According to Appendix B, paragraph 6.7(e) of the Code on Collective Investment Schemes (CIS Code), collateral received by a scheme for the purpose of efficient portfolio management techniques like securities lending must not be issued by the counterparty or its related corporations. In the scenario, the collateral consists of bonds issued by the counterparty’s parent company, which is a ‘related corporation’. This creates a concentration of risk, as the failure of the counterparty could be linked to the failure of its parent, rendering the collateral worthless precisely when it is needed most. The other options are incorrect because the scenario explicitly states that the collateral’s value exceeds the lent securities (addressing 6.7(c)), it is held by an independent custodian (addressing 6.7(f)(ii)), and it is marked-to-market daily (addressing 6.7(a)). The primary and definitive breach is the origin of the collateral.

According to the Securities and Futures (Licensing and Conduct of Business) Regulations, there are distinct timelines for different compliance actions. Regulation 4 stipulates that when a representative of a Licensed Fund Management Company (LFMC) acquires an interest in securities, the particulars must be entered into the register of securities within 7 days of the acquisition date. In the scenario, the acquisition was on June 1st, making the deadline June 8th. The information was only provided on June 10th, resulting in a breach. Separately, Regulation 4A governs the location of the register. When the place for keeping the register is changed, the LFMC must notify MAS within 14 days of the change. The relocation occurred on June 3rd, setting the notification deadline for June 17th. Notifying MAS on June 20th constitutes a second, distinct breach. Therefore, the firm committed two separate regulatory violations by missing both the 7-day deadline for the register entry and the 14-day deadline for the location change notification.

The scenario describes a representative not only circulating unverified and misleading information but also actively using it to persuade clients to purchase securities. This action falls specifically under Section 200 of the Securities and Futures Act (SFA), which addresses the fraudulent inducement of persons to deal in securities. The key elements of this offence are present: the representative made a reckless statement or promise that was misleading, and this was done with the clear intent to induce clients to trade. While the action also involves disseminating a false statement (an offence under SFA Section 199), Section 200 is more precise because it captures the direct act of inducement. SFA Section 199 focuses more broadly on the circulation of information that is likely to affect the market or induce trading, whereas Section 200 targets the specific act of persuading someone to trade based on false pretences. The other options are incorrect as the scenario does not provide evidence of a coordinated ‘pump and dump’ scheme (which requires pre-positioning and selling at a peak) or manipulation through a series of transactions.

The core of this issue lies in the fund manager’s intent and the nature of the actions taken. The manager’s plan to place buy orders without the intention of fulfilling them, solely to create an artificial impression of market demand, is a classic example of a deceptive scheme. This action falls directly under Section 201 of the Securities and Futures Act (SFA), which prohibits the employment of any device, scheme, or artifice to defraud, or engaging in any act or practice that operates as a fraud or deception upon any person in connection with the sale of securities. The primary goal was to deceive the market about the true state of supply and demand to benefit the manager’s large sell order. This is distinct from fraudulently inducing persons to deal under SFA Section 200, which typically involves making a knowingly false or misleading statement (like in a research report or circular) to persuade specific individuals to trade. Here, the deception is enacted through market orders themselves, a practice designed to mislead the entire market, which is precisely what the ‘catch-all’ provision of SFA 201 is designed to capture.

Under the regulatory framework governed by the Monetary Authority of Singapore (MAS), the status of an appointed representative is considered to have ceased if the representative has been inactive for a continuous period of one month without the principal notifying MAS. In the scenario described, the representative’s two-month sabbatical means their status automatically ceased after the first month of inactivity, as the LFMC failed to inform MAS. The LFMC’s internal approval of the leave does not negate this regulatory requirement. Separately, the Securities and Futures (Licensing and Conduct of Business) Regulations mandate that a representative must inform their principal of any change in personal particulars, including their residential address, within 7 days of the change. The representative’s failure to report the move constitutes a distinct regulatory breach. The principal’s obligation to notify MAS within 14 days only begins after the representative has fulfilled their duty to inform the principal.

