Code of Conduct for CMS Licensees and Representatives¶
Overview¶
The Code of Conduct for capital markets services (CMS) licensees and their representatives sets out the professional standards expected of persons engaged in regulated activities under the Securities and Futures Act 2001 (SFA). These standards are derived from MAS Notices, Guidelines, and industry best practices, and are intended to promote integrity, professionalism, and trust in Singapore's capital markets.
CMS licence holders are required to ensure that their representatives adhere to these standards at all times while carrying out regulated activities.
Professional Standards¶
Core Principles¶
All CMS licensees and their representatives must observe the following core principles:
- Integrity: Act honestly and ethically in all dealings with clients, counterparties, and regulators
- Competence: Maintain the knowledge, skills, and qualifications necessary to perform regulated activities
- Diligence: Exercise due care and thoroughness in carrying out duties
- Fairness: Treat clients fairly and not place institutional interests ahead of client interests
- Confidentiality: Protect client information and use it only for authorised purposes
- Compliance: Observe all applicable laws, regulations, and internal policies
Fitness and Propriety¶
Representatives must meet and maintain fitness and propriety standards as set out in the MAS Guidelines on Fit and Proper Criteria (SFA 04-G05). These include:
- Honesty, integrity, and reputation: No history of fraud, dishonesty, or breach of fiduciary duty
- Competence and capability: Relevant qualifications (CMFAS examinations), experience, and ongoing training
- Financial soundness: No undischarged bankruptcy or unsatisfied judgement debts
Conflicts of Interest¶
Identification¶
CMS licensees must establish policies and procedures to identify conflicts of interest, including:
- Personal account dealing: Representatives trading in the same securities they recommend to clients
- Proprietary trading: The firm trading in securities that are the subject of client orders or recommendations
- Multiple roles: Acting for multiple clients with opposing interests in the same transaction
- Outside business interests: Representatives having financial interests or directorships in entities connected to client transactions
- Referral arrangements: Receiving fees or benefits for referring clients to third parties
Management and Disclosure¶
When conflicts of interest are identified, CMS licensees must:
- Avoid the conflict where possible
- Manage the conflict through internal controls (information barriers, restricted lists, supervision)
- Disclose the conflict to the affected client in a clear, fair, and not misleading manner
- Decline to act if the conflict cannot be managed adequately
Personal Account Dealing¶
CMS licensees must maintain policies on personal account dealing by representatives that:
- Require pre-clearance for personal trades in specified securities
- Impose holding periods (e.g., minimum 30-day holding for personal investments)
- Restrict trading in securities that are on the firm's restricted or watch list
- Require regular disclosure of personal trading activity
- Monitor compliance through periodic reviews
Gift and Entertainment Policies¶
Principles¶
CMS licensees must establish clear policies on the giving and receiving of gifts and entertainment that:
- Prevent gifts or entertainment from influencing or appearing to influence business decisions
- Distinguish between acceptable business courtesies and improper inducements
- Apply to all representatives and relevant employees
Thresholds and Restrictions¶
Typical policy requirements include:
- Monetary thresholds: Gifts above a specified value (commonly S$100-S$200) require pre-approval from compliance
- Entertainment thresholds: Business entertainment above a specified value requires pre-approval
- Prohibition on cash or cash equivalents: Cash gifts, gift cards with cash value, and similar items must not be accepted or given
- Frequency limits: Repeated gifts from the same source must be monitored and may be restricted
- Record keeping: All gifts and entertainment above a nominal value must be recorded in a central register
Prohibited Gifts and Entertainment¶
The following are generally prohibited:
- Gifts or entertainment intended to influence the outcome of a specific business decision
- Gifts or entertainment that create an obligation or expectation of reciprocity
- Gifts or entertainment involving travel, accommodation, or lavish events (unless pre-approved)
- Gifts to or from government officials or regulators (subject to strict anti-bribery laws)
Confidentiality and Information Handling¶
Duty of Confidentiality¶
CMS licensees and their representatives owe a duty of confidentiality to their clients. This includes:
- Not disclosing client information to unauthorised persons
- Not using client information for personal benefit or the benefit of third parties
