Regulatory Alerts2020-05-05
Frequently-Asked Questions on E-Services Platform Framework
The Securities Commission issued revised guidelines clarifying the scope and registration requirements for the E-Services Platform Framework. The framework applies only to platforms facilitating access to capital market products from CMSL holders, excluding pure payment service providers like Visa or Mastercard. Entities must register as operators only if they facilitate transactions while maintaining investor relationships with CMSL holders, whereas those acting as direct dealers require separate dealing licenses.
1 FREQUENTLY-ASKED QUESTIONS E-SERVICES PLATFORM FRAMEWORK REVISED GUIDELINES ON RECOGNIZED MARKETS (Date of Issuance: 5 May 2020)
- Will the e-services platform framework be applicable to the services provided by the likes such as Visa, Mastercard and FPX? E-services platform framework is only intended to apply to an app or website that provides an investor with access to buy or sell capital market products offered by a CMSL holder. As such, it would not apply to service providers such as Visa, Mastercard and FPX provided that they are just providing payment services.
- If I am a CMSL holder or registered person for dealing in securities and I intend to operate an e-services platform as one of a channels to distribute capital market products, do I need to be registered as an e-services platform operator? You do not need to be registered as an e-services platform operator if you are– (a) a CMSL holder or a registered person for dealing in securities or derivatives; and (b) the product you intend to offer on your e-services platform is the product you are currently licensed or registered for. For example, if you are licensed for dealing in securities restricted to OTC bonds, you will not need to be registered under the e-services platform framework if your platform is only intended to distribute OTC bonds.
- If I buy the capital market products offered on an e-services platform, will I be the client of the e-services platform operator or the CMSL holder? You will be a client of the e-services platform operator as a user of the said platform. You will also be a client of the CMSL holder as you will open and maintain an account with the CMSL holder for the purchase of the capital market products offered by the CMSL holder.
2 4. If my business model is such that an investor will only be my client and will not have any direct contact or relationship with a CMSL holder, will the SC register me as an e-services platform operator? No, you will not be registerable as an e-services platform operator. To be registered as an e-service platform operator, you are merely arranging or facilitating the sale, purchase or subscription of a capital market product offered by a CMSL holder. An investor will still have direct contact or relationship with the CMSL holder. In your given business model, as the investor will be only dealing with you, you will be responsible to the investor for the sale, purchase or subscription of the capital market product. As such, you will have to apply and obtain a license in dealing. 5. What is the difference between e-services platform operator and marketing representative? A marketing representative is only permitted to introduce a potential client to a CMSL holder. A marketing representative is not permitted to collect money or facilitate payment from an investor to a CMSL holder. Therefore, if a marketing representative wishes to provide an online platform that facilitates payments to a CMSL holder, the marketing representative must register its platform under the e-services platform framework.