Statute Details
- Title: Securities and Futures (Exemption from Requirement to Hold Capital Markets Services Licence) Regulations
- Act Code: SFA2001-RG11
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289), including reference to section 99(1)(h)
- Revised Edition / Gazette Citation: G.N. No. S 458/2002; Revised Edition 2004 (29 Feb 2004)
- Commencement (as per first edition): 1 October 2002
- Current Version Status: Current version as at 27 Mar 2026
- Key Provisions (from extract): Section 1 (citation), Section 1A (definitions), Section 2 (Citibank Aktiengesellschaft exemption), Section 3 (foreign company trading under approved arrangements), Section 4 (general exemption)
- Notable Amendments (from legislative history): S 147/2008; S 501/2010; S 630/2018; S 845/2019; S 227/2023; S 343/2022
- Related Legislation (as provided): Banking Act 1970; Commodity Trading Act 1992; Finance Companies Act 1967; Financial Advisers Act 2001; Financial Services and Markets Act 2022; Insurance Act 1966; Monetary Authority of Singapore Act 1970; Payment Services Act 2019; Penal Code 1871; and subsidiary legislation under those Acts
What Is This Legislation About?
The Securities and Futures (Exemption from Requirement to Hold Capital Markets Services Licence) Regulations (“SFA Exemption Regulations”) create targeted exemptions from the licensing requirement in the Securities and Futures Act (the “SFA”). In plain terms, the SFA generally requires persons carrying on regulated activities in capital markets products in Singapore to hold a Capital Markets Services (CMS) licence. These Regulations carve out circumstances where certain entities—typically foreign firms or group entities—may carry on specified activities without holding a CMS licence, provided strict conditions are met.
The Regulations are not a blanket deregulation. Instead, they are designed to manage regulatory risk while avoiding unnecessary licensing for entities whose Singapore exposure is limited or structured through approved arrangements. The exemptions are particularly relevant to cross-border trading, exchange membership, and clearing/settlement arrangements involving approved exchanges and clearing houses.
Practically, the Regulations help foreign market participants and group companies structure their Singapore-facing activities—especially dealing in securities, collective investment scheme units, exchange-traded derivatives, futures contracts, and over-the-counter derivatives—without triggering licensing, so long as they do not solicit or serve Singapore customers and meet prudential and information-sharing requirements.
What Are the Key Provisions?
1. Definitions and interpretive framework (Section 1A)
Section 1A sets out key terms that determine whether an entity qualifies for an exemption. Several definitions are operationally important for compliance analysis. For example, “financial institution” is defined broadly to include institutions licensed, approved, registered, or otherwise regulated by the Authority under written law. This matters because one of the general exemption conditions is that the exempt person must not be a financial institution.
The Regulations also define “over-the-counter derivatives contract” as a derivatives contract that is not exchange-traded. This distinction is critical because the general exemption in Section 4 treats exchange-traded derivatives differently from futures and OTC derivatives, including how they are cleared or settled.
Another important definition is “relevant offence”, which captures offences involving fraud or dishonesty, offences under the SFA or its regulations, and offences under a range of financial services statutes (including the Banking Act, Commodity Trading Act, Finance Companies Act, Financial Advisers Act, and others). This definition is relevant to the “cessation” or disqualification triggers in the exemption regime—i.e., when an entity no longer qualifies due to enforcement or misconduct-related events.
2. Exemption for Citibank Aktiengesellschaft (Section 2)
Section 2 provides a specific exemption for Citibank Aktiengesellschaft. The exemption is conditional: it applies only “subject to the conditions and restrictions specified in writing by the Authority”. In substance, Citibank is exempt from the CMS licensing requirement when dealing in specified products on behalf of any financial institution.
From a practitioner’s perspective, this provision is a reminder that even where an exemption exists, it may be governed by bespoke conditions imposed by the Authority. Advising a client would therefore require checking any written conditions or restrictions issued by the Authority to confirm ongoing compliance.
3. Exemption for foreign companies trading under approved arrangements with related corporations (Section 3)
Section 3 targets a particular category of foreign company: one that, immediately before 27 February 2008, was carrying on a trade in futures contracts (excluding commodity futures contracts) under an arrangement with its related corporation. The arrangement must have been and must continue to be approved by the Authority under paragraph 9 of the Third Schedule to the SFA.
If the company meets these historical and structural criteria, it is exempt from the licensing requirement in section 82(1) of the SFA to deal in commodity futures contracts “under the same terms of arrangement”. The provision is therefore both time-anchored (immediately before 27 February 2008) and arrangement-anchored (approved arrangement with related corporation).
For legal counsel, this is a classic “grandfathering” style exemption: it protects pre-existing business models that were already approved. The key compliance task is to verify that the arrangement remains approved and that the company’s current dealing remains “under the same terms”.
4. General exemption (Section 4) — the core licensing relief
Section 4 is the principal general exemption. It exempts a “person” who meets specified conditions from the requirement to hold a CMS licence to deal in certain capital markets products.