Under the Securities and Futures Act (SFA), specifically Section 102, a Licensed Fund Management Company (LFMC) is mandated to maintain books that sufficiently explain its business transactions and financial position. These records must be retained for a minimum period of five years. The regulations explicitly require the retention of ‘Every order prepared or received in the course of business of the LFMC’. Therefore, a policy to systematically delete original client order instructions after trade settlement is a direct violation of this core requirement, as the order forms a fundamental part of the transaction audit trail. The other options describe situations that are not necessarily breaches. The SFA does not prescribe a single format or location for all records, so storing different documents (like agreements and powers of attorney) in different formats or locations is permissible as long as they are secure and accessible. Similarly, the form of documentation for an underwriting’s allotment basis is not strictly defined; an internal memorandum can suffice if it contains the required information. Lastly, the obligation to retain marketing literature applies to materials that have been ‘distributed’ to clients or prospects, not to internal drafts that were never used.

According to Appendix B, paragraph 4.5 and 4.6 of the Code on Collective Investment Schemes, the back-testing outcomes are classified into three zones. The Red Zone is defined as having 10 or more exceptions in a sample of 250 observations. In this scenario, with 11 exceptions, the scheme has entered the Red Zone. Paragraph 4.6(c) explicitly states that when a scheme enters the Red Zone, the manager must stop adding new positions and wind down existing positions to reduce market risks. Furthermore, it notes that the Authority may require the scheme to revert to the Commitment Approach. The other options describe actions relevant to different zones or situations. Investigating and proposing remedial actions is the requirement for the Yellow Zone (5-9 exceptions). Ceasing trading in specific instruments relates to a model being found inadequate for those instruments, which is a different issue from an excessive number of general back-testing exceptions. Continuing normal operations is incorrect as the Red Zone mandates immediate risk-reduction actions.

According to the principles outlined in the SGX-ST Listing Manual, specifically Appendix 7.1, all public announcements must be factual, clear, balanced, and fair. The correct statement adheres to these principles by presenting the positive news (completion of the initial research phase) while immediately qualifying it with the significant risks and uncertainties involved (regulatory approvals, further testing). It responsibly states that the financial impact cannot be assessed, which is a crucial element of fair disclosure when future outcomes are uncertain. In contrast, a statement implying a future favourable effect through negative phrasing is explicitly discouraged as it can mislead investors. Using promotional or overly optimistic language like ‘breakthrough’ or ‘revolutionize’ without a solid factual basis is also against the guidelines, as it aims to excite rather than inform. Lastly, while selective disclosure to partners is permissible under confidentiality, an announcement that merely mentions this without providing the market with balanced information about the development itself fails to meet the core objective of keeping all investors equally and adequately informed.

According to Chapter 3.3 of the Code on Collective Investment Schemes, if a manager of an authorised Collective Investment Scheme (CIS) intends to delegate the management of more than 10% of the scheme’s Net Asset Value (NAV) to a sub-manager located abroad, a specific condition must be met. The Singapore-based manager, together with its related corporations, must be managing a minimum of SGD 500 million in discretionary funds in Singapore. In the given scenario, Lion City Asset Management (LCAM) proposes to delegate 15% of the NAV, which exceeds the 10% threshold. However, LCAM and its related corporations only manage SGD 400 million in discretionary funds in Singapore, which is below the required SGD 500 million. This shortfall is the primary regulatory obstacle. The regulations do not mandate that the foreign sub-manager must have a physical presence in Singapore, nor is there a minimum total NAV for the CIS to be eligible for sub-management. The trustee’s role is to ensure proper oversight and controls are in place for the delegation, not to co-sign agreements based on its own international presence.

