Published February 11, 2009

SGX fines UOB-Kay Hian $115,000

By LYNETTE KHOO

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THE Singapore Exchange (SGX) has fined trading member UOB-Kay Hian $115,000 over poor administration of an examination for trading representatives (TRs), which also led to leaked exam questions.

The exam was designed to ensure that trading representatives are familiar with a new product - the extended settlement (ES) contract - which starts trading on Feb 20. The ES contract is the first marginable futures contract to be listed on SGX's securities trading platform.

In an announcement yesterday, SGX said UOB-Kay Hian breached its directives for the administration of the examination in three areas:

(i) failing to take adequate measures to safeguard the integrity of the examination on three days;

(ii) failing to ensure strict confidentiality of examination papers, which led to the disclosure of examination papers from certain trading representatives to other representatives;

(iii) failing to immediately notify the SGX of a possible leakage of examination materials.

Yeo Lian Sim, SGX head of risk management and regulation, said: 'Member firms must make sure that their staff understand the new products in order to be able to advise their customers. The examination is a means to ensure that the TRs are familiar with ES contracts. This is a serious matter.'

After a two-week investigation, SGX established four of eight preferred charges against UOB-Kay Hian and imposed a total fine of $150,000 and ordered the re-administration of the exam for trading representatives who sat for the exam on four particular days.

Following an appeal by UOB-Kay Hian, the SGX appeals committee lowered the fine to $115,000 but upheld the disciplinary committee's order for re-examinations.