With effect from 1st January 2012, the Monetary Authority of Singapore (MAS) will require all financial institutions to ascertain whether their clients possess the necessary knowledge or experience on the features and risks of the products that they intend to trade through the prescribed Customer Knowledge Assessment (CKA) or Customer Account Review (CAR).

The requirement will apply to all Specified Investment Products.

Specified invest products includes the following products: Stock listed on an exchange outside of Singapore, Futures contracts, Exchange Traded Options, ETFs, CFDs, FX Spot and FX options.

How will they affect you?

The following two new measures will apply to you if you wish to purchase a Specified Investment Product or open an account for trading Specified Investment Products:

(i) Assessing if you have relevant knowledge and experience

From 1 January 2012 onwards, intermediaries (your brokers and advisers) must assess if you have the relevant knowledge and experience before offering a Specified Investment Product to you or opening an account for you to trade Specified Investment Products listed on an exchange.

To do this, the intermediary will request information on your educational qualifications, investment experience and work experience. Based on the information you have provided, the intermediary will assess whether you may proceed to purchase an unlisted Specified Investment Product or open an account to trade listed Specified Investment Products.

This new process is known as

  • the “Customer Account Review (CKR)” if you wish to open an account to trade Specified Investment Products listed on an exchange; and
  • the “Customer Knowledge Assessment (CKA)” if you wish to purchase a Specified Investment Product that is not listed on an exchange.

If the intermediary assesses that you do not have the relevant knowledge or experience to purchase the unlisted Specified Investment Product or to open an account to trade listed Specified Investment Products, they may suggest that you undergo learning modules to learn more about Specified Investment Products.

(ii) Offering you financial advice

Intermediaries must offer to provide you with financial advice on whether the Specified Investment Product is suitable for you, taking into account your knowledge and experience in the product. (Only intermediaries that are authorized by MAS to provide financial advice may do so)

If you decide not to take up the offer of advice or to invest in a Specified Investment Product that the intermediary did not recommend to you, you will have to be responsible for your own investment decision.

What Information is required for the assessment?

The information required from you to evaluate relevant knowledge or experience would be as follows:

  • Educational Qualifications (diploma or higher qualification in relevant course and/or Professional Finance related qualifications)
  • Work Experience (worked at least 3 consecutive years in the past 10 years in a relevant field)
  • Investment Experience (have made at least 6 transactions within the last 3 years in these categories of products)


About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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