COMMODITIES TRADING FIRMS (Regulation)

Mr Noris Ong Chin Guan asked the Minister for Trade and Industry if his Ministry has any plans to curb unregulated commodities trading firms that advertise in the newspapers for job applicants and subsequently apply strong arm tactics on the respondents to invest in commodities trading.

The Minister for Trade and Industry (BG George Yong-Boon Yeo): Mr Speaker, Sir, trading in commodities futures is regulated under the Commodities Futures Act. Currently, this Act covers only commodities that are traded on the Singapore Commodity Exchange (SICOM), namely, rubber and coffee.

Firms that trade in other commodities are not regulated. As Mr Ong and other Members of the House have pointed out, some of these firms, commonly known as bucket shops, have enticed the public to open trading accounts with them. They engage in trading practices that are against the interest of investors.

MTI will be proposing amendments to the Commodities Futures Act to extend the Act to cover all commodities and associated derivatives, and to require any firm that wishes to trade in commodities to be licensed. However, to ensure that, obviously, bona fide traders are not inconvenienced, several categories of traders (other than those trading in rubber and coffee) will be exempted from the licensing requirement. These categories will include principal-to-principal traders, over-the-counter traders and banks. The proposed amendments will help to stamp out bucket shops, without overly inconveniencing bona fide traders. In drafting the new legislation, we welcome the views of all Members of the House and the public.

Mr Noris Ong Chin Guan (Nominated Member): Sir, as part of the review of the legislation, would the Minister also consider legislating a cooling off period from the date of signing the agreement, so that a prospective investor will have more time to consider his intentions before activating the investment account?

BG George Yong-Boon Yeo: Sir, we can consider such a provision. But we have got to look at it from all angles to see whether it sets a precedent for other transactions which may become a problem. But we will consider it.