Pullback A Healthy Sign For Stock ETFs

Jerry Slusiewicz
Saturday March 28, 2009, 3:00 am EDT

http://finance.yahoo.com/news/Pullback-A-Healthy-Sign-For-indexuniverse-14784640.html

The S&P 500 pulled back a bit on Friday. But volume on major stock exchanges was relatively low, which is actually a healthy sign.

In fact, we'd like to see the blue chip index fall to around the 750-790 range in coming weeks, from the current level of 820.

The current rally, which started on March 6, has just come too far in too fast of a time frame. It has been a fairly broad rally, though. If the month ended right now, we'd be looking at the best monthly returns since 1974. In the past three weeks, the S&P 500 index has jumped 22.4%.

While that's great, it's more constructive at this point to have a moderate retracement. That doesn't mean we need to see the index retest the 666 mark, its 12-year low. But even a pullback of some 8.5% to 750 would still provide support for a longer-term rally.

If stocks continue to climb, technical factors indicate that the S&P 500 will hit considerable resistance at the 875-880 range. That would represent about another 8% rise from current levels.

Today, some 70% of stocks on the New York Stock Exchange have moved above their 50-day moving average. Again, that indicates the market has moved too far and too fast. Look at Jan. 6, when 80% of stocks were trading above their 50-day moving averages. The result was a sharp correction to multiyear lows.

So from a technical perspective, the safe move for a broad-based fund such as the SPDRs S&P 500 ETF (NYSEArca:SPY - News) would be to wait until it's trading around $75 a share. It closed on Friday at $81.59. So we're looking for about an 8% fall to signal a more reasonable entry point.

The same reasoning holds for the PowerShares QQQ (NasdaqGM:QQQQ - News). The Tech-heavy ETF closed at $30.82 per share on Friday. Technically speaking, a better entry point would be $28 per share. On Oct. 24, 2008, the ETF hit a low for this current cycle at $28.09. From early December 2008 through the end of February 2009, its low range was right around $28. And QQQ's 20-day moving average is right at that point now.

Another note of caution is that the market rose 6.2% last week—the first time we've seen three up-weeks in a row in almost a year. Although that's pretty good, it still isn't enough to guarantee that this rally is a new bull market.

S’pore to invest up to $20b in infrastructure projects this year

Updated: 23rd March 2009, 1000 hrs / 93.8 Live

Singapore will be investing as much as $20 billion in infrastructure projects this year to prepare for recovery and growth.

Senior Minister of State for National Development, Grace Fu, said the projects include the construction of a new International Cruise Terminal at Marina South,
new roads and parks, and the upgrading of schools, sports facilities and our public housing estates throughout Singapore.

She told an industry summit that these investments are not a once-off effort.

In 2010 and 2011, the government will continue to invest another $15 to $17 billion each year in building and infrastructure projects.

The goal is to build Singapore as a distinctive global city, a key node within a network of cities around the world.

Ms Fu said Singapore will be remade within the next five to ten years.

It will be a new city thriving with new opportunities.

Trading 'expert' ordered to refund fees

Home > Prime News > Story
Trading 'expert' ordered to refund fees
Course trainees were upset that option trading instructor's doctorate came from an unaccredited university
By Sandra Davie, Senior Writer
The Straits Times, Digital HTML
March 17, 2009 Tuesday

A GROUP of 49 people scored a legal victory over a self-styled expert on option trading who turned out to have a dodgy doctorate from an unaccredited American university.

A dozen of the course participants said they had paid Mr Clemen Chiang between $3,600 and $4,000 last year for a three-day course on option trading - a complex and risky investing technique which often amounts to betting on share-price trends.

Several had also forked out another $960 for training software and a handful paid $1,600 to $12,000 more for online tutorials referred to as 'webinars'.

Mr Chiang, a 34-year-old Nanyang Technological University engineering graduate, has been running these seminars for a few years at his Freely Business School in North Bridge Road.

He would tell students his own success story of how he made millions, and he drew hundreds of participants.

He claimed to have a PhD in option trading, a rarity in the finance industry here.

But when it came to light last year that his doctorate was from the unaccredited Preston University in Alabama, the group of 49 wanted their money back.

Yesterday, the Small Claims Tribunal found that Mr Chiang had misrepresented his qualifications. It awarded all participants a refund of close to 80 per cent of their fees for the seminar and a full refund for the cost of the software and 'webinars'.

Mr Chiang, who still calls himself 'Dr', attended the hearing but did not speak to The Straits Times.

The Small Claims Tribunal is part of the Subordinate Courts and can hear claims involving the sale of goods or services not exceeding $10,000.

Outside the tribunal, several participants said they felt cheated when they read a Straits Times expose on degree mills last August. The report named Mr Chiang as having a PhD from an unaccredited university.

Sales representative Terence Tan, 41, said: 'I signed up because of his PhD. Option trading is a complicated thing. I thought this guy should know what he is talking about since he had a PhD in it.

'So imagine my shock when I found out that his degree was not from a recognised university.'

Like some others, he felt the course fell short of providing a good understanding of option trading.

Engineer William Hui, who paid $8,000 for himself and his wife to attend Mr Chiang's course, said: 'He should have called it 'Millionaire mindset', because for a whole day, it was just about how much money he made, his Sentosa Cove bungalow and his wife's Hermes Birkin handbag costing over $10,000.

'When he finally went into his so-called method of trading in options, I found it lacking. And then he tried to sell his software for another $960.'

Mr Chiang still claims to have a PhD on several of his websites, but makes no mention of Preston University, which American education authorities have called a 'degree supplier' offering 'fraudulent or substandard degrees'.

Last August, he told The Straits Times that he was also pursuing another PhD at the University of South Australia.

When asked then why he had opted for a degree from an unaccredited institution, he said he wanted to complete a PhD in double-quick time.

Because Preston University was listed as a partner of a private school registered with the Education Ministry here, he said he thought it was an accredited institution.

It was only later that he realised that Preston was not accredited in the United States, he said.

Like other business people who had bought fake degrees, Mr Chiang said then that it helped to pave the way in business.

Checks last year found more than 200 people - including prominent businessmen and financial consultants - flaunting degrees, MBAs and doctorates from degree mills and unaccredited, substandard institutions.

sandra@sph.com.sg

Gold Futures Rebound in N.Y. on Dollar’s Decline

By Pham-Duy Nguyen

http://www.bloomberg.com/apps/news?pid=20601081&sid=aDyZ2gge5vg0&refer=australia

March 11 (Bloomberg) -- Gold futures rose, rebounding from the lowest price in a month, as the slumping dollar enhanced the appeal of the precious metal as an alternative investment. Silver gained the most in two weeks.

The dollar fell as much as 1.2 percent against a weighted basket of six major currencies. Gold and the dollar historically have moved in the opposite direction. The correlation hasn’t held this year as investors purchased both assets as a hedge against turmoil in financial markets.

“Gold is still an exceptional buy,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “Traders will start looking at more traditional relationships like future inflation, government spending and devaluing of currencies.”

Gold futures for April delivery rose $14.80, or 1.7 percent, to $910.70 an ounce on the Comex division of the New York Mercantile Exchange. Yesterday, the price touched $891.10, the lowest since Feb. 3.

Silver futures for May delivery gained 26 cents, or 2.1 percent, to $12.80 an ounce, the biggest gain since Feb. 20. Gold has gained 3 percent in 2009, while silver is up 13 percent.

Gold reached a record $1,033.90 on March 17 as the dollar headed for an all-time low against the euro. In the second half of 2008, the dollar rallied as investors sought a haven from declining equity markets. Gold gained 5.5 percent last year, while the dollar rose 6 percent against the basket of currencies.

Gold’s gains accelerated today after U.S. equities pared gains. The Standard & Poor’s 500 Index climbed as much as 1.7 percent before dropping. Yesterday, the gauge jumped 6.4 percent, the most this year. Gold fell as low as $892.60 today.

A rebound in equities would “be a bearish development as investment transfers from gold toward riskier assets,” said Tom Pawlicki, an analyst at MF Global Ltd. in Chicago.

Since March 6, investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, has been unchanged at 1,029 metric tons, close to the all-time high.

“It’s becoming evident that the buying in ETFs may have been led by a small group of hedge funds, whose actions can be incredibly difficult to predict,” Pawlicki said. “It’s also likely that they are now under water on those positions.”

Greenlight Capital Inc., the $5.1 billion hedge fund run by David Einhorn, said last month it invested in gold for the first time in the fourth quarter, making a bullion-backed exchange- traded fund its largest holding.

Chartology – Is The Bottom In?

http://www.cnbc.com/id/29619793
Posted By: Lee Brodie
Topics:Stock Market | Stock Picks
Companies:Morgan Stanley | Sprint Nextel Corp

For months investors have been whispering cautiously about a market bottom. It’s certainly the trillion dollar question – and one that can only be answered with confidence in hindsight.

But you need that information now -- so for insights we turn to Jeff DeGraaf, ISI Head Of Technical Analysis Research. He’s the #1 analyst in his field as ranked by Institutional Investor magazine.

Here’s a summary of DeGraaf's analysis.

First DeGraaf explains that we need a 35% rally just to get back to the 200-day moving average. Looking at a chart of the S&P 500 from 1929-1934, he says not since 1931 has the S&P been so far from its 200-moving day average. DeGraaf interprets the pattern to mean the market is extremely oversold.

Then, he looks at the AAII bear readings from the last 20 years. The patterns reveal that 70% of investors are bearish and that the retail crowd is tuned out.

