CAO chief executive Chen Jiulin was suspended after the collapse

The city state's Commercial Affairs Department was leading inquiries into the affair, police said.

CAO collapsed late on Tuesday after amassing trading losses on oil futures in October, when global prices surged.

Singapore-based CAO said on Thursday that it had launched a $100m rescue plan following its collapse.

Joint investigation

The firm, which is majority owned by the Chinese state and is China's biggest supplier of jet fuel, said it had appointed consultant Deloitte & Touche to act as its financial adviser.

The police run Commercial Affairs Department would be investigating CAO's collapse in conjunction with the city state's securities and derivatives exchange, the Singapore Exchange, and the Monetary Authority of Singapore, a police spokeswoman said.

The Singapore Exchange has called for the return to Singapore of CAO's suspended chief executive Chen Jiulin, who flew to China after the company's collapse.

The exchange said it wanted Mr Chen to help with inquiries into CAO's collapse.

A separate investigation is also being carried out by accounts PricewaterhouseCoopers.

The financial scandal is the biggest to hit Singapore since trader Nick Leeson brought down Barings Bank in 1995.

The Singapore-based British trader famously lost $1.2bn in speculative currency deals, eventually causing the collapse of the UK bank.