Statute Details
- Title: Securities and Futures (Margin Requirements for Exempt Financial Institutions) Regulations 2018
- Act Code: SFA2001-S666-2018
- Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Powers: Sections 100(1) and 341 of the Securities and Futures Act
- Commencement: 8 October 2018
- Legislative Status: Current version (as at 27 Mar 2026)
- Key Provisions: Regulation 2 (definitions); Regulation 3 (margin requirements); Regulation 4 (offences)
- Schedule: Minimum margin requirements for contracts for differences and spot foreign exchange contracts for leveraged foreign exchange trading
What Is This Legislation About?
The Securities and Futures (Margin Requirements for Exempt Financial Institutions) Regulations 2018 (“Margin Regulations”) impose margining obligations on a specific category of market participants: exempt financial institutions that deal in contracts for differences (“CFDs”) and/or spot foreign exchange contracts for the purpose of leveraged exchange trading. In practical terms, the Regulations require these institutions to collect and maintain minimum levels of collateral from their customers to reduce counterparty and market risk.
In Singapore’s regulatory framework, some entities may be exempted from holding a capital markets services licence under the Securities and Futures Act (“SFA”). However, exemption from licensing does not mean exemption from prudential risk controls. The Margin Regulations fill that gap by setting enforceable minimum margin requirements for leveraged trading products—particularly CFDs and leveraged spot FX—when offered on a margin basis.
The Regulations also address the operational mechanics of margin: what counts as acceptable collateral, what happens if collateral value falls below required levels, and the timeline for implementation for institutions already carrying on business before the Regulations commenced.
What Are the Key Provisions?
1. Definitions and product scope (Regulation 2)
The Regulations define core terms that determine when the obligations apply. Two definitions are especially important for practitioners advising on product coverage:
- “Contract for differences” is defined as an over-the-counter derivatives contract traded on a margin basis, intended to secure profit or avoid loss by reference to fluctuations in the value/price of underlying things (including an index), and without actual taking or physical delivery of the underlying.
- “Customer” is defined by reference to the person on whose behalf the exempt financial institution carries on regulated activity, or with whom it enters into a transaction as principal for the sale or purchase of capital markets products. Importantly, the definition excludes accredited investors, expert investors, and institutional investors.
The definition of “exempt financial institution” is also central: it refers to a person exempted under section 99(1)(a), (b) or (c) of the SFA from the requirement to hold a capital markets services licence. This is the regulated population targeted by the Regulations.
2. Core margin obligation (Regulation 3(1))
Regulation 3(1) is the heart of the regime. Subject to Regulation 3(2), an exempt financial institution dealing in CFDs or spot foreign exchange contracts for leveraged exchange trading must obtain margin from customers that meets the minimum margin requirements for each contract it enters into with customers.
Two features matter for compliance design:
- Per-contract margining: the obligation is framed “in respect of each contract” (not merely at an aggregate level).
- Minimum margin requirements: the minimum levels are set out in the Schedule, which practitioners should treat as the benchmark for regulatory compliance.
3. Transitional relief for existing businesses (Regulation 3(2))
Regulation 3(2) provides a transitional pathway for institutions that were already carrying on the relevant business immediately before 8 October 2018. Such institutions are not required to comply with Regulation 3(1) immediately, but must comply from and after 8 October 2019.
Practically, the transitional provision distinguishes between:
- Contracts entered into before 8 October 2019 that remain in force on or after that date; and
- Contracts entered into on or after 8 October 2019.
From the compliance perspective, this means firms must identify their existing CFD and leveraged spot FX books as at the commencement date and ensure that margining is brought into line by the specified deadline.
4. Acceptable collateral and margin calls (Regulation 3(3)–(4))
Regulation 3(3) requires that the minimum margin requirements be in the form of acceptable collateral. Regulation 3(5) then sets out a detailed list of what qualifies.
Regulation 3(4) introduces a margin maintenance mechanism. If the current market value of acceptable collateral in the customer’s trading account falls below the minimum margin requirements, the exempt financial institution must:
- Contact the customer immediately; and
- Inform the customer to provide additional acceptable collateral to make good the shortfall in value within 2 business days after being so informed.
This is effectively a regulatory margin call requirement with a defined response window. For operational readiness, firms should ensure systems can calculate shortfalls promptly, generate margin call notices, and track the two-business-day cure period.
5. Acceptable collateral: the compliance “menu” (Regulation 3(5))
The Regulations specify acceptable collateral categories, including:
- Cash and gold.