According to the Monetary Authority of Singapore’s (MAS) guidelines for Fund Management Companies (FMCs), the requirements for Professional Indemnity Insurance (PII) vary based on the type of licence held. For a Retail Licensed Fund Management Company (Retail LFMC), MAS may impose a licence condition making it mandatory to obtain PII that meets specific minimum requirements. However, for an Accredited/Institutional LFMC (A/I LFMC) and a Registered Fund Management Company (RFMC), the stance is different. These entities are strongly encouraged, but not mandated, to maintain adequate PII coverage. A critical and universal requirement for all FMCs, regardless of their PII status, is transparency. They must disclose to all potential and existing customers whether they have PII arrangements in place or if they lack such coverage. Therefore, the primary obligation for an A/I LFMC is the combination of being strongly encouraged to have PII and the absolute requirement to disclose its status to clients.

According to Appendix B of the Code on Collective Investment Schemes (CIS Code), a fund manager is permitted to use the Value at Risk (VaR) Approach to calculate a scheme’s global exposure as an alternative to the standard Commitment Approach. However, paragraph 3.11 of the Appendix explicitly states that this is ‘subject to prior consultation with the Authority’. Furthermore, paragraph 3.14 details the comprehensive information that must be submitted to the Monetary Authority of Singapore (MAS) within a risk management process document. This document must describe the VaR methodology, risk management systems, valuation processes, and details of the personnel and technology involved. Therefore, engaging with MAS and providing this detailed documentation is a mandatory step before implementation. The other options are incorrect. The global exposure limit remains 100% of the scheme’s Net Asset Value as per paragraph 3.1, and switching the calculation method does not automatically change this limit. While the manager must have policies on staff expertise (paragraph 3.14(g)), the Code does not mandate a specific professional qualification. Finally, while independent verification of the model is a point to be included in the submission (paragraph 3.14(d)), the Code does not impose a rigid requirement for a specific certification or a flawless five-year back-testing record.

Under the CPF Investment Scheme (CPFIS) admission criteria, a representative for a recognised Collective Investment Scheme (CIS) has specific obligations distinct from the foreign Fund Management Company (FMC) it represents. The representative must be a corporate entity and a member of the Investment Management Association of Singapore (IMAS). Crucially, its role involves ensuring the foreign FMC adheres to the CPFIS Guidelines (CPFIG) and other reporting requirements set by the CPF Board. To formalise this, the representative must provide the CPF Board with an indemnity mechanism, such as a back-to-back agreement. This agreement ensures the representative has legal recourse to the foreign FMC if the latter fails to perform its duties with due care. The other options are incorrect because they either confuse the representative’s duties with the FMC’s direct admission criteria (such as track record and assets under management), misstate the nature of the compliance oversight, or invent obligations like guaranteeing investment performance or needing a separate CMS licence for representation.

The most accurate characterization of this coordinated activity is the employment of a manipulative and deceptive device under Section 201 of the Securities and Futures Act (SFA). This provision is a broad, ‘catch-all’ rule designed to prohibit any scheme or practice that operates as a fraud or deception on the market in connection with the sale or purchase of securities. The scenario describes a multi-faceted scheme that combines two deceptive actions: the dissemination of a misleading research note and the execution of manipulative trades to create a false impression of market activity and price trends. This entire ‘course of business’ is intended to deceive other market participants and artificially inflate the share price for the fund’s benefit, fitting squarely within the definition of a manipulative and deceptive device. While the misleading report could be seen as fraudulently inducing persons to deal (SFA Section 200), the ‘manipulative device’ classification is more comprehensive as it covers the entire fraudulent scheme, including the trading pattern. Legitimate trading strategies do not involve deception, and disclaimers in a report do not provide a safe harbour for a deliberate plan to manipulate the market.

According to the MAS framework for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), a Capital Markets Services (CMS) licence holder must apply a Risk-Based Approach (RBA) to client onboarding. This approach requires assessing multiple risk factors to determine the overall risk profile of a client. In this scenario, while the client’s source of wealth appears legitimate and originates from a low-risk jurisdiction, several high-risk factors are present. These include the use of a Personal Investment Company (PIC), which is categorized as a high-risk business activity, and its incorporation in the British Virgin Islands (BVI), a jurisdiction known for shell companies and secrecy. Furthermore, the involvement of a third-party intermediary from a country with known AML/CFT deficiencies adds another layer of risk and complexity. The RBA dictates that the presence of significant high-risk factors, such as complex ownership structures and dealings with high-risk jurisdictions, necessitates the application of Enhanced Due Diligence (EDD). EDD involves more intensive verification measures beyond standard due diligence. Therefore, the legitimate source of wealth does not automatically classify the client as low-risk; the structural and jurisdictional risks are overriding concerns that mandate a higher risk rating and more stringent scrutiny.

