1B.3 Market conduct
The prohibitions that keep markets fair, efficient, orderly and transparent. The examination tests which provision catches which behaviour, and the extraterritorial reach of the rules.
3.1 Scope
Section titled “3.1 Scope”Market conduct rules apply to acts in Singapore involving products listed or quoted inside or outside Singapore, and to acts outside Singapore involving products listed or quoted on a Singapore organised market. This extraterritorial reach is a frequent examination point.
3.2 Objective
Section titled “3.2 Objective”The rules protect fair, efficient, orderly and transparent markets — the same objective the anti-manipulation, disclosure and insider-trading provisions enforce from different angles.
3.3 False trading and market rigging
Section titled “3.3 False trading and market rigging”Prohibited conduct includes creating an appearance of active trading, buying and selling without changing beneficial ownership, acting recklessly in a way likely to create a false or misleading market appearance, and transactions intended to mislead about price or market activity. A wash sale is a transaction with no real change in beneficial ownership. Matching orders are coordinated buy/sell orders entered with knowledge of the other side to create a false market.
3.4 Securities-market manipulation
Section titled “3.4 Securities-market manipulation”It is prohibited to effect two or more transactions in securities or securities-based derivatives that raise, lower, maintain or stabilise price with the intention of inducing others to trade. Trading through several customer accounts or using fictitious orders to support a price can be manipulative.
3.5 False or misleading statements and information
Section titled “3.5 False or misleading statements and information”It is prohibited to disseminate materially false or misleading information likely to induce subscription, buying or selling, or raise/lower/maintain/stabilise a price, where the person knows or should know it is false or is reckless as to truth. The medium may be research, newsletters, electronic communications, media or word of mouth.
3.6 Fraudulently inducing dealing
Section titled “3.6 Fraudulently inducing dealing”A person must not induce or attempt to induce dealing through a knowingly misleading/false/deceptive statement, dishonest concealment of a material fact, reckless publication, or storing/recording materially false information.
3.7 Manipulative and deceptive devices
Section titled “3.7 Manipulative and deceptive devices”Section 201 is a broad anti-fraud rule. It covers schemes or devices to defraud, practices likely to operate as fraud or deception, materially false statements, and omissions of material facts needed to make statements non-misleading. Spoofing-like conduct in a pre-open or pre-close phase—placing large orders with no intention to execute and cancelling them to move the price—is the type of conduct the section captures.
3.8 Dissemination of information about illegal transactions
Section titled “3.8 Dissemination of information about illegal transactions”It is an offence to circulate information that a price will rise, fall or be maintained because of an illegal transaction. An illegal transaction includes false trading, rigging, manipulation, false statements, fraudulent inducement and deceptive devices. Liability may arise where the person or an associate entered or purported to enter the illegal transaction, or received/expected a benefit for circulating the information.
3.9 Insider trading
Section titled “3.9 Insider trading”Inside information is information that is not generally available, would be likely to materially affect price or value, and would influence persons who commonly invest. Generally available information is observable; publicised in a way likely to reach investors with a reasonable dissemination period elapsed; or a reasonable deduction/inference from such information.
- Connected persons include officers, substantial shareholders, and people whose professional/business relationship gives access to price-sensitive information — lawyers, accountants, bankers, investment bankers, public-relations advisers, consultants and transaction counterparties. Possession of non-public information and the statutory presumptions are central.
- Non-connected persons may still be liable if they know the information is non-public and price-sensitive — regardless of the source and regardless of any intention not to use it.
- Persons must not trade, procure another to trade, or communicate the information to facilitate trading.
Exceptions/defences: specified CIS redemptions; underwriter activity; legally required transactions or communications; corporate/partnership knowledge rules where Chinese walls apply; a person’s own transaction knowledge; corporate own-transaction knowledge; parity of information; and the broker-dealer exception (instruction unsolicited, no advice given, principal not an associate). If unsure, stop and consult compliance.
3.10 Securities hawking
Section titled “3.10 Securities hawking”Securities hawking is offering securities, securities-based derivatives or CIS units in an unsolicited meeting. It is designed to prevent pressure selling and “boiler-room” practices. The prohibition does not apply in the same way to qualifying offers to institutional or accredited investors and certain products not requiring a prospectus.
3.11 Other market conduct rules
Section titled “3.11 Other market conduct rules”- Short selling: a covered short sale has borrowed or arranged delivery; an uncovered/naked short sale does not. Short selling can improve liquidity and price formation but can increase volatility and settlement risk. CDP may conduct buying-in and charge purchase cost plus the applicable penalty for failed delivery.
- Marking sell orders: a seller must identify a short-sale order and quantity/value before or when placing it. If an order is partly owned and partly short, split and mark the relevant portions. SGX publishes aggregated short-sale information.
- Short positions: when a net short position crosses the MAS threshold, report identity/business information, position and changes.
- Specified-product borrowing/lending: collateral must generally be at least 100% of market value, marked to market daily, and the agreement must cover capacity (agent/principal), title transfer, collateral, corporate actions, valuation/margin shortfalls, return, termination/default, fees, governing law and jurisdiction. Explain risks and obtain written understanding for non-exempt customers; exemptions can apply for accredited, expert and institutional investors.
3.12 Penalties
Section titled “3.12 Penalties”Market misconduct may result in criminal fines/imprisonment, civil penalties, compensation for other participants’ losses, licence suspension/revocation, disciplinary action and reputational damage. Learn the categories and consequences — the amount of a penalty is not tested.
Exam cues
Section titled “Exam cues”- Extraterritorial reach: acts in Singapore on foreign-listed products, and acts abroad on Singapore-listed products, are both caught.
- Intent separates the provisions: manipulation needs intention to induce trading; false trading may be reckless; section 201 is the broad anti-fraud catch-all.
- Insider trading: connected vs non-connected. A non-connected person can be liable merely knowing the information is non-public and price-sensitive, even without intent to use it.
- Generally available requires a reasonable dissemination period to have elapsed.
- Hawking targets the unsolicited meeting; qualifying offers to institutional/accredited investors are outside it.
- Trap: the private or public nature of the information — not the source — decides non-connected liability.