FAQ: Commodity Trading Act

  • What is “spot commodity trading”?

    “Spot commodity trading” means the purchase or sale of a commodity at its current market or spot price, where it is intended that such transaction results in the physical delivery of the commodity.

    Please refer to section 2 of the CTA.

  • What commodities are covered under “spot commodity trading” in the CTA?

    The definition of “commodity” in section 2 of the CTA is very wide. Please refer to section 2.

    Commodities may include, but are not limited to, oil, gas, chemicals, palm oil, rubber, soya beans, iron ore, aluminium, gold, silver, etc.

  • Who requires licensing for “spot commodity trading” under the CTA?

    All persons* conducting / involved in spot commodity trading requires a license under the CTA, unless exempted. Examples of persons involved in spot commodity trading includes:

    • a “spot commodity broker”;
    • a “spot commodity broker’s representative”;
    • a “spot commodity pool operator”; and
    • a “spot commodity pool operator’s representative”.

    Please refer to sections 2, 13A(1), and 14A(1) of the CTA read together with paragraphs 1(f) and/or 1(g) of the Schedule to the CTA.

  • Can I be exempted from licensing under the CTA?

    The definition of “commodity” in section 2 of the CTA is very wide. Please refer to section 2.

    Commodities may include, but are not limited to, oil, gas, chemicals, palm oil, rubber, soya beans, iron ore, aluminium, gold, silver, etc.

  • Can you give some scenarios when one would be exempted from licensing under the CTA?

    Scenario 1

    Your business activities involve the purchase and/or sale of commodities (which may include, but are not limited to, oil, gas, chemicals, palm oil, rubber, soya beans, iron ore, aluminium, gold, silver, etc.). You purchase and/or sell the commodities at the current market or spot price on your own account, and the commodities are intended to be physically delivered. You pay for the commodities that you purchase with your own funds. You do not solicit any funds from the public in connection with the purchase and/or sale of the commodities.

    Your business activities would involve “spot commodity trading”.

    You would be a “spot commodity broker” who is subject to licensing under the CTA.

    However, as you carry on “spot commodity trading” on your own account and do not solicit any funds from the public, you would be exempted from licensing.

    Conducts Spot Commodity Trading Exempt from Licensing under CTA
    • Carry on trading on your own account and
    • Do not solicit funds from the public

    Please refer to section 14A(1) of the CTA read together with paragraph 1(f) of the Schedule to the CTA.

    Scenario 2

    Your business activities involve facilitating the purchase and/or sale of commodities (which may include, but are not limited to, oil, gas, chemicals, palm oil, rubber, soya beans, iron ore, aluminium, gold, silver, etc.) between buyers and sellers. You arrange for the purchase and/or sale of commodities at the current market or spot price between buyers and sellers, and the commodities are intended to be physically delivered. The buyers and sellers are the parties to the contracts for the purchase and/or sale of the commodities, and the buyers make payment for the commodities directly to the sellers. You receive a commission as payment for your services, but:

    • you are not a party to any contract for the purchase or sale of the commodities;
    • you do not carry the customer’s position, margin or account in your own books; and
    • you do not accept money or assets from your customer as settlement of, or a margin for, or to guarantee or secure any contract for the purchase or sale of any commodity.


    Your business activities would involve “spot commodity trading”.

    You would be a “spot commodity broker” who is subject to licensing under the CTA.

    However, as you facilitate “spot commodity trading” for a customer, but you are not a party to the contract, and you do not handle any customer monies or assets, you would be exempted from licensing.

    Conducts Spot Commodity Trading Exempt from Licensing under CTA
    • Not party to the contract
    • Do not handle any customer monies or assets

    Please refer to section 14A(1) of the CTA read together with paragraph 1(g) of the Schedule to the CTA.

  • If I require licensing for “spot commodity trading”, how can I apply for a licence?

    Before submitting any new licence applications, please reach out to us at https://go.gov.sg/askenterprisesg and provide us with a brief description of your intended business activities.

    Please include the following details in your email:

    1. Company name (and company registration number).
    2. Name of contact person.
    3. Telephone number.
    4. Email address.
    5. Website address.
  • Who administers the CTA?
    The Enterprise Singapore Board (Enterprise Singapore) is the regulatory body responsible for administering the CTA. The Commercial Affairs Department (CAD) of the Singapore Police Force enforces the CTA.
  • Can I appeal if my application for a licence is rejected?

    If a licence application is rejected, an appeal can be made to the Minister for Trade & Industry within one month after the notification of rejection. The decision by the Minister shall be final.

    Please refer to section 21 of the CTA.

  • What is the validity period of a licence?
    Licences are valid for a period of one year and are renewable annually. However, Enterprise Singapore may issue licenses for different validity periods in exceptional circumstances.
  • What are the fees payable for licences?

    Licence fees are set out in the First Schedule to the Commodity Trading Regulations 2001 (CTR) and are as follows for “spot commodity trading” (please refer to the CTR for the actual wording):

    Application for or renewal of a licence as a “spot commodity broker” or “spot commodity pool operator”. S$1,200.00 per annum.
    Application for or renewal of a licence as a “spot commodity broker’s representative” or “spot commodity pool operator’s representative”. S$100.00 per annum.
  • What are the penalties for contravening section 13A(1) of the CTA?