Also, he tells us the number of new lows on the S&P has been contracting over the past several months. Even though we're 140 points below where we were in October the number of stocks making those lows is about half. That's a bullish divergence.

These are good conditions but they don’t mean anything without a spark. On Tuesday we got the spark, DeGraaf says.

That spark combined with the factors mentioned above should provide a strong under-pinning for some kind of rally.

What’s the bottom line?

At a minimum, we’re in a bear market bounce. Don't be short. To see DeGraaf’s complete interview as well as this charts used in his analysis please watch the video above.

New Red Flag for Markets: Credit Is Tightening Again

Tuesday March 10, 2009, 2:11 pm EDT

While Wall Street enjoys its relief rally Tuesday, stocks face looming danger from a familiar foe: tightening of credit.

Several metrics that market analysts use to gauge the availability of credit have been signaling trouble in recent days, throwing up a caution flag that tougher times could lie ahead for the availability of cash.

That's a formula that always spells trouble for investors.

"Unless we start seeing a reversal of the widening of a lot of these credit spreads, any equity rally is going to be short-lived," says David Lutz, managing director of institutional trading at Stifel Nicolaus. "Unless the credit markets are cooperating, it's going to be very hard for equities to rise."

A lack of confidence in Obama administration policies, combined with unabated declines in the economy, are fueling banks' renewed reluctance to lend. And that's being reflected in a number of key data points in the credit markets.

"The euphoria over the new administration is out the window at the moment," Lutz says. "We're seeing the fact that since they haven't been able to roll out a comprehensive housing or financial program, it's a sign they don't have the right idea yet."

Among the signs that analysts say point to credit problems are Libor, or the rate banks charge each other for overnight lending; The "Ted spread," which is the difference between 3-month Libor and the 3-month Treasury bill; two-year credit default swap rates; and the Commercial Mortgage-Backed Securities index, or CMBX.

Libor rates have swelled to prices not seen since December, with the trend indicating a June three-month rate of 1.7 percent, Lutz said in a research note. A widening in Libor emanates from lower confidence that institutions have in each other and leads to tighter lending policies. Three-month Libor gained Tuesday to about 1.33 percent.

Similarly, the CMBX and the two-year swap spread both are at four-month highs, while the Ted Spread, which indicates willingness to lend, also is moving lower, falling Tuesday to 1.09 percent.

None of it bodes well for the credit picture in 2009, and if credit tightens up, the stock market will feel the pinch regardless of what Tuesday's sharp rally indicates.

Stocks surged at the open on some encouraging words from Treasury Secretary Ben Bernanke regarding aid for banks in valuing distressed assets. The market punched up further following the government's decision to reinstitute the uptick rule, which requires a move higher in a stock before it can be short-sold.

"With those four things showing more and more strain, there's a disconnect with equities rallying the way they are," Lutz says. "If they keep trading this way it's definitely an indication that there could be another leg down in stocks."

To be sure, the credit indicators are nowhere near the depths of September 2008 or so when lending all but dried up completely.

But the inability of aggressive government action around the globe to eradicate credit issues is disturbing.

"After several months of swift declines and an environment where global central banks continue to cut short-term interest rates, any increase in Libor rates is a troubling reminder of the tension in credit markets," says Greg McBride, senior financial analyst for Bankrate.com. "The equity markets have effectively been behind the curve of what the credit markets have seen and experienced first-hand."

While analysts are quick to point out that the tightening is not at alarming levels at least in the short term, there's concern over the pressure the failing economy will put on lending practices.

Following a year of aggressive money-easing, Fed fund futures now are indicating a 30 percent chance that the central bank will tighten monetary policy by June.

"The underlying economy continues to deteriorate. The default rates on some of these underlying loans has been able to go up," says Mike Larson, an analyst with Weiss Research. "While they've been able to buy a period of calm, we have yet to see if it's a genuine turn and not just driven by Fed largesse."

Other indicators that have analysts concerned include the difference between investment grade bonds and Treasurys, as well as increasing problems in the commercial real estate business that will be reflected in the CMBS rates and other metrics.

Until the government can turn around the news cycle, credit issues likely will remain a significant concern.

"There's a lack of confidence and a tremendous amount of uncertainty over the fact that all the heavy artillery that the Fed, the Treasury and other central banks around the globe have been throwing at the problem has shown little impact thus far," McBride says. "Pessimism rules the day."

Buffett says economy fell off cliff

Mon Mar 9, 2009 2:50pm EDT
http://www.reuters.com/article/newsOne/idUSTRE5282J820090309
By Jonathan Stempel

NEW YORK (Reuters) - Warren Buffett said on Monday the U.S. economy had "fallen off a cliff" but would eventually recover, although a rebound could kindle inflation worse than that experienced in the late 1970s.

Buffett said Americans, including himself, did not predict the severity of home price declines, which led to problems with securitizations and other debt whose value depended on home prices continuing to rise, or at least not plummet.

He said Wells Fargo & Co and U.S. Bancorp, two large Berkshire holdings, should appear "better than ever" three years from now, while the ailing Citigroup Inc, which Berkshire does not own, would probably keep shrinking.

Bank of America Corp Chief Executive Kenneth Lewis, in a Wall Street Journal opinion piece on Monday, agreed that the vast majority of banks will survive. Berkshire has reported a small stake in Bank of America stock.

Buffett said he still expects Berkshire's derivatives contracts, whose value depends on where four stock indexes trade a decade and more from now, to be profitable. "Over 10 years", he said, "you will do considerably better owning a group of equities" than U.S. Treasuries.

Buffett also defended his imperfectly timed October opinion piece for The New York Times, where he said he was moving non-Berkshire holdings in his personal account to stocks. "I stand by the article," he said. "I just wish I had written it a few months later."

(Reporting by Jonathan Stempel; Additional reporting by Lilla Zuill; Editing by Lisa Von Ahn and John Wallace)

Oil jumps 3 percent on U.S.-China tensions, OPEC

Mon Mar 9, 2009 3:38pm EDT
By Matthew Robinson

http://www.reuters.com/article/hotStocksNews/idUSTRE5210GO20090309

NEW YORK (Reuters) - Oil jumped more than 3 percent to $47 a barrel on Monday as a naval incident between the United States and China, the world's top oil consumers, boosted geopolitical tensions and as dealers pondered the possibility of deeper production cuts by OPEC.

The U.S. State Department said five Chinese ships, including a naval vessel, harassed an unarmed U.S. Navy ocean surveillance ship in international waters in the South China Sea on Sunday.

"Crude prices are up, I think, in a knee-jerk reaction to the news of Chinese vessels harassing a U.S. Navy ship in the South China Sea," said Phil Flynn, analyst at Alaron Trading in Chicago.

U.S. crude settled up $1.55 at $47.07 a barrel, while London Brent crude fell 72 cents to settle at $44.13 a barrel.

Gold slides more than 2 percent as dollar rises

Mon Mar 9, 2009 1:00pm EDT
By Jan Harvey

LONDON (Reuters) - Gold prices slipped more than 2 percent on Monday after the dollar rose and data showed a small fall in holdings of exchange traded funds.

Spot gold fell to a low of $913.53 an ounce and was at $916.60/917.60 an ounce at 1629 GMT from $939.60 late in New York on Friday.

"Right now the dollar is a little bit stronger and equity markets (generally) are a bit stronger as well so we don't see much inflows into gold exchange traded funds (ETFs)," said Commerzbank analyst Eugen Weinberg.

The world's largest gold-backed exchange traded fund (ETF) recorded its first decline since January 8. Its holdings dipped 0.3 tonnes to 1,028.99 tonnes as of March 8.

UBS analyst John Reade said the total gold holdings of the nine major ETFs the bank follows fell to 48.30 million ounces on March 6 from a revised total of 48.40 million ounces previously.

The dollar gained across the board as global recession fears and banking sector concerns weighed on world stock markets, spurring safe-haven demand for the greenback.

A higher U.S. currency makes metals priced in dollars more expensive for holders of other currencies. Gold is often also used as an alternative when the dollar falls out of favor.

Earlier a rise in U.S. stocks also weighed on gold, which is used a hedge against financial market instability. .N

SOLID ETF DEMAND

Equity weakness broadly supported gold toward the end of last week, although the precious metal was caught up in a stocks sell-off last Monday as investors sought liquidity.

Demand for the precious metal from ETFs, which issue securities backed by physical stocks of gold, was a major price driver earlier in the year. Taders said expected these inflows to resume as uncertainty grows.

"I think that there will be enough worrying news in the first half of 2009 for ETF demand to remain solid," said David Thurtell, an analyst at Citigroup.

Holdings of Julius Baer's (BAER.VX) gold-backed exchange traded fund rose 109,000 ounces or 18 percent last week, the bank said in a weekly statement on Monday.

Demand for gold from jewelry buyers in traditionally strong markets such as India and China remained weak, however.

Traders said scrap sales also put pressure on premiums for gold bars.

Gold: Weak jewelry demand, strong dollar hit prices

Weak jewelry demand, strong dollar hit prices
SPDR gold ETF records first outflow since early January
Julius Baer's gold ETF up 18 percent last week (Recasts, updates prices, market activity; adds second byline, dateline, previously LONDON)
By Frank Tang and Jan Harvey

http://www.guardian.co.uk/business/feedarticle/8394276

NEW YORK/LONDON, March 9 (Reuters) - Gold prices dropped more than 2 percent on Monday, as a dollar rise and slight drop of holdings of gold-backed exchange traded funds triggered heavy sell-stop orders.