The Code on Collective Investment Schemes (Chapter 3) outlines strict rules regarding transactions with related parties to prevent conflicts of interest. The manager of a CIS is generally prohibited from investing the scheme’s assets in securities issued by the manager or its related corporations. However, a specific exception exists: such an investment is permissible if the securities are constituents of the CIS’s reference benchmark, and that benchmark is constructed by an independent party. In this scenario, investing in the shares of the related bank is allowed because its stock is part of the independently constructed benchmark the fund tracks. Lending money to a related corporation is explicitly prohibited, and the exception for deposits made with licensed financial institutions in the ordinary course of business does not cover unsecured loans. Using fund assets to pay for marketing and promotional materials like brochures is also forbidden, as these costs must be borne by the manager, not the fund participants. Finally, the purchase of real estate assets from a related corporation is prohibited to avoid potential overvaluation and self-dealing, even if an independent valuation is obtained.

A Fund Management Company (FMC) intending to offer Fund Management Accounts (FMAs) to CPF members must adhere to specific procedural guidelines set by the CPF Board. While the FMC does not need to seek approval for each individual FMA mandate, it is required to notify the CPF Board before it begins offering the service. This involves writing to the Board and providing a copy of its standard investment management agreement and related forms at least two weeks before the intended launch. The primary purpose of this advance notification is operational; it allows the CPF Board sufficient time to coordinate with the agent banks to establish the necessary procedures for processing the withdrawal of CPF funds for these new FMA services. The other options are incorrect. FMCs are explicitly not required to submit a separate application for each individual FMA client. The Risk Classification System (RCS) is designed for Collective Investment Schemes (CIS) like unit trusts to be included under the CPFIS, not for bespoke, segregated FMAs. While FMAs must be managed according to the client’s risk profile and CPFIS Investment Guidelines, they are not formally classified under the RCS. Lastly, while proper disclosure is mandatory, the regulations allow FMCs to follow industry practice for FMA disclosures, and the critical pre-launch step is the operational notification to the CPF Board, not a formal pre-approval of the disclosure documents.

The scenario describes a situation where a fund manager knowingly enters into an arrangement to help a client manage funds that are reasonably suspected to be proceeds of crime. The key action is structuring an investment that facilitates the client’s continued control over these illicit benefits, while obscuring the client’s direct ownership. This directly corresponds to the offence under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) related to assisting in the retention or control of criminal benefits by arrangement. The fund manager’s involvement in creating this structure, even without directly handling the initial illicit funds, constitutes the offence. The other options describe different offences under the CDSA. Laundering one’s own benefits is incorrect as the funds belong to the client. Acquiring property for inadequate consideration is not the primary action; the manager is facilitating an arrangement, not acquiring the assets for himself. Assisting to avoid prosecution by transferring property is a separate offence; the scenario focuses on an arrangement to retain and use the funds, which is a more specific form of facilitation.

According to the Securities and Futures (Licensing and Conduct of Business) Regulations (SFR-LCB), when a Licensed Fund Management Company (LFMC) intends to deposit a customer’s money or assets denominated in a foreign currency with an overseas custodian, there are specific prerequisite conditions that must be satisfied. The LFMC must first obtain the customer’s prior written consent for this arrangement. Concurrently, the LFMC must ensure that the chosen overseas custodian is appropriately regulated in its home jurisdiction. This means the custodian must be licensed, registered, or authorised to conduct either banking business (for a trust account) or custody services (for a custody account) in that country. While conducting due diligence on the custodian’s suitability and obtaining written acknowledgements regarding the trust nature of the account and the waiver of set-off rights are also mandatory obligations, they follow the fundamental requirements of client consent and the custodian’s authorised status. The requirement for an overseas custodian to have a physical presence or branch in Singapore is not stipulated in the regulations.

