SINGAPORE Law and Practice Contributed by: Kenneth Pereire and Lin YingXin, KGP Legal LLC
This regulatory measure underscores the MAS’s broader commitment to ensuring transparency, fair - ness and investor protection within the financial mar - kets. It aligns with Singapore’s reputation as a secure, transparent and trustworthy financial hub that is keen on adapting to global trends while maintaining the highest standards of market integrity. For context, PFOF is a prevalent practice in other jurisdictions, particularly in the US, where platforms like Robinhood have faced scrutiny over similar con - cerns. While PFOF may be permitted in certain mar - kets, the stringent stance adopted by Singapore sets a benchmark for prioritising client welfare and main - taining market confidence, further distinguishing Sin - gapore’s financial regulatory landscape. 6.8 Market Integrity Principles Market Integrity The basic principles governing trading to maintain market integrity are outlined in the SFA, which man - dates that markets be fair, orderly and transparent. A fair market ensures proper trading practices and pro - vides non-discriminatory access to market facilities and information, fostering an equitable environment for all participants. An orderly market is character - ised by robust procedures and systems that facilitate organised transactions while minimising the risk of market failure. Transparency in trading, including the real-time availability of pre-trade and post-trade infor - mation, is crucial for maintaining market integrity. Moreover, regulatory measures have been implement - ed to address emerging challenges, such as those in the digital payment token (DPT) services sector. Fol - lowing a consultation paper released by MAS on pro - posed measures for Market Integrity for DPT services, regulatory measures for digital payment token servic - es were introduced. These measures aim to uphold market integrity in the evolving digital landscape, aligning with the fundamental principles of fairness, orderliness and transparency outlined in the SFA. Market Abuse Market abuse and misconduct, defined as violations of the SFA, encompass practices such as insider trad - ing, false trading and breaches of corporate disclo - sure requirements. To combat such misconduct, the
MAS and SGX have jointly published a trade surveil - lance practice guide, assisting brokers in implement - ing effective monitoring practices. 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations SGX RegCo published the Algorithmic Trading Regu - latory Guide in 2020 that recommends best practices in governance, risk controls, development process and testing process for SGX member firms that use algorithms for trading in Singapore markets. In 2023, SGX RegCo published a consultation paper regarding proposed changes to its Futures Trading Rules to formalise important parts of the Algorithmic Trading Regulatory Guide in relation to the require - ments for automated trading. While there is no sepa - rate statutory regime solely for algorithmic trading based on asset class, applicable requirements may differ depending on whether trading occurs in securi - ties, derivatives or other regulated products and on When a firm acts in a principal capacity, it may apply to The Singapore Exchange Securities Trading Limited (SGX-ST) in order to become a Designated Market- Maker. 7.3 Regulatory Distinction Between Funds and Dealers In Singapore, the MAS establishes regulatory distinc - tions between funds and dealers engaged in high- frequency trading and algorithmic trading. Funds are primarily regulated under the SFA and FAA, focus - ing on investor protection and disclosure. Licens - ing requirements may necessitate funds to apply for a CMS licence for fund management. These funds operate within a broader investment context, aiming to generate returns for investors through optimised trading decisions. the rules of the relevant trading venue. 7.2 Requirement To Be Licensed or Registered as a Market Maker When Functioning in a Principal Capacity
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