- Implementing appropriate information security measures (encryption, access controls, secure disposal)
- Training staff on the handling of confidential information
Information Barriers¶
Where a CMS licensee carries out multiple regulated activities (e.g., dealing, advising, research), information barriers (also known as "Chinese walls") must be established to:
- Prevent the flow of material non-public information between different business units
- Ensure that investment decisions are made independently
- Restrict access to sensitive information to authorised personnel only
- Monitor and enforce compliance with information barrier policies
Data Protection¶
CMS licensees must comply with the Personal Data Protection Act 2012 (PDPA) in handling client data, including:
- Obtaining consent for the collection, use, and disclosure of personal data
- Limiting the use of personal data to the purposes for which it was collected
- Implementing reasonable security arrangements to protect personal data
- Providing clients with access to and correction of their personal data upon request
Advertising and Communications¶
Standards¶
All advertising and communications by CMS licensees and their representatives must:
- Be fair, clear, and not misleading
- Not contain false or exaggerated claims about products, services, or performance
- Present a balanced view of risks and rewards
- Comply with MAS guidelines on fair dealing and product advertising
Prohibited Practices¶
- Guaranteeing returns or performance outcomes
- Using testimonials or past performance in a misleading manner
- Omitting material risks or limitations
- Targeting vulnerable customers with unsuitable product promotions
Continuing Professional Development (CPD)¶
Requirements¶
Representatives must complete continuing professional development to maintain their competence:
- Minimum CPD hours: As specified by the relevant industry associations (e.g., IBF, SIAS)
- Relevant topics: Regulatory updates, product knowledge, ethics, risk management, AML/CFT
- Record keeping: CMS licensees must maintain records of CPD completed by each representative
Consequences of Non-Compliance¶
Failure to meet CPD requirements may result in:
- MAS inquiry into the representative's continued fitness and propriety
- Conditions on or suspension of the representative's appointment
- Requirement to pass additional examinations before resuming duties
Reporting and Whistleblowing¶
Obligation to Report¶
CMS licensees must establish internal reporting mechanisms for:
- Suspected breaches of laws, regulations, or internal policies
- Conduct that may harm clients or the market
- Concerns about the fitness and propriety of colleagues or representatives
Whistleblower Protection¶
CMS licensees should implement whistleblower protection policies that:
- Encourage reporting of misconduct without fear of retaliation
- Protect the identity of whistleblowers to the extent legally permitted
- Provide an independent reporting channel (e.g., compliance officer, board audit committee)
- Investigate reports promptly and take appropriate action
Disciplinary Actions¶
Internal Discipline¶
CMS licensees must establish disciplinary procedures for breaches of the code of conduct, including:
- Investigation process with appropriate due process protections
- Range of sanctions (warning, suspension, termination, clawback of compensation)
- Reporting to MAS where required (e.g., for serious breaches affecting fitness and propriety)
MAS Enforcement¶
MAS may take regulatory action against CMS licensees or their representatives for breaches of conduct standards, including:
- Reprimands and warnings
- Conditions on licences or representative appointments
- Financial penalties (composition of offences)
- Revocation of licence or representative status
- Prohibition orders preventing a person from performing regulated activities
Key Regulatory References¶
- Securities and Futures Act 2001 (SFA)
- Securities and Futures (Licensing and Conduct of Business) Regulations
- MAS Notice SFA 04-N12: Sale of Investment Products (Customer Account Review and Customer Knowledge Assessment)
- MAS Guidelines on Fit and Proper Criteria (SFA 04-G05)
- MAS Guidelines on Fair Dealing
- Personal Data Protection Act 2012 (PDPA)
Relevance to Regnify¶
For CMS licence holders using Regnify:
- Representative onboarding: Form 3A submissions should verify that the representative has acknowledged and agreed to the code of conduct
- Fit and Proper assessment: Conduct history (disciplinary actions, regulatory sanctions) must be evaluated during the onboarding process
- Conflict of interest declarations: The Form 3A process should capture and record any disclosed conflicts of interest
- Training records: CPD compliance can be tracked as part of the representative's ongoing compliance profile within Regnify
- Audit trail: All conduct-related decisions and assessments should be logged in Regnify's audit system