Statute Details
- Title: Securities Industry (Exempt Dealers) (No. 2) Notification
- Act Code: SIA1986-N3
- Authorising Act: Securities Industry Act (Chapter 289), section 40(d)(v)
- Type: Subsidiary legislation / notification (sl)
- Status: Current version as at 27 Mar 2026
- Revised Edition: Revised Edition 1990 (25th March 1992)
- Key Provisions: Section 1 (Citation); Section 2 (when a merchant bank is an exempt dealer; definitions of “Linkage Information” and “Linkage securities”)
What Is This Legislation About?
The Securities Industry (Exempt Dealers) (No. 2) Notification is a targeted regulatory instrument made under the Securities Industry Act (SIA). In plain terms, it creates a specific pathway for certain merchant banks to be treated as “exempt dealers” for the purposes of the SIA—meaning they may be relieved from some regulatory requirements that would otherwise apply to dealers in securities.
The notification is narrow in scope. It does not create a general exemption for all merchant banks or all kinds of securities dealing. Instead, it focuses on a particular situation: where a merchant bank is (i) approved as a financial institution under the Monetary Authority of Singapore Act, and (ii) carries on its main business in a way other than dealing in securities, and (iii) its securities dealing is limited to “Linkage securities” under a defined market linkage arrangement between NASDAQ and the Stock Exchange of Singapore (SES).
Accordingly, the notification is best understood as a compliance “gatekeeper” document. It sets conditions under which a merchant bank’s limited securities activity can be treated as exempt, while still tying that exemption to a specific market infrastructure and defined information flows.
What Are the Key Provisions?
Section 1 (Citation) is straightforward. It provides the short title: the “Securities Industry (Exempt Dealers) (No. 2) Notification.” While not substantive, citation provisions matter for legal drafting and for practitioners when referencing the instrument in submissions, regulatory correspondence, or compliance policies.
Section 2 (When merchant bank is an exempt bank / exempt dealer) is the core of the notification. It states that, for the purpose of section 40(d)(v) of the SIA, a merchant bank that is approved as a financial institution under section 28 of the Monetary Authority of Singapore Act is an exempt dealer if two conditions are satisfied.
First condition (main business not securities dealing): Under section 2(1)(a), the merchant bank must have a main business carried on that is other than the dealing in securities. This requirement is designed to prevent banks whose primary business is securities dealing from using the exemption as a regulatory workaround. Practically, this means that the bank’s corporate strategy, licensing posture, and business lines must support that securities dealing is not the dominant or defining activity.
Second condition (limited dealing in Linkage securities, and approved association): Under section 2(1)(b), the dealing must be by way of dealing in Linkage securities, and the merchant bank must be an Associate of the SES approved to deal in Linkage securities. This is a critical limitation. It means the exemption is not available for dealing in any securities at large; it is confined to securities that have been identified for the NASD–SES Market Linkage arrangement. It also requires the merchant bank to be properly positioned within the SES framework as an approved associate for that specific category of dealing.
Section 2(2) then supplies the interpretive definitions needed to apply the exemption. These definitions are important because the exemption turns on whether the securities and information involved fall within the defined linkage framework.
“Linkage securities” are defined as securities identified for the purposes of the NASD–SES Market Linkage as agreed between NASD and SES “from time to time.” This “from time to time” language signals that the set of eligible securities can evolve. For practitioners, this creates an ongoing compliance task: the bank must monitor whether the securities it deals in remain within the linkage list agreed between NASD and SES.
“Linkage Information” is defined broadly and includes multiple categories of market data and trading metrics. It includes:
- the unique identifiers of NASDAQ and SES market-makers and their individual closing price quotations in each of the Linkage securities;
- the closing inside quotations of each of the Linkage securities;
- the last sale prices of each of the Linkage securities where applicable; and
- the cumulative daily volume of each of the Linkage securities.
This definition is significant because it indicates that the exemption is tied to a market linkage model that depends on structured cross-market information exchange. Even though the notification’s operative exemption is framed around “dealing,” the detailed information definitions suggest that the regulatory scheme expects linkage dealing to be conducted within a defined information and quotation ecosystem.
The notification also defines key terms used in the linkage framework, including:
- NASD (National Association of Securities Dealers, Inc.), including its corporate subsidiaries NASDAQ, Inc. and NASD Market Services, Inc.;
- NASDAQ (the NASDAQ Automated Quotation System operated by NASDAQ, Inc.);
- NASDAQ market-makers (NASD member firms registered to make a market in Linkage securities by entering quotations in NASDAQ);
- NASD Market Services, Inc. (the subsidiary that processes last sale price information);
- “NASD–SES Market Linkage” (the programme and stock market facilities through which linkage information compiled from market-maker data is exchanged between NASD and SES for use in their respective markets, including facilities of NASDAQ, Inc. and NASD Market Services, Inc.); and
- SES (Stock Exchange of Singapore Ltd.).
From a legal practice perspective, these definitions reduce ambiguity. They also anchor the exemption to specific institutional actors and data processing arrangements. If the market linkage programme changes materially (for example, if the relevant facilities or data processors are replaced), practitioners should assess whether the defined terms still capture the new structure or whether a new notification or amendment is required.
How Is This Legislation Structured?
This notification is structured as a short instrument with:
- Section 1: Citation (how the notification is referred to).
- Section 2: The operative provision setting out when a merchant bank qualifies as an exempt dealer for the purposes of the SIA, followed by a definitions section in subsection (2) that clarifies “Linkage Information,” “Linkage securities,” and the NASD/NASDAQ/SES linkage framework.
There are no separate “Parts” or extensive schedules in the extract provided. The legal effect is concentrated in section 2, with definitions supporting the application of the exemption.
Who Does This Legislation Apply To?
The notification applies to merchant banks that are approved as financial institutions under section 28 of the Monetary Authority of Singapore Act. In other words, the exemption is not available to every entity that might be described as a merchant bank in a commercial sense; it is limited to those with the required MAS approval status.
It also applies only where the merchant bank’s securities dealing meets the notification’s conditions: the merchant bank’s main business must not be securities dealing, and its securities dealing must be limited to Linkage securities under the NASD–SES Market Linkage, with the merchant bank being an Associate of the SES approved to deal in those linkage securities.
Why Is This Legislation Important?
Although the notification is brief, it has practical regulatory significance. In Singapore’s securities regulatory framework, “dealer” status can trigger licensing and compliance obligations under the Securities Industry Act and related subsidiary legislation. By carving out a defined exemption, the notification enables certain merchant banks to participate in a specific cross-market dealing activity without being treated as full securities dealers for the relevant regulatory purpose.
For practitioners advising financial institutions, the key importance lies in the conditional nature of the exemption. The notification is not a blanket relief; it is a carefully bounded permission. Legal teams must therefore conduct a structured assessment against each requirement: MAS approval status, the “main business” criterion, the linkage securities limitation, and the SES associate approval requirement.
In addition, the definitions of “Linkage securities” and “Linkage Information” highlight that compliance is not only about corporate status but also about the market data and securities categories involved. Because “Linkage securities” are identified “from time to time” by agreement between NASD and SES, ongoing monitoring is essential. A bank that continues to deal in securities that fall outside the linkage definition could risk losing the exemption and thereby becoming non-compliant.
Related Legislation
- Securities Industry Act (Chapter 289), in particular section 40(d)(v)
- Monetary Authority of Singapore Act (Cap. 186), in particular section 28 (approval of financial institutions)
Source Documents
This article provides an overview of the Securities Industry (Exempt Dealers) (No. 2) Notification for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.