According to the IMAS Code of Ethics and Standards of Professional Conduct, specifically Standard 3.11.3, a distribution agreement must contain several key obligations to ensure ethical and compliant operations. One of the most critical is an undertaking by the distributor to observe the prohibition against ‘late trading’. Late trading is the practice of placing orders to buy or redeem fund units after the fund’s Net Asset Value (NAV) for the day has been determined, but at that day’s price. This practice is detrimental to the fund’s integrity and unfair to other investors as it allows a trader to capitalize on information released after the market’s close. To prevent this and safeguard the integrity of the NAV calculation, the agreement must explicitly obligate the distributor to adhere to all operational dealing deadlines and cut-off times. The other options, while representing sound business or compliance practices, do not specifically address the risk of late trading. Verifying the source of funds is a crucial Anti-Money Laundering (AML) procedure (as per Standard 3.11.3(e)), but its primary purpose is to prevent illicit financial flows, not to ensure fair trade timing. A general compliance report is a broad oversight measure, and providing product training is important for competent sales, but neither is the specific contractual control required to prevent the abuse of trade cut-off times.

A Fund Management Company (FMC) that exclusively serves accredited investors and/or institutional investors is classified as a Licensed Accredited/Institutional Fund Management Company (A/I LFMC). This licensing category has specific concessions and requirements tailored to the sophisticated nature of its client base. The investment vehicle itself is a Collective Investment Scheme (CIS) as defined under the Securities and Futures Act (SFA). However, when a CIS is offered exclusively to accredited investors under a private placement exemption, it does not need to be an ‘Authorised CIS’ under Section 286 of the SFA. The authorisation process and the accompanying prospectus requirements are primarily designed to protect retail investors. Therefore, offering the fund on a private basis to a sophisticated client group bypasses the need for public authorisation. The other options are incorrect because a fund offered privately to accredited investors does not automatically need to be an ‘Authorised CIS’; compliance with CPFIS guidelines is a separate matter and not a default requirement for such funds; and licensing for fund management falls under the SFA, not the Financial Advisers Act (FAA), with the vehicle being a CIS, not an ILP.

This question assesses the understanding of the extra-territorial application of the Securities and Futures Act (SFA), specifically under Section 339 and the associated MAS Guidelines. The ‘Effects Doctrine’ extends the SFA’s reach to acts conducted wholly outside Singapore if they have a ‘substantial and reasonably foreseeable effect’ in Singapore. While MAS generally does not regulate foreign entities responding to unsolicited inquiries, this safe harbour has limitations. The key issue here is the transition from a passive, unsolicited relationship to an active solicitation of new business. The initial contact from the client who moved to Singapore was unsolicited. However, when the foreign fund manager proactively markets a new, substantially different product (the ‘Global ESG Fund’) to this client now residing in Singapore, it is no longer merely servicing an existing relationship. This action constitutes an offer of a new investment product directed at a person in Singapore, making the effect ‘reasonably foreseeable’. This active solicitation of new business from a person in Singapore brings the activity within the regulatory purview of the SFA, irrespective of the initial relationship’s unsolicited nature. The other options represent common misinterpretations of the rules. The unsolicited exemption is not a blanket cover for all future activities. The ‘substantial effect’ is not solely determined by the number of clients but also by the nature of the act and its potential impact on investor protection. Lastly, the absence of Singapore-specific marketing or SGD pricing does not automatically negate a ‘reasonably foreseeable’ effect, as direct communication with a client in Singapore is a strong indicator.

