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Singapore’s CAD and MAS warn investors about unregulated online trading platforms

On 31 May, the Commercial
Affairs Department
(CAD) of the Singapore Police Force and Monetary Authority of Singapore (MAS) advised
the public
to exercise extreme caution when dealing with unregulated online
trading platforms.

MAS licenses certain online trading platforms that offer
investment products that are regulated under the Securities and Futures Act (SFA).
These products include shares, debentures, futures and exchange-traded funds.

Trading platforms that are licensed by MAS adhere to
regulatory safeguards such as disclosure requirements on investment products
that are offered to consumers. Regulated platforms are also subjected to
conduct rules, to ensure that they deal fairly with their customers. Such
safeguards protect investors’ monies and assets when they are dealing with
financial institutions.

According to the announcement, CAD and MAS have received an
increasing number of complaints from members of the public involving losses
from unregulated online trading platforms over the past year. These unregulated
trading platforms allow investors to trade a wide range of products, such as
foreign exchange, shares, commodities and binary options.

In 2017, the CAD received 142 reports from consumers who
lost a total of S$7.8 million from trading with these unlicensed platforms, up
from 40 reports in 2016.

Some online trading platforms are operated by entities which
are neither licensed nor regulated by MAS. These unlicensed platforms engage
consumers via online advertisements, unsolicited phone calls, emails or
messaging apps.

In some instances, events or seminars are conducted to
promote the platform. Existing customers are also offered commission to entice
new customers to trade on the platforms.

Mr David Chew Siong Tai, Director CAD, said, “Consumers
should always be cautious when they come across an investment opportunity that
promises high returns with assurances of little or no risks. These are likely
to be a scam; if it is sounds too good to be true, it most probably is.”

As most of these unregulated online trading platforms tend
to be located outside Singapore, it poses greater fraud risk to consumers since
the credibility of the online platforms’ operations cannot be easily verified.
Investors will also face challenges in pursuing claims against operators based

Investors are often instructed by operators of unregulated
online trading platforms to transfer monies to overseas bank accounts, which
are held in the names of persons different from the platform operators. This
makes it very difficult for investors to recover their monies when things go

Online trading platforms may also require investors to pay
for their trades or fund their trading accounts using credit or debit cards.
This exposes investors to a further risk of unauthorised transactions on the
credit or debit card. 

“There is no regulatory safeguard for investors who choose
to transact on unregulated trading platforms. There is greater risk of fraud
when investors transact on platforms operated by unregulated entities whose
backgrounds and operations cannot be easily verified. Before committing to an
investment, consumers should always ‘ASK, CHECK and CONFIRM’ to avoid any
potential scams,” said Mr Lee Boon Ngiap, Assistant Managing Director (Capital
Markets), MAS.

Credit: MoneySENSE and Monetary Authority of Singapore

The call for consumers to always ASK, CHECK and CONFIRM
before committing to an investment was central to the “Beware! Investment Scams”
campaign, jointly launched by MoneySENSE
and the Securities Investors Association
in April 2017.

The campaign aimed to caution consumers to be alert to
investment scams and heighten awareness of the steps consumers should take to
perform checks on all investment opportunities before they invest.

ASK – ASK as many questions as you need to fully understand
the investment opportunity. If the company is unable to, or avoids answering
any of your questions, be wary!

CHECK – CHECK on the company, its owners, directors and
management members to assess if the opportunity is genuine

CONFIRM – CONFIRM the company’s and representatives’
credentials by using available resources, including the Financial Institutions
Directory, Register of Representatives and Investor Alert List on the MAS’

As reported
, MAS also issued warning
over unauthorised digital token exchanges and Initial Coin Offering (ICO). The warning to the eight digital token exchanges
in Singapore were requested not to facilitate trading in digital tokens without
MAS’ authorisation. MAS has reminded the eight digital token exchanges to seek
MAS’ authorisation if the digital tokens traded on their platforms constitute
securities or futures contracts under the Securities and Futures Act (SFA). MAS
also warned an ICO issuer to stop the offering of its digital tokens in
Singapore. The warning served to reiterate that digital token issuers,
intermediaries and platforms that offer, facilitate or trade digital tokens are
responsible for ensuring that they comply with all relevant laws.

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