COMMODITIES BROKING FIRMS (Measures to regulate and monitor business activities)

Dr Ho Tat Kin asked the Minister for Finance how many unlicensed commodities broking firms there are in Singapore; and what measures are being taken by the Government to regulate and monitor the business activities of these firms.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, I would like to point out that it is not accurate to refer to commodities broking firms as being unlicensed since under existing laws, there is no requirement for them to obtain a licence for conducting broking in commodity futures. However, they are properly registered with the Registry of Companies and Businesses. Members may recall that in the Second Reading of the Futures Trading Bill in March 1986, investors were advised that broking firms which offer facilities solely in commodity futures were not subject to the regulations of this legislation. Members of the public who trade with them would therefore have to accept the risk involved. Investors were advised to place their orders through members of the Singapore International Monetary Exchange Ltd (SIMEX) as their activities in commodity markets are closely monitored by the Exchange. As SIMEX members have to meet a high standard of conduct and financial requirements, the interest of investors who trade through them would be protected. Currently, there are 15 SIMEX members which offer services in broking commodity futures in addition to financial futures.