- Equities and convertible bonds listed on the Singapore Exchange Securities Trading Limited (SGX-ST) or on a recognised group A exchange, subject to conditions (including index inclusion or issuer size thresholds).
- Debt securities with specified credit rating thresholds (with separate thresholds for long-term and short-term instruments), including government/public entity or recognised multilateral agency issuers, and other entities meeting minimum rating criteria.
- Collective investment schemes authorised or recognised by the Authority (MAS) under specified provisions, with restrictions (e.g., daily published prices and investment concentration requirements).
- Exchange traded funds and property funds listed on SGX-ST or recognised group A exchanges.
- Exchange-traded contracts on SGX-ST or recognised group A exchanges, where issuer and underlying security shares qualify as specified shares.
- Specified products in an initial public offer to be listed/quoted, if fully paid for by the customer.
- Specified products quoted on the Central Limit Order Book (CLOB) International.
- Other specified products or financial instruments as may be specified by MAS in a notice published on its website.
For legal practitioners, the key point is that “acceptable collateral” is not open-ended. It is a closed list with precise eligibility conditions, including credit rating thresholds and index/issuer criteria. This affects both onboarding documentation and ongoing collateral monitoring.
6. Offences (Regulation 4)
The extract indicates that Regulation 4 creates criminal offences for contraventions of Regulation 3(1)–(4). While the extract truncates the remainder of the offence wording, the structure signals that failure to obtain minimum margin, failure to use acceptable collateral, and failure to issue timely margin calls within the required period can attract regulatory enforcement consequences.
From a practitioner’s standpoint, advising on risk includes not only substantive compliance but also ensuring that internal controls can demonstrate adherence to the specific regulatory triggers and timeframes.
7. The Schedule: minimum margin requirements
The Schedule sets the minimum margin requirements for:
- Contracts for differences, and
- Spot foreign exchange contracts for the purposes of leveraged foreign exchange trading.
Although the extract does not reproduce the numerical or formulaic content of the Schedule, the Schedule is legally binding. Firms must treat it as the authoritative benchmark for the minimum margin levels to be collected from customers.
How Is This Legislation Structured?
The Regulations are concise and structured as follows:
- Part 1 (Enacting formula and commencement): Citation and commencement (Regulation 1).
- Part 2 (Definitions): Regulation 2 defines key terms such as “contract for differences”, “exempt financial institution”, “customer”, and “acceptable collateral” (with further sub-definitions).
- Part 3 (Substantive obligations): Regulation 3 sets the margin requirements, including transitional timing, collateral form, and margin call mechanics.
- Part 4 (Enforcement): Regulation 4 provides for offences for contraventions of specified obligations.
- Schedule: Minimum margin requirements for CFDs and leveraged spot FX.
Who Does This Legislation Apply To?
The Regulations apply to persons who qualify as exempt financial institutions under section 99(1)(a), (b) or (c) of the SFA. The obligations arise when such institutions deal in CFDs or spot foreign exchange contracts for the purpose of leveraged exchange trading.
The margining obligation is owed to customers as defined in Regulation 2. Notably, the definition excludes accredited investors, expert investors, and institutional investors. Therefore, the margin regime is designed to protect retail or non-institutional counterparties who are more exposed to leveraged trading risk.
Why Is This Legislation Important?
These Regulations are important because they operationalise a core investor-protection and market-stability principle: leveraged trading should be supported by adequate collateral. By requiring minimum margin and restricting acceptable collateral, the regime reduces the likelihood that an exempt financial institution’s customer positions become under-collateralised during adverse market movements.
For practitioners, the Regulations also create a clear compliance checklist: (i) determine whether the institution is an “exempt financial institution”; (ii) determine whether the relevant products fall within “contracts for differences” or “spot foreign exchange contracts for leveraged exchange trading”; (iii) ensure margin is collected per contract at or above the Schedule minimums; (iv) ensure collateral is “acceptable” under the statutory list; and (v) implement margin call processes that trigger immediately upon collateral shortfall and require cure within two business days.
Finally, the existence of offences for contraventions underscores that compliance is not merely best practice. Firms should ensure that policies, systems, and evidence trails are capable of demonstrating adherence to the specific regulatory requirements, particularly around collateral valuation and margin call timing.
Related Legislation
- Securities and Futures Act (Cap. 289)
- Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licences) Regulations (including the Fourth Schedule referenced in the definitions)
- Futures Act (listed in the provided metadata)
- Timeline (as referenced in the provided metadata)
- Town Councils Act (listed in the provided metadata)
Source Documents
This article provides an overview of the Securities and Futures (Margin Requirements for Exempt Financial Institutions) Regulations 2018 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.