Product scope: Section 4(1) covers dealings in securities, units in a collective investment scheme, and exchange-traded derivatives contracts listed or quoted on an approved exchange, as well as dealings involving a recognised market operator incorporated in Singapore. Section 4(2) covers dealings in futures contracts and OTC derivatives contracts that are cleared or settled by an approved clearing house or a recognised clearing house incorporated in Singapore.
Core conditions (Section 4(3)): The exemption is conditional on multiple requirements, including that the person is incorporated outside Singapore; is a member of the relevant approved exchange/recognised market operator (for exchange-listed/quoted products) or a member of the relevant approved clearing house/recognised clearing house (for futures/OTC derivatives); does not serve any customer resident in Singapore; is not a financial institution; and operates in a jurisdiction where the relevant regulator has an information exchange and cooperation arrangement with the Authority.
Additionally, the person must be regulated by its home regulator in relation to the relevant activity (dealing for Section 4(1) products; clearing for Section 4(2) products). Finally, the person must not have any affiliate that is a financial institution. This affiliate restriction is particularly significant in group structures: even if the exempt entity itself is not a financial institution, the presence of a financial-institution affiliate can defeat the exemption.
Loss of exemption / cessation triggers (Section 4(4) and beyond): Section 4(4) provides that a person who would otherwise be exempt is not, or ceases to be, exempt if certain events occur. The extract shows examples such as ceasing to satisfy the conditions; winding up or dissolution; enforcement orders returned unsatisfied in whole or in part; and appointment of receivers, judicial managers, or similar insolvency-related officers. The truncated remainder of the provision (not fully reproduced in the extract) would typically also include other compliance and enforcement-related disqualifiers, likely tied to “relevant offences” and regulatory action.
For practitioners, the key is to treat the exemption as dynamic. Qualification must be assessed at the outset and monitored continuously. A single adverse event—insolvency, enforcement, or loss of regulatory status—may remove the exemption and trigger licensing exposure.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with a definitions section and a small number of substantive exemption provisions. The structure, based on the extract, is:
Section 1 sets out the citation of the Regulations.
Section 1A provides definitions and interpretive rules, including definitions of “customer”, “financial institution”, “over-the-counter derivatives contract”, “relevant offence”, and “relevant regulator”, and a rule for when a customer is resident in Singapore.
Section 2 provides a bespoke exemption for Citibank Aktiengesellschaft, subject to Authority-specified conditions.
Section 3 provides an exemption for certain foreign companies trading under approved arrangements with related corporations, tied to pre-27 February 2008 conduct.
Section 4 provides the general exemption, with detailed conditions and disqualification/cessation triggers.
Although the extract truncates the remainder of Section 4(4), the overall legislative design is clear: eligibility is conditional, and ongoing compliance is required.
Who Does This Legislation Apply To?
The Regulations apply primarily to foreign persons and group entities that deal in specified capital markets products in Singapore without serving Singapore-resident customers. The general exemption in Section 4 is drafted to benefit entities incorporated outside Singapore that are members of approved exchanges or clearing houses (or recognised counterparts incorporated in Singapore), and that are regulated in their home jurisdictions.
In addition, the Regulations apply to specific named or category-based entities: Citibank Aktiengesellschaft (Section 2) and foreign companies with approved arrangements with related corporations (Section 3). The exemptions are therefore not intended for domestic Singapore firms seeking to avoid licensing; rather, they are designed for cross-border market participation where Singapore customer engagement is excluded and regulatory cooperation exists.
Why Is This Legislation Important?
For practitioners, these Regulations are important because they directly affect whether a client must hold a CMS licence under the SFA. Licensing is not merely a formal requirement; it can determine governance obligations, compliance systems, audit readiness, and regulatory reporting. By providing exemptions, the Regulations can materially reduce compliance burden for qualifying foreign market participants.
However, the exemptions are conditional and risk-sensitive. The “no Singapore customers” requirement, the prohibition on being (or having affiliates that are) financial institutions, and the requirement for home-regulator information exchange arrangements all reflect the Authority’s focus on preventing regulatory arbitrage. In practice, counsel must conduct careful fact-finding on customer flows, group structure, and the regulatory status of both the exempt entity and its affiliates.
Finally, the cessation triggers mean that exemption status can change due to insolvency, enforcement, or loss of regulatory standing. Advisers should therefore implement an internal compliance monitoring approach—tracking whether the entity continues to meet each condition and whether any “relevant offence” or enforcement event has occurred. Where exemption status is uncertain, the safer approach may be to consider licensing or to restructure activities to fit within the exemption’s boundaries.
Related Legislation
- Securities and Futures Act (Cap. 289) — licensing requirement and references to section 82(1) and section 99(1)(h)
- Banking Act 1970
- Commodity Trading Act 1992
- Finance Companies Act 1967
- Financial Advisers Act 2001
- Financial Services and Markets Act 2022
- Insurance Act 1966
- Monetary Authority of Singapore Act 1970
- Payment Services Act 2019
- Penal Code 1871
Source Documents
This article provides an overview of the Securities and Futures (Exemption from Requirement to Hold Capital Markets Services Licence) Regulations for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.