Higher gold prices and global recession weighed down gold jewelry buying, which accounts for about 60 percent of total gold demand, traders said. "There is a big bull-and-bear disparity in gold. There is investment buying but no jewelry buying, which has dropped sharply," said Jonathan Jossen, a COMEX gold floor trader.

Spot gold fell to a low of $911.95 an ounce and was at $918.15 an ounce at 1:22 p.m. EDT (1722 GMT), down 2.3 percent from its last quote $939.60 in New York late Friday.
Gold for April delivery settled down $24.70, or 2.6 percent, at $918.00 an ounce on the COMEX division of the New York Mercantile Exchange. Demand for gold from jewelry buyers in traditionally strong markets remained weak.

On Monday, the dollar rose amid global recession fears and banking sector concerns, prompting investors to divert money out of gold and into U.S. Treasuries. A stronger dollar makes metals more expensive for holders of other currencies. Gold often rises when the dollar falls.

The world's largest gold-backed exchange traded fund (ETF) recorded its first decline since Jan. 8. Its holdings dipped 0.3 tonnes to 1,028.99 tonnes as of March 8.

Investors also favored oil at the expense of gold on Monday. Oil rallied 4 percent at above $47 per barrel. "A lot of people think gold is much too high compared to where crude is, so they are taking profit," Jossen said.

SOLID ETF DEMAND

Demand for gold from ETFs, which issue securities backed by physical stocks of gold, helped drive bullion higher earlier in the year. Traders said they expected these inflows to resume. "I think that there will be enough worrying news in the first half of 2009 for ETF demand to remain solid," said David Thurtell, an analyst at Citigroup. Holdings of Julius Baer's gold-backed exchange traded fund rose 109,000 ounces or 18 percent last week, the bank said in a weekly statement on Monday.

(Additional reporting by Paul Lauener and Pratima Desai; Editing by David Gregorio)

DOW, STI, HSI, SSE Intra Day Lowest in 2008

DOW, STI, HSI, SSE Intra Day Lowest in 2008
21/11/08 DOW 7392.27 (Dow already broke...)
28/10/08 STI 1473.77 HERE
27/10/08 HSI 10676.29
28/10/08 SSE 1664.93

Source: Posted by Bangkok Kid in CNA forum

Wall St Week Ahead: GM, banks' fate to keep investors on edge

NEW YORK (Reuters) - With stocks mired in multi-year lows and the fate of General Motors and banks hanging in the balance, investors are unlikely to curb their flight from risk this week, putting Wall Street on track for another brutal sell-off.

One focal point will be a meeting between the U.S. auto task force and GM, Chrysler and officials from the United Auto Workers in Detroit this week after auditors raised doubts about GM's ability to survive outside bankruptcy.

Uncertainty over the plan to salvage banks will also hang over the struggling sector until more concrete details from Washington are revealed, leaving investors to fret that companies that were once pillars of the financial system will have to be nationalized.

The weak economy will likely be confirmed by a handful of economic reports, including a government report on February retail sales and a survey of consumer sentiment.

"There are, unfortunately, no guideposts to a lot of the market to allow investors to get a better sense of direction of where the market is going, where corporate America is going," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

"Short of that, we're going to likely have to rely on Washington. Unfortunately, it just seems like Washington's relationship with the stock market is strained."

"PAINFUL" MARKET

With the Dow and S&P trading at 12-year lows, and the Nasdaq sliding to six-year lows, market watchers will be looking for signs of whether a bottom has been found, or if indexes still have another leg down to go.

Last week was the fourth week of declines for all three major U.S. stock indexes, as the Dow Jones industrial average dropped 6.2 percent and the Nasdaq composite index fell 6.1 percent. The Standard & Poor's 500 slid 7 percent, its worst week since November.

"I've been in the business since 1963 and I've truthfully never seen a market that is so discouraging or painful," said Carl Birkelbach, chief executive officer of Birkelbach Investment Securities in Chicago.

"I've been through a lot, but this is the worst I've seen."

The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion of U.S. government bailout money poured into American International Group Inc has been paid to at least 24 financial institutions around the world.

Already cheap bank stocks continued their tumble last week. The stock price of Dow component Citigroup, once the world's most valuable bank by market capitalization, fell under $1 for the first time, reigniting anxiety over the bank's health and that of the entire banking sector.

Clarity on how toxic assets will be cleared off banks' balance sheets and how those assets will be valued is key to stabilizing the financial sector and seeing markets manage a sustainable recovery, analysts said.

"In order to move forward, we need (Treasury Secretary) Geithner to come out and tell us the answer to the question: 'How do you value the assets?'," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.

"We may be happy about it, we may not be happy about it, but at least we'll know."

Members of the U.S. autos task force will visit Detroit this week to meet with GM, Chrysler and officials from the United Auto Workers labor union, an official for the Obama administration said Friday.

GM's failure could trigger round of massive layoffs and hurt companies that supply and manufacture parts, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank in New York.

In all, GM's bankruptcy could lop off 4 percentage points from the U.S. gross domestic product, of which two-thirds is driven by consumer spending, LaVorgna said.

CONSUMER PSYCHOLOGY 101

Ahead of the Fed's policy-making meeting the following week, Federal Reserve Chairman Ben Bernanke is set to address the Council on Foreign Relations on Tuesday. Investors will be watching for any comments on the state of the economy and the outlook for banks.

Economic data on February retail sales on Thursday and a preliminary reading on March consumer sentiment on Friday, coupled with quarterly results from office supplies and electronics retailer Staples Inc on Wednesday, should give a gauge of consumer spending. January's international trade deficit report is due on Friday.

Economists polled by Reuters forecast that retail sales will slip 0.5 percent in February, after January's unexpected gain of 1 percent. They forecast a preliminary March reading on consumer sentiment of 55.0, down from 56.3 for February, from the Reuters/University of Michigan Surveys of Consumers. The international trade deficit is forecast to drop to $38.1 billion in January from $39.93 billion in December.

Last week, U.S. retailers posted better-than-expected same-store sales for February, helped by a strong gain at Wal-Mart, the world's largest retailer and the leading U.S. discount chain. But analysts cautioned that stores will have to show consistent improvement for expectations of weakness to change.

CMFAS M5 Chapter 8: Money Laundering

Key sections covered:

1. Customer Due Diligence
2. Record Keeping
3. Suspicious Transaction
4. Internal Policies
5. Terrorist Financing

DEFINITIONS

• AML/CFT - means anti-money laundering and countering the financing of terrorism;
• CDD – means customer due diligence;
• FATF - means the Financial Action Task Force; is an inter-governmental body founded in 1989 by the G7. The purpose of FATF is to develop policies to combat money laundering and terrorist financing. [Source: Wikipedia]
  
• STR - means suspicious transaction report;
• STRO - means the Suspicious Transactions Reporting Office, Commercial Affairs Department of the Singapore Police Force
• Beneficial Owner as defined in the MAS Notice on Prevention of Money Laundering and Countering the Financing of Terrorism means the natural person who ultimately owns or controls a customer or the person on whose behalf a transaction is being conducted and includes the person who exercises ultimate effective control over a body corporate or unincorporate.

GUIDELINES TO FINANCIAL ADVISERS
The Notice contains principles that serve as guidelines for the conduct of business:

1. A financial adviser must exercise due diligence when dealing with customers.
2. A financial adviser must conduct its business in conformity with high ethical standards.
3. A financial adviser should cooperate with law enforcement authorities to prevent money laundering and terrorist financing.

1. CUSTOMER DUE DILIGENCE (CDD)

A financial adviser shall perform CDD measures when:

1. the financial adviser establishes business relations with any customer;
2. there is a suspicion of money laundering or terrorist financing;
3. there are doubts about the accuracy or adequacy of any information obtained.

In non-face-to-face situations, the financial adviser shall:

1. put in place policies to address any related risks that may arise;
2. shall carry out CDD measures that are as stringent as face-to-face situations

When a financial adviser acquires the business of another financial institution, the acquiring financial adviser shall perform CDD measures on the customers acquired at the time of acquisition EXCEPT where:

1. there are no concerns about the adequacy of the information;
2. any due diligence conducted has not raised any doubts about the adequacy of the AML/CFT of the acquired institution.

Verification of customers:

1. A financial adviser shall complete verification of the identity of the customer and beneficial owner before business relations are established;
2. A financial adviser may establish business relations before verification if:

• the deferral of verification is essential in order not to interrupt business operations; and
• the risks of money laundering and terrorist financing can be effectively managed.

3. If business relations are established before verification, the financial adviser shall complete such verification as soon as possible.

Other pointers:

1. If CDD Measures are not completed, the financial adviser shall terminate the business relationship and consider if the filing of an STR is warranted.
2. In the case of joint accounts, a financial adviser shall perform CDD measures on all holders as if each were individual customers.
3. A financial adviser shall perform CDD measures on its existing customers after assessing materiality and risk.

A financial adviser may perform Simplified CDD measures:

1. if it is satisfied that the risks of money laundering and terrorist financing are low
2. but not in relation to customers that are related to countries known to have inadequate AML/CFT measures
3. in relation to a customer that is a financial institution supervised by the Authority (other than holders of money changer’s and remittance licences)

A financial adviser shall perform Enhanced CDD measures in addition to the standard CDD measures for “high risk” category of customers such as:

1. Politically Exposed Persons (PEP) – for example, persons with prominent public functions in a foreign country, heads of state and senior military officials.
2. customers assessed to have a higher risk for money laundering and terrorist financing.
3. persons from countries known to have inadequate AML/CFT measures.