The Securities and Futures (Financial and Margin Requirements for Holders of CMS Licences) Regulations, or SFR-FMR, specifically outlines the financial stability requirements for Capital Markets Services (CMS) licence holders, including fund managers. This regulation provides the detailed framework and formulas for calculating minimum Base Capital and the Total Risk Requirement (TRR), which are crucial for ensuring a firm can meet its financial obligations and withstand market shocks. While the Securities and Futures Act (SFA) is the parent legislation that establishes the overall regulatory regime, the specific, granular rules for financial computations are delegated to subsidiary legislation like the SFR-FMR. The Securities and Futures (Licensing and Conduct of Business) Regulations (SFR-LCB) govern operational conduct, client asset segregation, and risk management policies, but not the specific capital adequacy calculations. The Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations (SFR-CIS) pertain to the rules for offering and marketing investment funds to the public, such as prospectus requirements, not the financial solvency of the fund management company itself.

According to the Securities and Futures (Licensing and Conduct of Business) Regulations, specifically Regulation 33 concerning the lending of a customer’s securities, a Licensed Fund Management Company (LFMC) must adhere to specific protocols. When lending securities belonging to a customer, the LFMC is required to obtain the customer’s explicit written consent for the transaction. This requirement applies to all customers, including accredited investors. Additionally, the LFMC must establish a formal written agreement that clearly sets out the terms and conditions of the lending arrangement. While there is a general requirement to explain the risks involved, this particular obligation is waived when the customer is an accredited investor. Therefore, the two essential actions are securing written consent and having a written agreement in place. Suggesting that no consent is needed for an accredited investor is incorrect, as is stating that a risk explanation is mandatory in this specific scenario.

According to the MAS Notice on Recommendations on Investment Products (FAA-N16), when a retail client has been assessed to possess the requisite knowledge under the Customer Knowledge Assessment (CKA) but chooses to decline the offer of financial advice, the representative is obligated to perform several key actions. A critical part of this process is to provide a written notification to the client outlining the consequences of their decision. This notification must explicitly state that the responsibility for ensuring the suitability of the Collective Investment Scheme (CIS) rests solely with the client. Furthermore, it must clearly inform the client that by proceeding without advice, they will not be able to rely on section 27 of the Financial Advisers Act to file a civil claim against the financial adviser for any loss suffered, should the CIS later be deemed unsuitable. Simply documenting the waiver or providing a product summary is insufficient to meet this specific regulatory requirement. The duty to inform the client of this significant legal consequence lies directly with the representative at the point of interaction.

The Singapore financial regulatory framework comprises a hierarchy of instruments with varying legal force. Statutory laws, such as the Securities and Futures Act (SFA), are legally binding, and their contravention constitutes a criminal offense. Below this are instruments like Codes and Practice Notes issued by the Monetary Authority of Singapore (MAS). A Practice Note, as mentioned in the scenario regarding the retail scheme application, provides guidance on administrative procedures. While failure to follow a Practice Note is not in itself a criminal offense, it can attract regulatory attention and may have consequences if the procedure is also mandated by law or regulation. Separately, industry bodies like the Investment Management Association of Singapore (IMAS) issue their own codes and guidelines. The IMAS Guidelines for the Disclosure of Expense Ratios are an example. These are considered best practices and are mandatory for IMAS members. Non-compliance does not have the force of law but can lead to sanctions from IMAS, such as a reprimand or censure, to uphold professional standards. Therefore, the FMC’s actions are best described as failures to adhere to administrative guidance and industry standards, which carry potential regulatory and industry-level repercussions but are distinct from criminal offenses.

The primary risk associated with corporate structures that obscure the Ultimate Beneficial Owner (UBO), such as those using multiple offshore layers and bearer shares, is the potential for sanctions evasion. Financial institutions, including Capital Markets Services (CMS) licence holders, are obligated under regulations like those issued by the Monetary Authority of Singapore (MAS) to prevent transactions with sanctioned individuals, entities, or countries. These complex structures are frequently used to hide the involvement of Specially Designated Nationals (SDNs) or other prohibited parties. A failure to identify the true UBO and subsequently transacting with a sanctioned party constitutes a serious regulatory breach, leading to significant fines and legal repercussions. While risks like processing fraudulent instructions or internal fraud are valid operational concerns, the fundamental compliance threat posed by an opaque ownership structure is the unwitting facilitation of prohibited financial activities, directly contravening anti-financial crime laws and regulations.

