Executive Summary
Singapore Exchange Regulation (“SGX RegCo“) is proposing significant rule changes to modernise the post-trade custody model by enabling the wider adoption of broker custody (omnibus) accounts, in line with global standards. This reform is recommended by the Equities Market Review Group as part of the wider move to revitalise Singapore’s equities market. Currently, while Singapore retail investors may hold their SGX securities in direct accounts, they hold their foreign securities in broker custody accounts. The reforms will:
- Allow depository agents to hold instruments that are custodised with the Central Depository (“CDP“) (“SGX securities“) for Singapore investors in omnibus sub-accounts (i.e., sub-accounts in which the securities of more than one client are held). The securities of each client need not be held in a segregated sub-account with CDP;
- Introduce enhanced regulatory and operational safeguards; and
- Require brokers to actively facilitate shareholder rights for clients.
Retail investors may still opt for direct accounts, while new oversight powers and transparency requirements will strengthen investor protection. Implementation is targeted for June 2026, with a new penalty framework for non-compliance. The consultation ends on 27 March 2026. For more information, please refer to the “Consultation Paper on Modernisation of Singapore’s Post-Trade Custody Model“.
Enabling Omnibus Sub-Accounts for SGX Securities
Currently, Singapore investors hold SGX securities in direct accounts or segregated sub-accounts, a practice stemming from the post-1985 Pan-Electric crisis requirement that each client’s assets be kept separate for protection and traceability. This comes from CDP’s requirement that depository agents open and maintain a separate sub-account for each client (“individual segregation requirement“).
SGX proposes to remove the individual segregation requirement, letting depository agents and investors choose between omnibus and segregated sub-accounts. Retail investors may also choose to keep direct accounts. With stronger laws and oversight by the Monetary Authority of Singapore, individual segregation is less necessary and adds complexity and costs that deter international brokers. To align with global practices, SGX will also review related fees and settlement fee structures.
Enhanced Regulatory Measures to Support Broker Custody Model
To support wider adoption of sub-accounts in Singapore, SGX RegCo proposes to introduce the following enhanced regulatory measures, summarised in the table below.
| Enhanced Regulatory Measures | Details |
|---|---|
| Business and operational requirements for depository agents to safeguard client assets and monies and for operational robustness. |
In addition, a depository agent may only transact SGX securities for a client with the client's explicit authorisation and must not use these securities to settle obligations for others, unless the securities are used in connection with a borrowing or lending arrangement. SGX RegCo will also tighten admission requirements for depository agents. |
| Requirements for brokers and depository agents to facilitate individual sub-account holders’ exercise of shareholder rights |
|
| Enhanced oversight powers of CDP | CDP’s current disciplinary actions include reprimands, activity restrictions, and termination. SGX RegCo proposes including new powers to issue warning letters and impose financial penalties, as well as inspection and investigation powers over depository agents. CDP will also have enhanced powers to request information, assistance or action from depository agents in the interest of, among other things, investor protection and ensuring the integrity of the market.
SGX RegCo clarifies that CDP can block depository agents from transactions, payments, or onboarding new clients without approval. Grounds for disciplinary action will include financial or operational difficulties, charges of offence, events of default under the Clearing Rules defaults, or actions harming CDP’s integrity or reputation. |
Implementation
SGX RegCo plans to implement the rule changes by June 2026. Depository agents needing more time to meet shareholder rights requirements may request an extension from SGX, but no extensions will be granted after December 2026.
If you have any queries on the above, please reach out to our Contacts.
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