Performance of CDD Measures by Intermediaries:

1. A financial adviser may rely on an intermediary to perform CDD measures if:

• the financial adviser is satisfied that the intermediary has adequate measures to comply with AML/CFT requirements;
• the intermediary has not been precluded by the Authority;
• any information needed can be relayed to the financial adviser without delay

2. The financial adviser shall not rely on an intermediary to conduct ongoing monitoring of customers.
3. Where a financial adviser relies on an intermediary to perform CDD measures, it shall document the basis except where the intermediary is a financial institution supervised by the Authority.
4. For the avoidance of doubt, the financial adviser shall remain responsible for AML/CFT obligations to Notice.

2. RECORD KEEPING

(a) A financial adviser shall maintain documentation on its business relations and transactions with customers such that:

1. legal requirements are met;
2. any transaction can be reconstructed to provide evidence for prosecution of criminal activity;
3. the Authorities and auditors of the financial adviser are able to assess transactions and level of compliance; and
4. the financial adviser can satisfy any enquiry from Authorities for information.

(b) A financial adviser’s record retention policies with regard to customer:

1. keep records for at least 5 years following the termination of business relations;
2. keep records for at least 5 years following the completion of transactions.

(c) A financial adviser may retain documents as originals or copies in any form provided they are admissible as evidence in a Singapore court of law.

(d) A financial adviser shall retain records for as long as needed such as in accordance with any request from STRO or other authorities.

3. SUSPICIOUS TRANSACTIONS REPORTING

• A financial adviser shall keep in mind the legal provisions regarding Corruption, Drug Trafficking and Terrorism regarding transactions suspected of being connected with money laundering or terrorist financing, including the following:

1. establish a single reference point within the organisation to whom all staff are instructured to promptly refer all transactions suspected of being connected with money laundering or terrorist financing, for possible referral to STRO via STRs; and
2. keep records of all transactions referred to STRO, together with all internal findings and analysis done in relation to them.
   

• A financial adviser shall submit reports on suspicious transactions to STRO, and extend a copy to the MAS for information
• A financial adviser shall consider if any circumstances are suspicious so as to warrant the filing of an STR

4. INTERNAL POLICIES, COMPLIANCE, AUDIT AND TRAINING

• A financial adviser shall implement internal policies to help prevent money laundering and terrorist financing and communicate these to employees.
• The policies shall include CDD measures, record retention, detection of suspicious transactions.
• A financial adviser shall take into consideration money laundering and terrorist financing threats that may arise from the use of new technologies.

5. TERRORIST FINANCING

Key Concepts of Notice:

• Money laundering is a process intended to mask the benefits derived from criminal conduct so that they appear to have originated from a legitimate source.
• The CDD function may be outsourced to third party but the financial adviser remains fully accountable.

Stages of money laundering:

1. Placement - physical disposal of the benefits of criminal conduct;
2. Layering - separation of the benefits from their source by creating layers of financial transactions designed to disguise the audit trail; and
3. Integration - provision of apparent legitimacy to the benefits of criminal conduct such that laundered funds return to the economy as “legitimate business funds”.

Placement: Disposal of bulk cash

• Smuggling bulk currency
• Mix illicit proceeds with legitimate deposits
• Deposit amounts in small denominations
• Subdivide bank or commercial transactions

Layering: Disguise origin of initial deposit through:

• Multiple transfers
• Multiple transactions

Integration: Use layered funds to purchase clean, legitimate assets

Terrorism seeks to compel governments into a particular course of action or seeks to intimidate the public. Sources of terrorist financing may be legitimate or illegitimate. Terrorist financing involves amounts that are not always large and the associated transactions may not necessarily be complex given that some sources of terrorist funds may be legitimate

Non-Face-to-Face Verification

As a guide, financial advisers should take one or more of the following measures to mitigate the risk associated with not being able to have face-to-face contact when establishing business relations:

1. telephone contact with the customers at a residential or business number than can be verified independently
2. confirmation of customer's address through an exchange of correspondence or other appropriate method
3. subject to the customer's consent, telephone confirmation of the customer's employment status with the customer's employer's personnel department at a listed business number of the employer.
4. confirmation of the customer's salary details by requiring the presentation of recent bank statements;
5. certification of identification documents by lawyers or notary publics presented the customers;
6. requring the customer to make an initial deposit using a cheque drawn on the customer's personal account with a bank in Singapore; and
7. any other reliable verification checks adopted by the financial adviser for non-face-to-face provision of financial advisory services.

Compliance

The responsibilties of ALM/CFT compliance officer should include the following:

1. ensuring speedy and appropriate reaction to ALM/CFT related matter
2. advising and training on development and implementing internal policies, procedures and controls on AML/CFT;
3. carrying out ongoing monitoring and sample reviewing of accounts for compliance.
4. promoting compliance with MAS Notice and Guidelines on AML/CFT.
   

SUMMARY

1. Definition of Money Laundering: A process intended to mask benefits derived from drug trafficking or criminal conduct so that it appears to originate from a legitimate source

2. The 3 stages of Money Laundering in the following order; Placement, Layering and Integration.

3. Verification of personal customers. If applicant and insured are different people, the applicant’s identity needs to be verified.

4. Non face-to-face identification procedures should be at least as stringent as those of face-to-face verification.

5. For Group Polices

• It is the identity of the holder of the master policy that has to be verified
• Clubs, societies and charities - constitution of the applicant to be produced
• Shell Companies, Trust, Nominee and Fiduciary Accounts – must obtain satisfactory evidence of beneficial owners

6. Record Keeping

• Setting Document Retention Policy (retention period: 5 years)
• Methods of Retention

7. Systems of Reporting Suspicious Transactions

• Licensees are required to set up a system for reporting suspicious transactions.
• It is the obligation of the employees to report suspicious transactions.

8. Compliance and Training

• Internal Audit should monitor the effectiveness of the measures taken to combat money laundering.
• New staff must be trained in specific areas of Money Laundering.
• Refresher training should be held at least once every 2 years.

CMFAS M5 Chapter 7: CPF and SRS

CPF MINIMUM SUM SCHEME (MSS)

A scheme which aims to help CPF members set aside sufficient savings to support a modest standard of living during retirement. All CPF members are required to set aside the Minimum Sum when they turn age 55 and pensioners may apply for exemption from the Minimum Sum.

Options To Meet The MSS Requirement

• When a member reaches age 55, the Minimum Sum that he sets aside is kept in a Retirement Account.
• Setting aside this Minimum Sum amount is a requirement and the amount increases by $4,000 on 1 July each year until it reaches $120,000 (in 2003 dollars) in year 2013, and will be adjusted yearly for inflation.
• (New) The Minimum Sum currently stands at $106,000 (for the period 1-7-2008 and 30-6-2009).
  
• (Old) The Minimum Sum currently was at $94,600 (for the period 1-7-2006 to 30-6-2007).

For members who do not have enough money in their Retirement Account, i.e. below the Minimum Sum amount, the Board allows them the following options:

• instead of withdrawing the savings in their OA or SA Accounts which they are entitled to, they may request for them to be transferred to the Retirement Account to make up to the Minimum Sum amount. However, such a transfer is irrevocable;
• they can pledge their properties up to 50% of the Minimum Sum (For 1 July 2006 to 30 June 2007, the maximum limit that one can pledge his property is up to a maximum of $47,300);
• they can use their future CPF contributions (i.e. if they are working after age 55) to make up the shortfall in the Minimum Sum;
• they can top-up their Retirement Account by cash.

Options To Invest The MSS
Members are given the following three options to invest their Minimum Sum when they turn age 55:

1. buy a life annuity from a participating insurance company;
2. keep it with a participating bank; or
3. leave it with the CPF Board.

For all three options, the member will only start to receive a monthly income when he reaches the statutory retirement age (currently at age 62) except for those whose job requires them to retire early, e.g. those in the police force.

Buying a life annuity is the best choice amongst the three options because the monthly payment will continue for as long as the annuitant is alive. As for the other two options, once the Minimum Sum is fully utilised, the monthly payment will be discontinued.

Option For Combined MSS For Married Couples
They can opt to set aside a combined Minimum Sum of 1.5 times the Minimum Sum provided they nominate each other as the beneficiary for the balance of their Minimum Sum. Once the nomination is made, it cannot be revoked. Should one of the account holders die, the deceased’s Minimum Sum would be transferred to the surviving spouse’s Retirement Account to make up the full Minimum Sum. Any excess amount will be paid in a lump sum to the surviving spouse as nominee of the money.

Commencement Date Of Monthly Payout
For members who reach age 55 before 1 January 1999, the Minimum Sum monthly payout will commence from age 60 and for those who reach age 55 on or after 1 January 1999, the Minimum Sum monthly payout will commence from age 62 .

Retirement Age Determined At Age 55
The retirement age is based on the one prevailing at the time a member turns 55 years old. This means to say that whenever the legislated retirement age is changed, it will only affect those who are below 55 years old.

Minimum Sum Plus Scheme (MSPS)
Members who are age 55 and above on or after 1 January 2001 can use the balance in their CPF savings in the Ordinary and Special Accounts as well as Medisave Account in excess of the Medisave Minimum Sum, beyond the Minimum Sum to buy Life Annuities. This is an extension of the Minimum Sum Scheme and is optional. Members who have set aside the full Minimum Sum amount as well as the Medisave Minimum Sum amount may make use of this scheme to buy life annuities when they are eligible for CPF withdrawal.