    The penalty for a person acting as or holding himself out as a “spot commodity broker” or “spot commodity pool operator” without the necessary licence is a fine not exceeding S$100,000 or imprisonment for a term not exceeding 3 years or both.

    The penalty for a person acting as or holding himself out as a “spot commodity broker’s representative” or “spot commodity pool operator’s representative” without the necessary licence is a fine not exceeding S$50,000 or imprisonment for a term not exceeding 12 months or both.

    Please refer to sections 13A(3)(a) and 13A(3)(b) of the CTA.

  • When did the CTA come about and why?

    On 27 May 1992, the Commodity Futures Act (Cap. 48A) (CFA) came into operation to regulate business activities involving “commodity futures contracts”. Initially the CFA covered only “commodity futures contracts” that were traded at the Singapore Commodity Exchange (SICOM), namely rubber and coffee futures contracts.

    On 27 June 2001, the CFA was amended to become the CTA to eliminate “bucket shops” and promote a fair and transparent commodity trading environment in Singapore. The scope of the CTA was expanded to cover all commodities (instead of just rubber and coffee futures contracts) and business activities involving:

    • “commodity futures contracts”;
    • “commodity contracts” in the form of “commodity forward contracts”, contracts made pursuant to transactions in “leveraged commodity trading”, and contracts made pursuant to trading in differences with respect to a commodity; and
    • “spot commodity trading”.
  • What are “bucket shops”?

    “Bucket shops” are firms that entice people through various tactics to open trading and investment accounts in assets such as commodities, but on contractual terms that are favourable towards the firms. The firms may “bucket” (claim to effect transactions for their clients when they did not) or “churn” (make repeated transactions to earn commissions from their clients without regard to their clients’ interests), causing their clients to suffer losses on their investments.

  • What have been the key amendments to the CTA since it came into operation?

    On 27 February 2008, Enterprise Singapore transferred regulatory oversight of “commodity futures contracts” under the CTA to the Monetary Authority of Singapore (MAS) under the Securities and Futures Act 2001 (SFA) and Financial Advisers Act 2001 (FAA). Since then, “commodity futures contracts” have been regulated under the same framework as other futures contracts. The objective of this transfer was to facilitate Singapore’s growth as a hub for commodity futures trading. A single regulator for all futures related activities streamlines licensing and compliance, as entities broking both commodity futures and financial futures only need a single licence from MAS.

    On 8 October 2018, Enterprise Singapore ceased regulating new business activities involving “commodity contracts” under the CTA, and the MAS commenced regulating commodity “over-the-counter or OTC derivatives contracts” under the SFA/FAA. This transfer stemmed from Singapore’s commitment to meeting the G20’s and Financial Stability Board’s recommendations on OTC derivatives contracts. The transfer provides two benefits – firstly, better synergy of regulatory approaches across the major classes of OTC derivatives contracts, and secondly, greater clarity to industry participants on the regulatory approach towards “commodity futures contracts” and other commodity derivatives. Entities whose business activities involve commodity OTC derivatives contracts come under the regulatory oversight of MAS after the transfer.

  • Will the activities that have been transferred from the CTA to the SFA/FAA be regulated in the same way?
    The regulatory regimes under the CTA and SFA/FAA are not exactly the same. Any person conducting business activities in derivatives contracts (whether exchange-traded or over-the-counter) where the underlying thing is a commodity should refer to the SFA/FAA or consult lawyers for the current regulatory framework that would apply to your business. Any person previously relying on the licensing exemptions in the CTA for “commodity futures contracts” and/or “commodity contracts” should refer to the SFA/FAA or consult lawyers on whether licensing exemptions in the SFA/FAA are available to you.
  • What does the CTA regulate now?
    With effect from 8 October 2018, the CTA regulates business activities involving “spot commodity trading” without change.
  • Will the CTA still be effective in managing the “bucket shop” problem?
    The scope of the CTA over “spot commodity trading” remains unchanged and the risk of “bucket shops” conducting business activities in “spot commodity trading” will remain contained.
  • How can consumers protect themselves from falling prey to unlicensed commodity trading firms?

    Consumers should be vigilant and exercise caution when coming across “get rich quick” schemes or investments schemes that are “too good to be true”. Consumers should also stay away from misleading advertisements that lure investors with lucrative part-time or full-time, home-based jobs that promise quick returns.

    Consumers can also refer to the Financial Institutions Directory on the MAS website (eservices.mas.gov.sg/fid) for a list of financial institutions regulated by MAS and the regulated activities they are authorised to provide.

    Consumers can also check the Investor Alert List (IAL) on the MAS website which provides a listing of unregulated persons or entities that, based on information received by MAS, may have been wrongly perceived as being licensed or regulated by MAS. Consumers must exercise caution when dealing with all unregulated entities, not just entities that are listed on the IAL, as the list is not exhaustive and is updated from time to time.

  • Where can I obtain a copy of the CTA and/or CTR?

    Online versions of the CTA and/or CTR are available on the Singapore Statutes Online website.