Dear valued customer,

At OCBC Securities, we always have your interest at heart. While we strive to make our internet trading portal iOCBC as user friendly as possible for you, we would also want to highlight certain trading practices that are prohibited by law under the Securities and Futures Act (“SFA”).

These practices could possibly be deemed as offences under Section 197 of the SFA on false trading and market rigging transaction. The following illustrates the prohibited practices where there is a No change in beneficial ownership of securities.

Example 1: Customer A has one trading account and used the same trading account number to trade

Customer A places an order via the Internet to buy x number of shares in Company XYZ at $0.50 in the market. Following the first order placed, he later keyed-in another order, via the Internet, to sell shares in Company XYZ at the same price in the market. The sell order was matched (completely or partially) against his own buy order in his trading account in the market. The reverse also applies where customer A’s sell order matches against his subsequent buy order.

Example 2: Customer B has multiple accounts (Cash / SBL / Margin) opened with OSPL and used a different trading account number to trade

Customer B places an order under his cash account, via the Internet, to buy x number of shares in Company XYZ at $0.50 in the market. Following the first order placed, he keyed-in another order, under his SBL / margin account (i.e. different trading account number), via the Internet, to sell shares in Company XYZ at the same price in the market. The sell order was matched (completely or partially) against his own buy order in his cash accounts in the market. The reverse also applies where customer B’s sell order in his cash account matches against his subsequent buy order in his other accounts.

The above examples have the effect of creating a “wash sale”. A wash sale is a purchase or sale of any securities that does not involve a change in the beneficial ownership of those securities. Section 197 (1) of the SFA prohibits any person from creating or doing anything that is intended or likely to create a false or misleading appearance of active trading in any securities on a securities market, or with respect to the market for, or the price of, such securities. Wash sale could have the effect of creating such false or misleading appearances.

Under Section 197(3) read with section 197(4) of the SFA, a person engaging in wash sales in securities is deemed to have created a false or misleading appearance of active trading in securities on a securities market unless the person establishes that the purpose for which he conducted the wash sale was not, or did not include, the purpose of creating a false or misleading appearance of active trading in securities on a securities market.

Apart from the above, there are some other market conduct offences under the SFA which apply generally to a person as follows:

SFA 198: Securities market manipulation

SFA 199: False or misleading statements, etc.

SFA 200: Fraudulently inducing persons to deal in securities

SFA 201: Employment of manipulative and deceptive devices

SFA 202: Dissemination of information about illegal transactions

SFA 204: PENALTIES


Alternatively, for updates on regulatory requirement, you may click here to refer to SGX website.

We’ll like to advise you to abstain from such prohibited market conduct, Happy trading!!!