Topping Up The Minimum Sum
It is intended to help individuals (CPF and non-CPF members) set aside money for their own, their spouses’, parents’ or grandparents’ old age needs. The eligibility criteria for this scheme are as follows:

• both parties (i.e. the applicant and the recipient of the top-up) must be Singaporeans or Singapore Permanent Residents;
• the recipient of the top-up should be at least 55 years old;
• the party whose money will be used for the top-up must have more than 1.5 the prevailing Minimum Sum amount in their Ordinary and Special accounts, including amount withdrawn for investments

Besides the eligibility criteria, the CPF Board also lays down conditions for the use of this scheme as follows:

• the amount of top-up must not exceed the maximum limit allowed under the scheme
• members must follow the guidelines on the use of cash and/or CPF savings for the topping up

Guidelines On Use Of Cash And/Or CPF Savings For Topping Up

Person* Whose Account Will Be Topped Up	Using CPF Savings	Using Cash
Self		X
Spouse	X	X
Parents	X	X
Grandparents		X

* Must be Singaporeans or Permanent Residents of Singapore

From the above table, it can be seen that members may top-up their own as well as their grandparent’s Retirement Accounts using cash only. As for spouse and parents, they may do so using both cash and CPF savings.

Tax Treatment
MSS: All monthly tax payments are tax free.

MSPS: Amount is also tax free. However if the annuity is discontinued, money will be returned to member and no more exemptions for subsequent investments.

Top Up:

• Member who used cash to top up their parents’ or grandparents’ Retirement Account can also claim tax relief up to $7,000 per calendar year for the amount of cash top-up subject to the topping up limits.
• Member will also qualify for the relief if the member has made a top-up in cash for his/her non-working spouse who is 55 years old or older and whose income does not exceed $2,000 in the year preceding the year of top-up.
• Topping-up of accounts through transfer of funds from the member’s own CPF account to that of his/her own or spouse’s, parent(s)’ or grandparent(s)’ retirement account will not qualify for deduction.

Upon Death Of The Retirement Account Holder

• The Minimum Sum (or its balance) will be paid out in a lump sum to his CPF nominees
• If there is no nomination, the money would be channelled to the Public Trustee for distribution according to the law of intestacy
• Upon death of the member, the remaining balance in annuity or bank deposit would be transferred back to CPF to be distributed to the CPF nominees
• In the case of topping-ups by children or grandchildren, the money will be returned proportionately (based on the amount contributed) to the children’s or grandchildren’s respective CPF Accounts
• For the combined Minimum Sum cases where an irrevocable nomination had been made, the deceased’s Minimum Sum would be transferred to the surviving spouse to make up the full Minimum Sum for the surviving spouse

CPF FAQ on Minimum Sum Scheme (MSS):
http://ask-us.cpf.gov.sg/explorefaq.asp?category=23004

Q: Can I claim tax relief if I use cash to top up under the Minimum Sum Topping-Up Scheme?

A: You can enjoy tax relief of up to $7,000 per calendar year, if you use cash to top up for yourself and/or receive cash top-ups from your employer. You can enjoy an additional tax relief of up to $7,000 per calendar year if you use cash to top up for your siblings, spouse, parents or grandparents. To qualify for tax relief for cash top-ups for siblings/spouse, the sibling/spouse must have earned $2,000 or less in the preceding year. For cash top-ups made in the year, you can claim tax relief in the following year’s Tax Assessment.

CPF INVESTMENT SCHEME (CPFIS)

• The CPFIS comprises the CPF Investment Scheme–Ordinary Account (CPFIS-OA) and CPF Investment Scheme-Special Account (CPFIS-SA).
• The purpose of these two schemes is to give CPF members more options to enhance their retirement savings through investments.
• Currently, the CPF Board pays a guaranteed minimum interest of 2.5% per annum and 4% per annum on the Ordinary and Special Accounts respectively.

Eligibility Requirement Criteria. All CPF members who meet the following requirements are allowed to participate under the CPFIS:

• at least 21 years old;
• not undischarged bankrupts; and
• have savings in their Ordinary or Special Accounts

Limitations

• List Of Investment Instruments Allowed Under CPFIS And The Investment Limits
• Buying And Selling Of Investments From Service/Product Providers Under The CPFIS
• Mode Of Premium Payment For Life Insurance Products
• Admission Criteria for Funds Seeking to be Included under CPFIS

Types Of Investment Instruments And Amount Of Savings Allowed Under CPFIS-OA

Instruments	Investment Limits
Fixed Deposits Singapore Government Bonds Statutory Board Bonds Bonds Guaranteed By Singapore Government Annuities Endowment Insurance Policies Investment-linked Insurance Products Unit Trusts Exchange Traded Funds Fund Management Accounts	The full balance in the Ordinary Account
Shares Corporate Bonds Property Funds (real estate investment trusts)	Up to 35% of investible savings
Gold	Up to 10% of investible savings

Types Of Investment Instruments And Amount Of Savings Allowed Under CPFIS-OA

Instruments	Investment Limits
Fixed Deposits Singapore Government Bonds Statutory Board Bonds Bonds Guaranteed By Singapore Government Annuities Endowment Insurance Policies Selected Investment-linked Insurance Products Selected Unit Trusts Selected Exchange Traded Funds	The full balance in the Special Account

Mode Of Premium Payment For Life Insurance Products. With effect from 1 January 2001, the CPF Board has discontinued the practice of allowing members to use their CPF savings to purchase regular premium policies. Policies taken after this date have to be paid by single premium or recurring single premium. The insurance coverage is limited to three times the single premium paid. Members who had purchased regular premium policies before 1 January 2001 are allowed to continue with their policies on a regular premium payment basis.

Admission Criteria for Funds Seeking to be Included under CPFIS
From 1 Feb 2006, new funds must meet the following criteria for inclusion under CPFIS:

• Top 25 percentile in their global peer group
• Expense ratio lower than median of existing CPFIS funds in its risk category
• Preferably have a track record of at least three years
• CPF Board will publish on its website a list of funds which meets these criteria.

PFIS-OA	CPFIS-SA
Need to open an investment account with DBS/OCBC/UOB	No need to open account. Service Provider will liaise with CPF
Sales proceeds will be credited into Investment Account and if inactive for 2 months, money will be transferred to OA	Sales proceeds automatically transferred to SA
Profits cannot be withdrawn	Same
No need to make good loss	Same
Profits and interest earned are not taxable but dividend is taxed at individual tax rate	Same (since shares are not allowed, hence no dividend)
Guaranteed interest at 2.5%	Guaranteed interest at 4%

Release Of Investment Holdings Upon Member Reaching Age 55

• A member’s investments will be released to him when he withdraws his CPF savings at age 55 after setting aside the Required CPF Minimum Sum and Medisave Required Amount.
• If he is unable to set aside the Required CPF Minimum Sum and Medisave Required Amount, his investments will not be released to him.
• Upon liquidation of the investments, the proceeds will be credited to his CPF Investment Account for CPFIS-OA or Special Account for CPFIS-SA.
• Up to half of all his new contributions (including his proceeds from the sale of investments) will be transferred to top-up the shortfall in his Retirement and/or Medisave Accounts when he applies to withdraw his CPF savings.

The Funds Performance Tracking Committee (FPTC) was formed after CPF decided to invite the industry parties to play a more active role in funds performance tracking. It comprises of representatives from:

• Investment Management Association of Singapore (IMAS)
• Life Insurance Association (LIA), and
• Security Investors Association of Singapore (SIAS)

Treatment Of CPFIS Investments Upon Member’s Death

• When members die (irrespective of whether they were undischarged bankrupts or not), CPF investments and any cash held in their CPF investment account under the CPFIS-OA, as well as investments held under CPFIS-SA, form part of the deceased members’ estate and will be distributed according to applicable laws.
• These investments cease to be protected from deceased members’ creditors under the CPF laws and may be used to satisfy creditors’ claims in accordance with the Probate and Administration Act.
• This applies whether the deceased member is an undischarged bankrupt or not.

Supplementary Retirement Scheme (SRS)

The SRS was introduced by the government on 1 April 2001 as a voluntary scheme to encourage working individuals to save for their retirement, over and above their CPF savings, i.e. it complements the CPF scheme.

Eligibility Criteria

• Singaporeans, PRs and foreigners;
• at least 21 years old;
• not undischarged bankrupts; and
• not of unsound mind.

Maximum Limit Imposed On Amount Of Contributions Made Per Year

• All SRS contributions and withdrawals must be made in cash only
• Only single premium and recurring single premium polices are allowed
• Life cover (including total and permanent disability benefits) capped at three times the single premium
• Plans can allow for contribution continuation feature/benefit upon disability
• Other types of life insurance, such as Critical Illness Insurance, Health Insurance and Long-term Care Insurance policies are not allowed under the scheme
• SRS investments cannot be used as a collateral
• SRS balance is not protected from creditors
• Flexibility on frequency of contributions and the selling of investments
• Withholding tax is imposed on all SRS withdrawals by foreigners and PRs
• A participant is not allowed to contribute to SRS after he has started to withdraw from his SRS account at or after retirement, or after he has reach the prevailing statutory retirement age, whichever is earlier

Income Tax Advantages

Summary Of SRS Regulations Pertaining To Withdrawal Of SRS Savings

Situation	Max period* allowed for withdrawal	Amount of withdrawal subject to tax	5% Penalty
On or after the prevailing statutory retirement age at the time of first contribution	10 years**	50%	No
Before the prevailing statutory retirement age at the time of first contribution	N.A.	100%	Yes
Upon Death	N.A.	50%	No
Upon permanent incapacity or on medical grounds 10 years	50%	No
Bankruptcy	N.A.	100%	No
FULL withdrawal by a foreigner who has maintained his SRS account for at least 10 years from date of first contribution	N.A.	50%	No

* Period may be longer if the statutory retirement age has been increased.
** 10-year period does not apply to investments in life annuities. 50% tax concession will apply to annuity streams in perpetuity.

