any source other than the fund in reduction of the loss.
Notice calling for claims against fund
188.—(1) An approved exchange may cause to be published in a daily newspaper published and circulating generally in Singapore a notice, in or to the effect of the form prescribed, specifying a date, not being earlier than 3 months after the date of publication, on or before which claims for compensation out of the fidelity fund, in relation to the person specified in the notice, may be made.[2/2009] (2) A claim for compensation out of a fidelity fund in respect of a defalcation must be made in writing to the approved exchange —(a) where a notice under subsection (1) has been published, on or before the date specified in the notice; or (b) where no such notice has been published, within 6 months after the claimant became aware of the defalcation.[2/2009] (3) Any claim which is not made in accordance with subsection (2) is barred unless the approved exchange otherwise allows.[2/2009] (4) No action for damages shall lie against an approved exchange or against any member or employee of the approved exchange by reason of any notice published in good faith and without malice for the purposes of this section.[2/2009]
Power of approved exchange to settle claims
189.—(1) An approved exchange may, subject to this Part, allow and settle any proper claim for compensation out of a fidelity fund at any time after the commission of the defalcation in respect of which the claim arose.[2/2009] (2) Subject to subsection (3), a person must not commence proceedings under this Part against an approved exchange without the consent of the approved exchange, unless —(a) the approved exchange has disallowed the person’s claim; and (b) the claimant has exhausted all relevant rights of action and other legal remedies for the recovery of the money or other property, in respect of which the defalcation was committed, available against a member of the approved exchange in relation to whom or to which the claim arose and all other persons liable in respect of the loss suffered by the claimant.[2/2009] (3) A person who has been refused consent to commence proceedings under this Part by an approved exchange under subsection (2) may apply for permission to a Judge sitting in chambers in the General Division of the High Court who may make such order in the matter as he or she thinks fit.[2/2009; 40/2019] [Act 25 of 2021 wef 01/04/2022] (4) An approved exchange must, after disallowing (whether wholly or in part) any claim for compensation out of a fidelity fund, serve notice of the disallowance in the prescribed form on the claimant or the claimant’s solicitor.[2/2009] (5) No proceedings against an approved exchange in respect of a claim which has been disallowed by the exchange may be commenced after the expiration of 3 months after service of notice of disallowance under subsection (4).[2/2009] (6) In any proceedings brought to establish a claim —(a) evidence of any admission or confession by, or other evidence which would be admissible against, the member of an approved exchange or other person by whom it is alleged a defalcation was committed, is admissible to prove the commission of the defalcation, even though the member or other person is not the defendant in or a party to those proceedings; and (b) all defences which would have been available to that member or person are available to the approved exchange.[2/2009] (7) An approved exchange or, where proceedings are brought to establish a claim, the General Division of the High Court, if satisfied that the defalcation on which the claim is founded was actually committed, may allow the claim and act accordingly, even though the person who committed the defalcation has not been convicted or prosecuted therefor or that the evidence on which the approved exchange or the General Division of the High Court (as the case may be) acts would not be sufficient to establish the guilt of that person upon a criminal trial in respect of the defalcation.[2/2009; 40/2019]
Power of approved exchange to require production of evidence
190.—(1) An approved exchange may require any person to produce and deliver any contract note, document or statement of evidence necessary to support any claim made, or necessary for the purpose either of exercising its rights against a member of an approved exchange or the directors of that member or any other person concerned, or of enabling criminal proceedings to be taken against any person in respect of a defalcation.[2/2009] (2) Where a person who is required under subsection (1) to produce or deliver any contract note, document or statement of evidence fails to do so, the approved exchange may disallow any claim by the person under this Part.[2/2009]
Subrogation of approved exchange to rights, etc., of claimant upon payment from fund
191. On payment out of a fidelity fund of any moneys in respect of any claim under this Part, the approved exchange is subrogated to the extent of such payment to all the rights and remedies of the claimant in relation to the loss suffered by the claimant by reason of the defalcation on which the claim was based.[2/2009]
Payment of claims only from fund
192. No moneys or other property belonging to an approved exchange, other than the fidelity fund, is available for the payment of any claim under this Part, whether the claim is allowed by the approved exchange or is made the subject of an order of the General Division of the High Court.[2/2009; 40/2019]
Provision where fund insufficient to meet claims or where claims exceed total amount payable
193.—(1) Where the amount at credit in a fidelity fund is insufficient to pay the whole amount of all claims against it which have been allowed or in respect of which orders of the General Division of the High Court have been made, then the amount at credit in the fund must, subject to subsection (2), be apportioned between the claimants in such manner as the approved exchange thinks equitable, and such claim must, so far as it then remains unpaid, be charged against future receipts of the fund and paid out of the fund when moneys are available therein.[2/2009; 40/2019] (2) Where the aggregate of all claims which have been allowed or in respect of which orders of the General Division of the High Court have been made in relation to a defalcation by or in connection with a member of an approved exchange exceeds the total amount which may, pursuant to section 186(10), be paid under this Part in respect of that member, then such total amount must be apportioned between the claimants in such manner as the approved exchange thinks equitable.[2/2009; 40/2019] (3) Upon payment out of the fidelity fund of such total amount in accordance with the apportionment of all such claims under subsection (2), any order relating thereto and all other claims against the fund which may thereafter arise or be made in respect of that defalcation by or in connection with that member are absolutely discharged.
Power of approved exchange to enter into contracts of insurance
194.—(1) An approved exchange may enter into any contract with any person or body of persons, corporate or unincorporate, carrying on fidelity insurance business in Singapore whereby the approved exchange will be insured or indemnified to the extent and in the manner provided by such contract against liability in respect of claims under this Part.[2/2009] (2) Any contract under subsection (1) may be entered into in relation to members generally, or in relation to any particular member or members named therein, or in relation to members generally with the exclusion of any particular member or members named therein. (3) No action shall lie against an approved exchange or against any member or employee of an approved exchange for injury alleged to have been suffered by any other member by reason of the publication in good faith of a statement that any contract entered into under this section does or does not apply with respect to it.[2/2009]
Application of insurance moneys
195. No claimant against a fidelity fund has any right of action against any person or body of persons with whom a contract of insurance or indemnity is made under this Part in respect of such contract, or has any right or claim with respect to any moneys paid by the insurer in accordance with any such contract.
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Compiled from an official source version. Later amendments or repeals may not be reflected; the official text prevails. Read the official text ↗
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