According to the principles outlined in the SGX-ST Listing Manual (Appendix 7.1), public announcements must be balanced, fair, and factual. They should avoid presenting favourable possibilities as certainties or projections without a sufficient factual basis. The original statement, ‘This acquisition will undoubtedly propel us to the top of the industry,’ is a forward-looking statement presented as a certainty without qualification, which is overly promotional and potentially misleading. The correct revision introduces necessary qualifications (‘is anticipated to significantly strengthen,’ ‘subject to successful integration and market conditions’) and focuses on a more measurable and supportable outcome (‘our competitive position’), thereby making the announcement more balanced and fair. The other options are incorrect because they either introduce other forms of prohibited language or fail to address the core issue. Suggesting a ‘revolutionary impact’ is still promotional jargon. Stating that the company ‘does not anticipate the acquisition will have an unfavourable effect’ is a negative statement phrased to create a positive implication, which is discouraged. Delaying the release to add more positive data without addressing the misleading certainty of the original statement does not resolve the compliance issue.

This question assesses the candidate’s understanding of the nuanced relationship between the duty of Best Execution and the permissible use of soft dollar arrangements under the IMAS Standards of Professional Conduct. Best Execution, as defined by IMAS, is not solely about achieving the single best price. It refers to executing trades on the ‘best available terms’ for the client, which encompasses a range of factors including price, costs, speed, likelihood of execution and settlement, size, nature, and any other consideration relevant to the execution of the order. Concurrently, the IMAS standards permit the use of soft dollars—where a broker provides goods or services to a fund manager in return for directing trades—under strict conditions. The key condition is that the goods or services (like substantive research) must reasonably be expected to assist the manager in their provision of investment services to clients. Therefore, a manager is not automatically obligated to use the broker with the absolute lowest price if another broker, offering a fair price and valuable research, provides a better overall outcome for the clients. The decision must be justifiable, documented, and demonstrate that the transaction was still executed on the best available terms and that the soft dollar arrangement benefits the clients.

According to Appendix B8 of the Code on Collective Investment Schemes, a ‘controlling unitholder’ is defined as a person who holds, directly or indirectly, 15% or more of the voting units in a property fund. The definition of an ‘associate’ for an individual includes their spouse. Therefore, to determine if an individual is a controlling unitholder, their direct holdings must be aggregated with the holdings of their associates. In this scenario, Mr. Lee’s direct holding of 12% is combined with his wife’s holding of 4%, resulting in a total interest of 16%. Since this combined interest meets and exceeds the 15% threshold, Mr. Lee is classified as a controlling unitholder. The other options are incorrect because they misinterpret the rules. The aggregation of associate holdings is not limited to situations involving corporate entities or directors, and the 15% threshold applies to the combined direct and indirect holdings, not just the direct portion. The MAS’s power to determine someone is not a controlling unitholder is a discretionary exemption, not a prerequisite for the classification.

Under the Guidelines on applications for approval of arrangements under Paragraph 9 of the Third Schedule to the SFA [Guideline No. SFA 04-G03], while the foreign related corporation’s track record and home country supervision are pre-requisite criteria for the application, the Monetary Authority of Singapore’s (MAS) primary assessment focuses on the operational integrity and accountability of the arrangement. This means MAS will scrutinise the ability of the licensed Singapore entity to maintain control and oversight. Key considerations include the adequacy of the Singapore entity’s internal controls, its management oversight procedures for the activities performed by the foreign entity, and robust record-keeping systems. These elements are crucial to ensure a clear and proper audit trail exists, allowing MAS to supervise the activities effectively and ensuring that the Singapore entity remains fully responsible for the services provided to Singapore-based clients. The other options, while related, are either pre-requisites for the foreign firm itself (like its good standing or home regulation) or are not requirements of the arrangement (like establishing a physical presence). The core of the approval rests on the Singapore entity’s framework for managing the cross-border activity.