Similarities Between CPFIS And SRS

• both are voluntary schemes;
• both have eligibility criteria;
• investment returns accumulated are tax free except for dividends which are taxed at the individual tax rate (Note: Shares are not one of the CPFIS-SA instruments, hence, no dividend issues where this scheme is concerned);
• life insurance cover (including total and permanent disability benefits) is capped at three times the single premium;
• most financial instruments (except fixed deposits*) do not guarantee investment return;
  
• both allow investment in single premium and recurrent single premium products including annuities.

*Provided the fixed deposits are not withdrawn prior to its maturity date

Differences Between CPFIS And SRS

CPFIS-OA	CPFIS-SA	SRS
Limits are only set on investments in stock and gold. Members can invest up to the balances in their OA in professionally- managed products allowed under the CPFIS-OA scheme	No limits set on the amount of savings in the SA account that can be used for investment	Sets limits on the amount of contributions that may be made to SRS Account per year
Can only use the savings in the OA for investment	Can only use the money in the SA for investment	Can use earned employment income (excluding directors’ fees) as well as income from self-employment for participation in the SRS
Members need to open an investment account with one of the approved agent banks	Members need not open any investment account	Participants need to open an SRS account with one of the SRS operators
Can only maintain one investment account at any one time	Not applicable	Can only maintain one SRS account at any one time
Members may buy and sell their investments through the service/product providers allowed under the scheme	Members may buy and sell their investments through the service/product providers allowed under the scheme	Participants may buy and sell their investments from any financial institution
Members may buy and sell their investments through the service/product providers allowed under the scheme	Members may buy and sell their investments through the service/product providers allowed under the scheme	Participants may buy and sell their investments from any financial institution
Can only purchase investment instruments approved under the scheme	Can only purchase investment instruments approved under the scheme	Can purchase any investment instruments available in the market
Withdrawal of profits is not allowed	Withdrawal of profits is not allowed	Withdrawals allowed at anytime
Not applicable	Not applicable	Penalty charge imposed on early withdrawal
No charges imposed on the operation of the investment account (Transaction fees and service charges may be imposed by agent banks)	Not applicable	May need to pay charges for operating the SRS account
Withdrawals are tax-free, with the exception of dividends received which are taxable at individual tax rates	Withdrawals are tax-free	Withdrawals on or after retirement (prevailing retirement age at first contribution), 50% of the amount withdrawn will be subject to tax
Not applicable	Not applicable	Withdrawal before the statutory retirement age prevailing at first contribution, 100% of the amount withdrawn is subject to tax
Not applicable	Not applicable	Withholding tax imposed on withdrawals by foreigners and Singapore Permanent Residents based on the rate prevailing at the time of withdrawal
Investments cannot be assigned, pledged or used as collateral for any loan purposes	Investments cannot be assigned, pledged or used as collateral for any loan purposes	SRS account balance cannot be used as collateral, security or guarantee for any financial transaction outside the SRS
Investments will form part of the deceased’s estate except for insurance	Investments will form part of the deceased’s estate except for insurance and fixed deposits	Investments will form part of the deceased’s estate

3 Money Making Bear Market Lessons

Simon Maierhofer
Friday March 6, 2009, 11:15 am EST

http://finance.yahoo.com/news/3-Money-Making-Bear-Market-etfguide-14566232.html

In fact, our February 2nd article, '11 ETFs For The Dow 6,500 Portfolio' was received with skepticism and mockery at the time. Today however, the Dow is just a few points shy of 6,500. The article outlined three different approaches to combat the bear: 1) ETFs that provide safety 2) ETFs that soften the blow 3) ETFs that make money in a down market.

All ETFs recommended accomplished their mission. The five ETFs recommended as profit centers are all up 20% and more, in a market that has lost more nearly 20%. Those ETFs were: ProShares UltraShort Financials (NYSEArca: SKF - News), ProShares UltraShort Real Estate (NYSEArca: SRS - News), ProShares UltraShort Consumer Services (NYSEArca: SCC - News), ProShares UltraShort S&P 500 (NYSEArca: SDS - News) and the ProShares UltraShort Dow 30 (NYSEArca: DXD - News).

Bear Hug for Gold?

http://www.minyanville.com/articles/gold-rally-GLD-market-etf-statistics/index/a/21496/from/yahoo

Lance Lewis Mar 06, 2009 2:50 pm

I’ve read some things written by gold bears of late, calling for gold to decline in March due to “seasonal tendencies."

As always with statistics, if one doesn’t know why a particular statistical pattern occurs (as with the “Super Bowl Indicator” for example), one can make incorrect assumptions about future behavior.

In gold’s case, it’s typical seasonality tends to see gold rally in the fall, and then peak in the early spring. But the reason that we typically see this pattern, is due to the seasonality of gold demand coming from the largest gold jewelry consumer on the planet, whose various festivals revolve around gold: India.

However, as I’ve pointed out before, jewelry demand is not what is currently driving the gold price. Indian gold imports in February were virtually 0. Meanwhile, gold rallied $100 during February to $1000 and an 11-month high. As always occurs during a big bull market in gold, investment demand is the primary driver of the gold market, and it displaces jewelry demand. And investment demand is obviously not seasonal.

CMFAS M5 Chapter 6: Financial Needs Analysis

Financial Needs Analysis (FNA)
A process designed to assist a prospective client in identifying his financial needs and goals so that he can make better informed decisions when deciding on the investment products to purchase that would meet his needs. Generally, this process involves:

1. fact finding;
2. identifying and quantifying client’s needs;
3. product recommendation and presentation; and
4. conducting a review of the client’s needs periodically

An FNA is not a financial plan although it can result in one. It should be construed as a guide for the representatives to use in deciding how best to attain his client’s financial goals in the areas of:

1. Accumulation. Planning to pay for children’s education and other financial objectives (e.g. saving to buy a bigger house.
2. Retirement Planning to provide the additional income needed to supplement CPF, pension plans and existing savings and investments.
3. Protection Planning to ensure that all financial obligations are met under the following circumstances:

• upon death;
• upon disablement;
• upon the contracting of critical illness;
• upon the loss of or damage to property;
• when a personal liability arises.

BENEFITS OF CONDUCTING FNA

• help to discover your client’s needs and advise the most suitable products to buy and how much to buy;
• spend more time on the client’s situation than you do on your product;
• if you sell the client additional products based on his plan, he will be able to see how the products fit into his overall plan;
• the client will be more committed to keeping to his plan as he understands the rationale for his purchases;
• enables you to establish a long-term relationship with your client.

Main Sources Of Money To Meet The Client’s Needs

• Central Provident Fund (CPF)
• Supplementary Retirement Scheme (SRS)
• other savings and investments, e.g. property
• client’s existing Life Insurance policy and Disability Income Insurance policy
• employee benefits provided by client’s employer

1. FACT FINDING

• Before you can perform a proper needs analysis, you must first of all know your client. To do this, you need to gather information from your client which include his:
• Personal Details;
• Employment Details;
• Number of Dependants (this piece of information is required for determining insurance needs);
• Financial Information;
• Monthly Income and Expenditure: committed (or Fixed) Expenditure and manageable (or Variable) Expenditure
• Assets and Liabilities.
• Existing Insurance Policies;
• Objectives:You need to find out your client’s objectives in order to recommend suitable products to meet their needs
• Preferences: Attitudes towards investment risk (risk averter, cautious, balanced, risk seeker;Areas of concern (keep pace with inflation; investment is easy to manage; capital growth; easy access to cash, investment income each year)
• Retirement Needs;
• Savings Goals.

2. IDENTIFYING AND QUANTIFYING CLIENT’S NEEDS

• analyse the data so as to identify and quantify the client’s needs
• pick up weaknesses or potential problems that can negatively affect the client’s ability to achieve his objectives
• do a detailed analysis of your client’s financial needs and tackle each of the needs that you have uncovered especially those that need immediate attention
• help your client to prioritise his needs. This is because the client’s resources are usually limited
• quantify your client’s needs

There are 2 methods of quantifying retirement needs, namely [p.177]

• the replacement ratio method, which computes the amount of funds required based on a certain percentage of the client's last drawn pay, and
• the expense method, which computes the amount of funds required based on the current level of the household expenses projected into the future at the expected inflation rate

For protection needs, you need to determine:

• the sum of the client's total liabilities
• his immediate expenses at the time of death, and
• the amount needed to provide for the dependents for as long as required

There are 2 common methods used for quantifying the amount needed to provide for dependants, namely

• the multiple approach, which computes the amount of funds required to meet a client's needs by multiplying the present value of the stream of the client's current yearly gross income (assumed to be constant until his retirement) by a constant future investment rate
• the needs approach, which calculates the amount needed by taking into account the specific position of the client. It involves estimating the income needed by the dependants to maintain their standard of living and the available funds that the client has to meet his needs. The difference between the two is the shortfall that the client needs to provide for his dependants.

