Legal and regulatory framework governing financial futures

Abstract

The Singapore International Monetary Exchange (SIMEX) is established in

1984. Its linkage to the Chicago Mercantile Exchange had eliminated the forecasted

problem of lack of trading liquidity in SIMEX as was experienced by other futures

exchanges in their early stages of trading. Since then, many significant developments in

futures trading activities have taken place at SIMEX. Trading volumes have been

soaring consistently and contracts offered at the Exchange have increased more than

threefold, from 4 contracts to 15 contracts.

To further enhance its position in the global financial market, SIMEX has

always been improving its legal and regulatory framework to ensure maximum

protection to all its participants and to enhance its soundness as a major international

financial exchange. SIMEX has a very detailed Rule Book covering all the rules and

procedures governing futures trading. The Exchange is also under the close supervision

of the Monetary Authority of Singapore (MAS) through the Futures Trading Act,

enacted in 1985.

Aside from the rules under the Act and the Rule Book, SIMEX has an unique

system of financial safeguards, enforced with the help of its Clearing House and other

departments in SIMEX. In addition, SIMEX is going to introduce an automated

trading system in 1993. This will be another major step towards providing 24 hour

trading for its global users. Thus, with this system of sound regulatory framework and

financials safeguard coupled with consistent improvements, there is no doubt as to how

SIMEX could have achieved a reputable recognition in the world's financial sector in

just eight years from its initial establishment.