Statute Details
- Title: Securities and Futures (Investor Compensation Scheme) Order 2018
- Act Code: SFA2001-S92-2018
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Key Enabling Provision: Section 181(b) of the Securities and Futures Act
- Commencement Date: 23 February 2018
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Key Provisions in Extract: Section 1 (Citation and commencement); Section 2 (Fidelity fund of Asia Pacific Exchange Pte. Ltd.)
- Status (as provided): Current version as at 27 Mar 2026
- Document Number (as provided): SL 92/2018
What Is This Legislation About?
The Securities and Futures (Investor Compensation Scheme) Order 2018 (“Investor Compensation Scheme Order 2018”) is a short but important piece of Singapore financial regulation. In plain terms, it sets a required minimum funding level for a “fidelity fund” held by a specific market operator: Asia Pacific Exchange Pte. Ltd. The fidelity fund is intended to support investor protection outcomes under the broader investor compensation framework in the Securities and Futures Act (the “SFA”).
Although the Order is brief, it performs a critical regulatory function. Under the SFA, MAS has powers to make subsidiary legislation to specify requirements relevant to the investor compensation scheme. This Order is made under section 181(b) of the SFA and focuses on ensuring that the fidelity fund maintained by Asia Pacific Exchange Pte. Ltd. is sufficiently capitalised. In effect, it translates the investor protection policy into a concrete financial threshold.
Practitioners should note that the Order does not itself describe the entire compensation scheme mechanics (such as eligibility, claims procedures, or payout processes). Instead, it supplies one key building block: the minimum amount that the fidelity fund must consist of for the purposes of section 181(b) of the SFA. Understanding this minimum funding requirement is essential for compliance planning, governance, and risk management for the relevant entity and for counsel advising on investor protection arrangements.
What Are the Key Provisions?
Section 1: Citation and commencement provides the formal identification and effective date of the Order. It states that the legislation is the “Securities and Futures (Investor Compensation Scheme) Order 2018” and that it comes into operation on 23 February 2018. For legal practice, the commencement date matters because it determines when the fidelity fund minimum requirement becomes enforceable and how it applies to events occurring before and after that date.
Section 2: Fidelity fund of Asia Pacific Exchange Pte. Ltd. is the substantive provision in the extract. It provides that, for the purposes of section 181(b) of the SFA, the fidelity fund of Asia Pacific Exchange Pte. Ltd. must consist of an amount of not less than US$2,500,000. This is a clear quantitative requirement: the fidelity fund must be at least US$2.5 million.
From a compliance perspective, the key legal questions that flow from section 2 include: (i) how the fidelity fund is measured (for example, what constitutes “the fidelity fund” and whether it includes cash, deposits, or other permitted instruments); (ii) the timing of measurement (whether MAS expects the fund to be maintained continuously above the threshold or tested at specific intervals); and (iii) the currency and valuation approach (the threshold is expressed in US dollars). While the extract does not elaborate on these operational details, counsel should treat the US$2.5 million figure as the minimum regulatory floor and advise on internal controls to ensure the fund does not fall below it.
It is also important to understand the purpose linkage to section 181(b) of the SFA. The Order is not a standalone investor compensation regime; it is a targeted instrument made under MAS’s statutory power. Accordingly, the fidelity fund requirement should be read together with the SFA provisions governing the investor compensation scheme and the obligations imposed on the relevant regulated entity. In practice, lawyers should cross-reference the SFA to confirm how the fidelity fund interacts with compensation triggers and MAS oversight.
Finally, the enacting formula indicates that MAS made the Order on 20 February 2018, with commencement on 23 February 2018. The signature block (Ravi Menon, Managing Director, MAS) reflects MAS’s formal exercise of delegated legislative power. For practitioners, this is relevant when considering questions of validity, procedural compliance, and the scope of MAS’s authority under the SFA.
How Is This Legislation Structured?
This Order is structured in a conventional subsidiary legislation format with a small number of sections. Based on the extract, it contains:
(1) Section 1 (Citation and commencement) — identifies the instrument and sets the date it comes into force.
(2) Section 2 (Fidelity fund of Asia Pacific Exchange Pte. Ltd.) — sets the minimum required amount for the fidelity fund, expressed as “not less than US$2,500,000”.
There are no additional parts or schedules shown in the extract. The brevity is consistent with an Order that is designed to specify a particular quantitative requirement under an enabling provision in the parent Act.
Who Does This Legislation Apply To?
The Order applies specifically to Asia Pacific Exchange Pte. Ltd. in relation to its fidelity fund. The wording in section 2 is entity-specific: it does not set a general requirement for all market operators or all licensed persons, but rather identifies the fidelity fund of that particular company.
In addition, the Order is relevant to legal advisers and compliance teams because it forms part of the regulatory framework that supports investor protection under the SFA. While the immediate addressee is Asia Pacific Exchange Pte. Ltd., the Order’s requirements may also be relevant to other stakeholders indirectly, such as investors, counterparties, and parties involved in governance, risk management, and claims processes under the investor compensation scheme.
Why Is This Legislation Important?
Even though the Investor Compensation Scheme Order 2018 is short, it is significant because it establishes a minimum funding threshold for the fidelity fund. In investor protection regimes, the availability of funds at the right level is often the difference between a theoretical compensation right and a practical ability to satisfy claims. By requiring at least US$2.5 million, the Order helps ensure that the investor compensation scheme has a baseline pool of resources.
From a practitioner’s standpoint, the Order is important for at least three reasons. First, it provides a clear compliance benchmark that can be incorporated into internal policies, board reporting, and audit checklists. Second, it supports regulatory accountability: MAS can assess whether the fidelity fund meets the statutory minimum specified by subsidiary legislation. Third, it informs risk assessment and contingency planning. If the fidelity fund is close to the minimum threshold, the regulated entity may need to consider how operational losses, market movements, or administrative factors could affect the fund’s level.
Finally, the Order’s continuing relevance is reflected in its status as “current version” as at 27 March 2026 (per the metadata provided). Practitioners should still verify whether there have been subsequent amendments or replacements after 2018, but the provided status suggests that the US$2.5 million requirement remains in force in the current version.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular section 181(b), which provides the enabling power for MAS to make this Order.
- Futures Act — referenced in the provided metadata as related legislation (practitioners should confirm the precise cross-references in the SFA framework).
- Legislation Timeline / MAS subsidiary legislation records — useful for confirming the operative version and any amendments.
Source Documents
This article provides an overview of the Securities and Futures (Investor Compensation Scheme) Order 2018 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.