TYPES OF INVESTMENT PRODUCTS TO MEET THE CLIENT’S OBJECTIVES

• Product Recommendations
• Product Suitability
• Client’s Objectives
• Affordability
• Taxation
• Client’s Risk Tolerance
• Prioritisation
• Effect of Inflation and Time Value of Money
• Investment Instruments for Meeting Accumulation Needs
• Investment Products to Meet Retirement Needs
• Investment Products to Meet Protection Needs

Two basic principle under product recommendation [p.178]

• client need - you should only recommend products if your client needs them
• product suitability - you should only recommend products which are the most suitable for your client given his circumstances

Investment Instruments for Meeting Accumulation Needs and the Risk of Losing Capital

• Money Market Securities (e.g. Treasury bills, banker’s acceptance and certificate of deposit, commercial paper, repurchase agreement, bank deposits): Low risk
  
• Fixed Income Securities, i.e. bonds: Moderate
• Equity Investments, i.e. ordinary and preferred shares: High
• Derivative Instruments, e.g. options and futures: High
• Property: High
• Unit Trusts: Moderate to High
• Whole Life Insurance: Low
• Endowment: Low
• Investment-Linked Products: Low to High depending on the underlying assets (i.e. whether the fund consists of bonds or equities, etc.)
• Annuities: Low

Types Of Life And Health Insurance Products For Meeting Protection Needs

• Term: Death as well as total and permanent disability
• Whole Life: Death as well as total and permanent disability
• Endowment Insurance: Death as well as total and permanent disability
• Investment-linked Life Insurance: Death as well as total and permanent disability
• Riders: To provide financial protection in addition to that of the basic policy at a low cost
• Critical Illness Insurance: To provide for a lump sum payment upon contracting one of the covered critical illnesses
• Long Term Care Insurance: To provide a regular income when one is unable to perform a specific number of activities of daily living, e.g. bathing
• Medical Expense Insurance and Managed Health Care Insurance" To provide protection against ill health
• Disability Income Insurance: To provide a monthly income when a person is disabled

General Insurance Products For Meeting Protection Needs

• Fire Insurance: For protection of the house against destruction by fire
• Householder/Houseowner Insurance: To protect the building or contents in the building
• Personal Accident Insurance: For protection against accidental death and disablement
• Personal Liability Insurance: To protect one against third party liability

3. PRESENTING YOUR RECOMMENDATIONS

• ensure that your client understands the products recommended and the reasons for your recommendations
• be able to explain the features and benefits of the recommended products and how these fit into his situation

4. CLIENT REVIEW

• The process of identifying and satisfying client needs does not stop with the implementation of the initial recommendations.
• Client’s personal circumstances are likely to change (e.g. the birth of a child) and new needs may surface.
• Regular review will ensure that your client continues to receive quality service from you and reinforces your relationship with him.
• External developments, such as changes to CPF rules may also indicate the need for a client review.
• The needs of your clients should be a long-term concern and your relationship with your clients, a continuing one.

CMFAS M5 Chapter 5: Development and Pricing of Insurance Products

MAS 302 – PRODUCT DEVELOPMENT AND PRICING
Comprises both mandatory requirements and guidelines. This Notice applies to any direct insurer registered to carry on life business.

Part 1 - Mandatory Requirements

• Prudent Management Oversight
• Approval For New Products
• Contravention Of Requirements Imposed

Approval For New Products
An insurer shall obtain written approval from the MAS before offering any product with any feature that does not appear in any product in the insurer’s then-existing business portfolio.
Any request for such approval shall be made in writing and submitted to the MAS no later than 1 month before the proposed official launch date of the product.

The paragraph above shall not apply in respect of:

• a short-term accident and health policy; or
• a term policy having a duration of 5 years or less.

Information And Product Documents To Be Submitted For Approval Of New Insurance Products

Part 2 – Guidelines
The standards set out in this section are not mandatory in that failure by an insurer to comply with any of the standards shall not of itself render the insurer to be in breach of this Notice.
MAS may take into account a failure to comply with these standards in considering whether to:

• approve a new product;
• revoke the approval for a product; or
• issue directions for the withdrawal of a product.

Notification For Products Launched
An insurer should notify the MAS in writing of any product launched by the insurer that does not require the approval of the MAS. Such notice should be given to the MAS within 7 working days after the official launch date of the product.

MAS 307 – NOTICE ON INVESTMENT-LINKED LIFE INSURANCE POLICIES

The MAS 307 was issued to ensure that insurers adhere to minimum standards of investment and disclosure requirements for ILPs. Under the MAS 307 Notice, an insurer shall seek written approval from the MAS for:

• the establishment of any ILP sub-fund; or
• any significant change to any ILP sub-fund, such as any change in the manager or investment objective of the ILP sub-fund.

Investment-linked sub-fund refers to each separate sub-fund within an ILP to which a policyholder can choose to allocate his or her premiums under the ILP.

Disclosure Of Information
It is important that all insurers issuing investment-linked policies should ensure that adequate and accurate information about the policies is provided to policyholders

1. Information For Applicants -Sales Materials/Policy Forms
2. Information For Policyholders

• Statement To Policyholders
• Reports To Policyholders

Sales Materials/Policy Forms

Sales materials and brochures shall not be written in language which may confuse or mislead an applicant due to his lack of experience. The shall include {p.155]:

1. a general description of the principal features of the policy;
2. a list of ILP sub-funds
3. investment policy of each sub-fund including:

• a description of the investment objectives intended
• principal types of investments,
• the markets and sectors intend;

4. the risks to be borne by the policyholder;
5. charges to be borne by the policyholders:

• initial charge
• management fees
• mortality cost
• any other charges
  

6. basis for computing all policy benefits
7. basis and frequency for valuing the assets
8. illustrations of benefits payable
9. investment performance of each sub-fund over the last 1-year, 3-year, 5-year, 10 years and since inception.

Statement To Policyholders. All policyholders shall be provided with a statement on the performance and value of their policies at least on an annual basis.

Report To Policyholders [p.157]

All policyholders shall also be entitled to receive from the insurer semi-annual and annual audited reports on the performance of each investment-linked sub-fund. The report shall include:

1.a summary of the financial statement of the sub-fund
2. the net investment performance
3. a list of investments held at market value and as percentage of net asset value
4. the top 10 holdings at market value and as a percentage of net asset value.
5. any charges levied against the sub-fund
6. a statement of any change in

• investment objective and the orientation
• any restriction or material quantitative or qualitative investment requirement.
  

Minimum Death Benefits. There is no prescribed minimum death benefit for an Investment-linked Life Insurance policy.

CMFAS M5 Chapter 4: MAS Guidelines

Guidelines are intended to provide general guidance and are meant to be good practice. They do not create any legally enforceable obligations or duties. MAS has published the following Guidelines in relation to FAA:

1. Guidelines on criteria for the grant of a Financial Adviser's license and a representative's license;
2. Guidelines on fit and proper criteria;
3. Guidelines on license applications and payment of fees
4. Guidelines on standards of conduct for FA
5. Guidelines on the use of the term "independent" by FA
6. Guidelines on applications for approval of Arrangements under Paragraph 11 of the First Schedule of Financial Act.
7. Guidelines for exemption for specialised units serving High Net Worth individuals under FAA.
8. Guidelines for conduct of business for execution-related advice
9. Guidelines on Structure Deposits
10. Guidelines on switching of designated investment products
11. Guidelines on prevention of Money Laundering and Countering the Financing of Terrorism.
    

1. GUIDELINES ON CRITERIA FOR THE GRANT OF A FINANCIAL ADVISER’S LICENCE AND A REPRESENTATIVE’S LICENCE

They are intended to provide guidance on the licensing admission criteria for persons applying for a financial adviser’s and a representative’s licence under the FAA

• Who Needs To Apply For A Financial Adviser’s Licence And A Representative’s Licence?
• What Are The Admission Criteria For The Grant Of A Financial Adviser’s Licence?
• What Are The Admission Criteria For The Grant Of A Representative’s Licence?

Who Needs To Apply For A Financial Adviser’s Licence And A Representative’s Licence?

• Corporations, which carry on a business of providing any financial advisory service unless otherwise exempted.
• Individuals who are employed by or acting for the corporation to provide any financial advisory service are required to hold a representative’s licence under the FAA.

Those who provide any financial advisory service on behalf of a corporation exempt under Section 23(1) of the FAA are exempt from the requirement to hold a representative’s licence.

The financial advisory services specified in the FAA are as follows:

1. advising others concerning any investment product;
2. issuing or promulgating analyses or reports concerning any investment product;
3. marketing of any collective investment scheme; and
4. arranging of any contract of insurance in respect of life policies, other than a contract of reinsurance.

What Are The Admission Criteria For The Grant Of A Financial Adviser’s Licence?

• Minimum Financial Requirements
• Professional Indemnity Insurance
• Management Expertise
• Track Record
• Shareholding
• Supervision by Home Regulatory Authority
• Systems and Processes
• Fit and Proper
• Others
• Opportunity to be Heard – Requirement of Grant or Renewal of Financial Adviser’s Licence.

Minimum Financial Requirements:

1. Paid-up capital of $150,000 for those who do not handle futures contracts or foreign exchange (FX) trading.
2. Paid-up capital of $300,000 for those with futures contracts or FX trading.
   

Professional Indemnity Insurance

• not less than $500,000
• deductible allowed not more than 20% of applicant's NAV
  

Management Expertise

• All Executive Directors (ED), including CEO must of minimum of 5 years of relevant working experience.
• They must of acceptable academic qualifications and/or professional qualifications
• CEO must of at least 3 years of managerial experience in the relevant field.
• CEO, ED or Manager must be a tied-agent
  

Systems and Processes
Applicant should be adequate internal compliance systems and processes to ensure:

• compliance with the law
• good practices and
  
• professional standards.

