FORWARD TRADING BY MEMBERS OF THE STOCK EXCHANGE OF SINGAPORE

Mr Chiam See Tong asked the Minister for Finance whether the Monetary Authority of Singapore was aware of the practice of forward trading by members of the Singapore Stock Exchange.

Dr Hu Tsu Tau: The Monetary Authority of Singapore (MAS) first became aware of the practice of forward trading in January 1985. This arose as a result of information received by the MAS on malpractices within the stockbroking company, Alfa-Pacific. In the course of investigations into the financial affairs of the firm, Alfa-Pacific was found to have over-traded and had poor credit and internal controls. The firm was also found to have entered into a number of forward contracts. This was referred to the Stock Exchange of Singapore (SES) for action. The SES' view at that time was that Alfa-Pacific's forward trading was not against SES rules. MAS had no powers to intervene in changing SES rules, but would have such powers in the proposed new Securities Industry Act which was then being drafted.