The Straits Times
Our official response to the letter sent to Straits Times Forum by Mr Loke Siew Keong dated 16th March 2012
We refer to the letter, "Puzzled and upset by extra licensing module for remisiers" by Mr Loke Siew Keong, which appeared in the Forum of Straits Times on 16 March 2012.
We share the same sentiments with Mr Loke, especially the arguments relating to the scope of Module 6A (‘M6A’) Exam. After having attended the M6A course recently, I can understand the frustrations resulting from this prerequisite to acquire eligibility status to transact in Specified Investment Products (‘SIP’).
It is reasonable for guidelines to apply when handling new and complex derivative related products, following the failure of some retail investors to understand them and the failure of some industry participants to educate public on the risks involved with such investments. However, we are of the opinion that the new M6A syllabus has not been correctly structured to address these gaps but has instead heightened confusion and anxiety amongst service providers and investors alike.
There is a natural mismatch of skill sets concerning remisiers, futures or commodity brokers and structured financial products resellers, which is evident because each intermediary is specialised in their own particular field and is licensed separately. We can understand the urgency to equip all industry participants to ensure that they are proficient in products that they are dealing in and to ensure higher service level for the benefit of retail investors. In our quest to be the best, we tend to exceed expectations when attempting to rectify failures in the system. As much as we appreciate the need to be thorough, we feel that the current course syllabus is an overkill in that it covers areas beyond what is necessary. Consequently, we believe that there is a need to streamline the M6A regime, instead of the present one-size-fits-all approach to qualify all types of industry participants.
The other area of contention lies with the classification of SIP. We are of the view that the definition of SIP can be fine-tuned and we are discouraged that products like STI ETF, SP AusNet, CDL HospitalityTrust, Public Bank, HSBC, Apple Corp, etc, which are highly rated shares listed in established foreign exchanges and some of which are CPF approved investments, are classified as SIP. There may be an urgent need for some guidelines to apply for complex derivative related products but we are unable to understand the need for such proviso for foreign listed shares. We hope that foreign listed shares are not conveniently classified under the category of SIP because of some mundane technicalities. This disparity in classification may stifle the growth and development of these products which in turn may damage the all-embracing vibrancy of the local market and prompt investors to shun these foreign shares altogether because these are considered complex instruments. However, if this can be resolved and foreign listed shares can be reclassified as non-SIP type, remisiers and investors may not have to endure unnecessary stress to sit for an exam that they may not need in the first place. We sincerely hope the authorities will rethink the classification of these foreign shares.
Lastly, it seems ironic that experienced industry participants, especially those who went through the 1998 Asian Financial Crisis and the 2008 'minibond' saga unscathed, have now suddenly been directed that, due to the new classification of existing products into SIP, they will not be allowed to transact these products unless they attain the M6A qualification. It is like saying that an IT engineer ceases to be one unless he pass an exam in order to be competent again because of a change in technology. In fact, remisiers are regarded as execution-only dealers and are not permitted to advise, let alone giving advice on SIP. One point to note: will remisiers be qualified to give advice after passing the M6A Exam? If the answer is positive, the pill may not be as difficult to swallow, at least for this group of professionals. Indeed, the consensus amongst industry practitioners is that remisiers, in particular those with 3 or more years of experience, should be allowed to deal in SIP and be exempted from the need to take the M6A Exam. A refresher course will suffice to empower them to transact in SIP. As it is, remisiers are already required to attend continuing education programmes before renewal of their trading license. We believe that this will be more effective in keeping them abreast of new developments in this ever-changing business environment.
John Wee Choo Chuan
The Society Of Remisiers (Singapore)
Tuesday, 27 March 2012 10:41