This would include access to:

• research reports
• financial planning tools and services
• investment capability
  

What Are The Admission Criteria For The Grant Of A Representative’s Licence?
A representative’s licence will only be granted to an individual. The MAS may refuse an application for the grant of a representative’s licence if the applicant does not satisfy its requirements in terms of age, competence & education requirements, fit & proper criteria.

2. GUIDELINES ON FIT AND PROPER CRITERIA [p.105]

The MAS will consider a number of factors when assessing if a financial adviser or representative is fit and proper, key among which are:

1. honesty, integrity and reputation;
2. financial soundness; and
3. competence and capability.

GUIDELINES ON LICENCE APPLICATIONS AND PAYMENT OF FEES [p.109]

Procedures For Application For A New Licence
Procedures For Renewal Of Licences
Procedures For Applying Additional Type(s) Of Financial Advisory Service
Annual Licence Fees

The following forms are set out in the FAR for the application of:

• Form 1: FA's license;
• Form 2: additional types of service FA services under FA's licence
  
• Form 3: renewal of FA's license
• Form 6: representative's license
• Form 7: additional types of FA service for representative
  
• Form 8: application for renewal of representative's license

GUIDELINES ON STANDARDS OF CONDUCT FOR FINANCIAL ADVISERS [p.112]

This guidelines cover:

1. Integrity

2. Objectivity

3. Confidentiality

4. Competence

5. Due Care and Diligence

• Prompt and Best Execution
• Supervision of Representatives
• Cessation of Business

6. Disclosure to Clients

• General Information about the Financial Adviser
• Key Features of Products
• Warnings, Exclusions and Disclaimers
• Clear, Adequate and not False or Misleading
• Facts and Opinion
• Remuneration

7. Know your Client

• General
• Reasonable Basis
• Record Keeping
• Prevention of Money Laundering

8. Conflict of Interest

9. Complaints Handling

10. Compliance with Laws

GUIDELINES ON THE USE OF THE TERM “INDEPENDENT” BY FINANCIAL ADVISERS [p.119]

It gives guidance to financial advisers on the circumstances they may use the term “independent”. It adopt a principles-based approach rather than a detailed prescriptive approach in determining whether a financial adviser can use the term “independent”

Under FAR, no licensed financial adviser or exempt financial adviser shall use the word “independent” , unless the financial adviser:

1. does not receive any commission or other benefit from a product provider which may create product bias and does not pay any commission to or confer other benefit upon its representatives which may create product bias;
2. operates free from any direct or indirect restriction relating to any investment product which is recommended; and
3. operates without any conflict of interest created by any connection to or association with any product provider.

The basic test for independence is whether a reasonable investor, knowing all the relevant facts and circumstances would perceive the financial adviser as having conflicting interests with the investor and for the advice or recommendation not to be objective and impartial. In considering whether a financial adviser is independent, the MAS will consider all relevant facts and circumstances.

The MAS considers that a financial adviser can use the word “independent” if:

• it does not receive any of the following:

1. any commission (apart from commission that is rebated in full to the financial adviser’s clients);
2. any form of remuneration calculated at a rate or on a basis that varies having regard to all or any of the following: the number of transactions so arranged or effected; or the value of each transaction or of all transactions (for life policies, based on amount of premiums paid or payable or the amount of sum insured. For unit trusts, based on subscriptions paid or payable); and
3. any gift or other benefit from product providers which may reasonably be expected to influence the financial adviser.

• it operates free from any direct or indirect restriction relating to the investment products it provides financial advisory services on; and

• it operates without any conflict of interest that may:

1. arise from its association or relationship with product providers; and
2. reasonably be expected to influence it in carrying on the business of providing financial advisory services.

Commission and Other Benefits
The mere fact that a financial adviser receives commissions or other benefits from a product provider does not preclude it from calling itself “independent”. The key issue is whether such commission or other benefit is likely to create a bias in favour of a particular investment product, class of investment product or product provider. The guidelines are:

• Insignificant Commission or Other Benefits. The commissions received should be insignificant relative to its total revenue.
  
• Same Level of Commission. It should received similar level of commission for similar products.
• Commission Sharing Arrangement. Where representatives are entitled to certain percentage of the commission paid by the product providers, the arrangement should be similar for the investment products.
• Significant Commissions or Benefits. MAS would consider commissions to be significant if they contribute more than 20% of the total revenue. Differences in the rate of commissions amounting to more than 20% will generally be regarded to significant.
  

Product Restriction
A financial adviser’s independence may be impaired by any form of product restriction, whether direct or indirect.

• Direct Restriction: An agreement between FA and product provider whereby FA is limited to sell only a range of products selected by the product provider.
• Indirect Restriction: FA is required to meet sales targets agreed with product provider.

Relationship with a Product Provider
A financial adviser may be a product provider itself, such as a bank, fund management company or life insurance company. Under such circumstances, the financial adviser should not promote its services as being “independent”.

A financial adviser may also be related to a product provider. For instance, it may be a subsidiary of a product provider, the advisory arm of a financial services conglomerate that owns a fund management, life insurance or banking outfit, or a sister company of a product provider. In considering whether these ownership links create a product bias, the MAS will take into account:

• the ownership structure of the financial adviser;
• its relationship with the product provider;
• the products on which advice or recommendation is given

GUIDELINES ON APPLICATIONS FOR APPROVAL OF ARRANGEMENT UNDER PARAGRAPH 11 OF THE FIRST SCHEDULE TO THE FINANCIAL ADVISERS ACT [p125]

Advisory process includes "know your client", needs analysis and product recommendation.

Client Servicing process includes sales, marketing, solicitation, and other pre-contract and pre-transaction activities.

Prospecting refers to the process of searching for clients.

GUIDELINES ON EXEMPTION FOR SPECIALISED UNITS SERVING HIGH NET WORTH INDIVIDUALS UNDER SECTION 100(2) OF THE FINANCIAL ADVISERS ACT [p.129]

These Guidelines elaborate on:

• the criteria that the MAS would consider in assessing applications for exemption;
• the types of clients that may be served by the Unit; and
• the general conditions that will be imposed by the MAS.

High net worth individual:

1. has minimum $1 million of assets in the following items:

• bank deposits and structure deposits
• capital market products
• life policies
• other investment products as may be prescribed by MAS;

2. total net personal assets exceed S$2 million in value;
3. annual income not less than S$300,000.
4. who is assessed by the applicant to have the potential to become a person prescribed in (1) within 2 years.

GUIDELINES ON CONDUCT OF BUSINESS FOR EXECUTION RELATED ADVICE [p.131]

Execution activities means any of the following activities:
1. dealing in securities quoted on a securities exchange.
2. trading in futures contracts;
3. foreign exchange trading
4. leverage foreign exchange trading.

GUIDELINES ON STRUCTURED DEPOSITS [p.134]

These Guidelines set out the standards of conduct expected of licensed and exempt financial advisers and their representatives when advising on structured deposits. They provide general guidance and are not intended to replace or override any legislative provisions or written directions issued under the FAA in respect of conduct requirements specifically applicable to licensed or exempt financial advisers and their representatives.

Product Information Disclosure
Although a structured deposit is a relatively safe instrument, returns on such products are variable and often contingent on the performance of complex financial instruments that the average retail investor may not fully understand. These risks should be clearly disclosed to every investor to ensure that he or she is able to make an informed investment decision.

Past And Future Performance

• when using any forecast on the economy, stock markets etc, state that such forecast is not necessary indicative of the future performance of the structure deposit;
• when using past performance of the structure deposit, state that the past performance is not necessarily indicative of future performance.
  

Recommendations On Structured Deposits

Reasonable Basis For Recommendation

• Warnings
• Screening
• Training And Competency

Fit And Proper Criteria

Segregation Of Activities
FA to ensure that the marketing and advisory process for structure deposit is distinct from the process through which a client's funds are accepted.

Requirements Under The Banking Act

A road show location where applications for structure deposits are received would be considered a new place of business, for which the bank would have to seek the prior approval of MAS.

GUIDELINES ON SWITCHING OF DESIGNATED INVESTMENT PRODUCTS [p.140]

• To provide guidance on the controls, processes and procedures that the MAS expects licensed financial advisers and exempt financial advisers to implement in order to monitor switching and ensure that their representatives do not advise clients to switch products in a manner that would be detrimental to the clients.
• For the purposes of these Guidelines, “switching” includes a situation where a client disposes of, or reduces his interest in, all or part of an investment product to acquire, or increase his interest in, all or part of another investment product, and “switch” shall be construed accordingly.

Disclosure Requirements
A financial adviser and its representatives should disclose to a client in writing and draw the attention of the client to any fee or charge the client would have to bear if the client were to switch from an original product to a replacement product.

Monitoring Of Switching Of Designated Investment Products

• Front-End Monitoring Procedures: supervisor needs to review the switching recommendation, and indicated in writing, whether he agrees with the recommendation made and if not, the actions taken to rectify the situation;
  
• Back-End Monitoring Procedures: FA should institute controls to monitor and track the switching of designated investment product.

Supervisor refers to a person who is responsible for the conduct of a representative and equipped to assess whether a switch is appropriate.

Remuneration Structure
Any remuneration structure based solely on the sales volume generated by representatives may encourage product pushing and undesirable switching. A financial adviser should structure the remuneration package of its representatives to uphold their responsibility to provide good quality professional advice.