This article discusses how to pass the Customer Account Review and Customer Knowledge Assessment that your stock broker is required to administer by the Monetary Authority of Singapore.
Before you can buy or sell (also called trade) certain financial assets, you have to be deemed knowledgeable enough to make such investments that might potentially lose you money. Fair enough.
These financial assets are what the Monetary Authority of Singapore (MAS) has categorized as Specified Investment Products (SIPs).
In order to be allowed to trade in these SIPs, you must first pass a Customer Account Review (CAR) / Customer Knowledge Assessment (CKA). This is compulsory for all Singapore retail investors (you!).
Understanding the specifics of the CAR/ CKA is a complex task in itself.
There are several ways to pass. For example, you qualify if you hold the following experience or education:
Education – have a diploma or high qualification in accountancy, actuarial science, business/business administration/business management/business studies, capital markets, commerce, economics, finance, financial engineering, financial planning, computational finance and insurance
Finance-related professional qualification
Working experience – have worked a minimum of 3 consecutive years in the past 10 years in the development of, structuring of, management of, sale of, trading of, research on and analysis of investment products or the provision of training in investment products. Work experience in accountancy, actuarial science, treasury or financial risk management activities are relevant experience
If you are reading this, it is highly unlikely you possess ANY of the above qualifications.
So, what can a regular person do?
Well, there is one criteria that seems to fit regular people. You can pass the CAR/ CKA if you have “done 6 or more trades in any of the following SIPs in the past 3 years”.
Think about that for a second. In order to pass the CAR/ CKA, you must have made at least 6 trades in the SIPs before. But, in order to trade in the SIPs, you must first pass the CAR & SKA. That is some mind-blowing circular Matrix-like logic.
If you like, you can read all about the complexities and the details of the CAR & CKA here.
However, if you like the simplified understanding of the CAR/ CKA, here it is:
In order to trade in certain SIPs, you must pass some mandatory assessments that you are not qualified for. However, there are only two ways to pass.
1) Blatantly lie on an official form which no one is suggesting you do. Although, there is an old SAF axiom that allegedly states “Do whatever you want, just don’t get caught”. In this case, there is no one to catch you.
2) Take an online course and test at the SGX website here.
Fill up the Customer Account Review (CAR) form (which you will fail) and subsequently be directed to the SGX e-learning portal.
Complete the whole e-learning course that is stated to take about 1 hour, if you have professional education or experience in finance or investing. Oh wait, you don’t. So, be prepared to take about 2 – 3 hours inclusive of breaks. If you can do this in one sitting without breaks, hats off to you.
Once you have finished the course, you need to PASS the exam. There are a total of 20 Questions and the passing mark is 18 out of 20. Good luck.
If you pass the test, SGX will send your positive test result to your email address. You can attach this test result and send it to your broker. Or, if you had already opened your trading account with your broker, ensure to list your broker as your main broker on the Customer Account Review (CAR) form when you first sign up at SGX.
Upon review, your broker should consider you a qualified investor to trade in those SIPs.
What if you fail the SGX Online Education because you really hate exams?
There is still hope. You will have to make an appointment with your broker (or representative from your stock broker) in person so that they can assist you and ensure they do their job so as to not get in trouble with MAS.
It is funny, there is such a stringent criteria for retail investors because MAS is afraid that they might lose money on bad investing decisions.
BUT, if the same investors were to drop a few thousands of dollars on 4D or Toto, they do not need to pass any kind of CAR/ CKA. It is a strange world we live in.