Statute Details
- Title: Securities and Futures (Investor Compensation Scheme) Order 2018
- Act Code: SFA2001-S92-2018
- 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: 23 February 2018
- Legislative Status: Current version as at 27 March 2026
- Legislation Number: SL 92/2018 (No. S 92)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Key Provisions in Extract: Section 1 (Citation and commencement); Section 2 (Fidelity fund amount)
- Named Regulated Entity (in extract): Fidelity fund of Asia Pacific Exchange Pte. Ltd.
What Is This Legislation About?
The Securities and Futures (Investor Compensation Scheme) Order 2018 is a short but important piece of Singapore financial regulation. In substance, it sets a required minimum funding level for a “fidelity fund” maintained by Asia Pacific Exchange Pte. Ltd. for the purposes of the investor compensation framework under the Securities and Futures Act (the “SFA”).
Investor compensation schemes are designed to protect investors when certain types of financial misconduct or failures occur, particularly where an intermediary or exchange-related entity is involved in handling client assets or dealing with client funds. While the SFA provides the overarching legal architecture, subsidiary legislation such as this Order specifies concrete operational requirements—here, the minimum amount that must be held in the fidelity fund.
Accordingly, this Order does not create a new compensation scheme from scratch. Instead, it functions as a targeted regulatory instrument: MAS exercises its statutory power under section 181(b) of the SFA to prescribe the minimum size of the fidelity fund for the relevant entity. The practical effect is to ensure that the investor compensation mechanism has a baseline pool of resources available.
What Are the Key Provisions?
Section 1: Citation and commencement. This provision identifies the instrument as the “Securities and Futures (Investor Compensation Scheme) Order 2018” and states that it comes into operation on 23 February 2018. For practitioners, the commencement date matters for compliance timelines, audit periods, and for determining which version of the regulatory requirement applied at a given time.
Section 2: Fidelity fund of Asia Pacific Exchange Pte. Ltd. This is the operative requirement in the extract. MAS orders 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.
In plain language, section 2 requires Asia Pacific Exchange Pte. Ltd. to maintain a fidelity fund at or above a specified minimum level. The fidelity fund is typically intended to provide financial coverage in circumstances connected to the investor compensation scheme—most commonly, situations involving fraud or dishonesty (hence the “fidelity” concept) or other losses that the scheme is meant to address. Even though the extract does not detail the claims process, the minimum funding requirement is a foundational compliance obligation: without sufficient funds, the investor protection objective cannot be met.
Legal significance of the “not less than” threshold. The wording “not less than” is strict. It indicates that the fund must meet the minimum amount at the relevant times contemplated by the SFA and the scheme’s rules. Practically, this means the regulated entity should implement governance and treasury controls to monitor the fund balance, ensure currency conversion and valuation methodology are properly handled, and maintain documentation demonstrating ongoing compliance. If the fund falls below the threshold, the entity may be in breach of the Order and potentially exposed to regulatory action under the SFA framework.
How Is This Legislation Structured?
The Order is structured in a very concise format, consisting of an enacting formula and two substantive provisions in the extract.
Enacting formula. The Order begins with the statutory basis: MAS acts “in exercise of the powers conferred by section 181(b) of the Securities and Futures Act.” This is a standard legislative drafting technique that links the subsidiary legislation to its enabling authority.
Section 1. Provides the citation and commencement.
Section 2. Sets the minimum fidelity fund amount for Asia Pacific Exchange Pte. Ltd. The Order’s brevity is typical for instruments that prescribe a specific numerical or operational parameter rather than a full procedural regime.
Who Does This Legislation Apply To?
On its face, the Order applies to Asia Pacific Exchange Pte. Ltd. insofar as it concerns the maintenance of the fidelity fund required for the investor compensation scheme under the SFA. The Order is not drafted as a general obligation for all market participants; instead, it is entity-specific in the extract.
More broadly, the Order sits within the SFA’s investor protection framework. While the Order itself names the fidelity fund of a particular entity, the regulated community should understand that investor compensation requirements often interact with licensing, exchange-related obligations, and MAS’s supervisory expectations. Practitioners advising exchanges, trading venues, or related entities should therefore treat this Order as one component of the wider compliance landscape under the SFA.
Why Is This Legislation Important?
Although the Order contains only two substantive provisions in the extract, it has real compliance and risk-management consequences. The investor compensation scheme’s credibility depends on whether the fidelity fund has sufficient resources. By prescribing a minimum amount of US$2,500,000, MAS ensures that the scheme has a baseline level of financial capacity.
From a legal and regulatory perspective, the Order is also important because it demonstrates how MAS uses subsidiary legislation to operationalise statutory investor protection objectives. Section 181(b) of the SFA provides the enabling power; the Order translates that power into a concrete funding requirement. This is a common regulatory pattern: the Act sets the framework and powers, while subsidiary legislation specifies the measurable standards.
For practitioners, the key practical impacts include: (1) advising on whether the fidelity fund is properly constituted and maintained at the required level; (2) assessing whether any changes in the entity’s financial arrangements could cause the fund to dip below the threshold; and (3) supporting regulatory reporting and audit readiness. In disputes or regulatory investigations, the minimum funding requirement can be a critical benchmark for determining whether the entity complied with its statutory and subsidiary obligations.
Related Legislation
- Securities and Futures Act (Cap. 289) (including section 181(b), the enabling provision referenced in the Order)
- Futures Act (listed in the provided metadata as related legislation)
- Investor compensation scheme framework under the SFA (as implemented through subsidiary instruments and MAS requirements)
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.