Exam questions leaked; exchange fines a brokerage, makes remisiers re-sit exam
By Goh Eng Yeow 17 January 2009
Cheating has emerged in an examination designed to ensure that stock dealers and remisiers are qualified to sell a complex new product the Singapore Exchange (SGX) is set to unveil.
The investment product - known as an extended settlement contract - is due to be launched next month.
Sets of questions used in the exam have apparently been circulating freely. In response, the SGX is believed to have imposed a fine on one of the affected securities houses, UOB Kay Hian, according to industry sources. The brokerage is appealing against the fine.
The exchange has also required some of UOB Kay Hian’s remisiers to re-sit the exam. Sources close to the brokerage confirmed that some of its dealers had already retaken the exam.
Broking sources said the cheating might be ‘quite rampant’.
Contacted on the issue, an SGX spokesman said: ‘We cannot comment as this matter is ongoing within our disciplinary framework.’
Still, one dealer said he was not surprised the exam had sprung a leak.
‘In some brokerages, the examination was conducted in the offices occupied by the directors and in the conference room. There was ample opportunity for a dealer to walk out and make photocopies of the examination papers,’ he said.
It was also not surprising that some of those who took the exam were caught.
‘All that is needed is to catch a dealer who had cheated, and he would squeal on the rest of his accomplices,’ the dealer said.
Last year, the SGX underscored the importance of implementing an industry-wide testing on extended settlement contracts to help brokers understand the product and explain it to their clients.
This led to a requirement for all brokers to sit for one paper before they could be ‘certified’ to trade the product.
The test was considered to be fairly simple. However, many dealers could not answer most of the questions. This led to some of them making copies of the exam papers and memorising the answers.
‘These people are stupid to resort to cheating. What is wrong with failing the examination five times? The market conditions are so bad that there may only be a few people trading extended settlement contracts,’ one remisier observed.
With an extended settlement contract, an investor buys an option created by the SGX that allows him to buy a stock at a price near its current level.
He then makes a small payment upfront - known as a ‘maintenance margin’ - while settling the rest of the purchase at a future date. If the stock price falls below his option purchase price, he is required to make an extra payment.
Yesterday, the SGX announced it had delayed the launch of extended settlement contracts by a month to Feb 20, as it focused on training and investor training.
‘We appreciate the efforts from all parties that have enabled the successful industry-wide testing, and we will now work with them to focus on training and investor education,’ said Mr. Chew Sutat, the SGX’s head of market development, in a statement.
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Dealers Caught Cheating in Test for SGX Product
Exam questions leaked; exchange fines a brokerage, makes remisiers re-sit exam
By Goh Eng Yeow
17 January 2009
Cheating has emerged in an examination designed to ensure that stock dealers and remisiers are qualified to sell a complex new product the Singapore Exchange (SGX) is set to unveil.
The investment product - known as an extended settlement contract - is due to be launched next month.
Sets of questions used in the exam have apparently been circulating freely. In response, the SGX is believed to have imposed a fine on one of the affected securities houses, UOB Kay Hian, according to industry sources. The brokerage is appealing against the fine.
The exchange has also required some of UOB Kay Hian’s remisiers to re-sit the exam. Sources close to the brokerage confirmed that some of its dealers had already retaken the exam.
Broking sources said the cheating might be ‘quite rampant’.
Contacted on the issue, an SGX spokesman said: ‘We cannot comment as this matter is ongoing within our disciplinary framework.’
Still, one dealer said he was not surprised the exam had sprung a leak.
‘In some brokerages, the examination was conducted in the offices occupied by the directors and in the conference room. There was ample opportunity for a dealer to walk out and make photocopies of the examination papers,’ he said.
It was also not surprising that some of those who took the exam were caught.
‘All that is needed is to catch a dealer who had cheated, and he would squeal on the rest of his accomplices,’ the dealer said.
Last year, the SGX underscored the importance of implementing an industry-wide testing on extended settlement contracts to help brokers understand the product and explain it to their clients.
This led to a requirement for all brokers to sit for one paper before they could be ‘certified’ to trade the product.
The test was considered to be fairly simple. However, many dealers could not answer most of the questions. This led to some of them making copies of the exam papers and memorising the answers.
‘These people are stupid to resort to cheating. What is wrong with failing the examination five times? The market conditions are so bad that there may only be a few people trading extended settlement contracts,’ one remisier observed.
With an extended settlement contract, an investor buys an option created by the SGX that allows him to buy a stock at a price near its current level.
He then makes a small payment upfront - known as a ‘maintenance margin’ - while settling the rest of the purchase at a future date. If the stock price falls below his option purchase price, he is required to make an extra payment.
Yesterday, the SGX announced it had delayed the launch of extended settlement contracts by a month to Feb 20, as it focused on training and investor training.
‘We appreciate the efforts from all parties that have enabled the successful industry-wide testing, and we will now work with them to focus on training and investor education,’ said Mr. Chew Sutat, the SGX’s head of market development, in a statement.
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