Consultation Paper on Proposed Legislation to Protect Payment and Settlement Systems

21 Aug 2002


The Monetary Authority of Singapore (MAS) invites comment on proposed legislation to make provision for the legal protection of payment and settlement systems in Singapore and to reduce risks associated with these systems.

2 The proposed Payment and Settlement Systems (Finality and Netting) Bill was the result of a joint study by MAS and the Attorney-General's Chambers of Singapore (AGC) to examine the legal and regulatory framework for payment systems in Singapore. The proposed legislation includes the following provisions:

(a) MAS would be empowered to designate systems to provide them with protection offered under this legislation;

(b) Transactions settled in designated systems would be final and irrevocable; 

(c) Under insolvency proceedings, the designated systems would not be required to unwind, reverse, adjust or set aside any transactions that were settled through the system; and

(d) The designated systems would be allowed to net obligations incurred before, or on the day of, a participant undergoes insolvency proceedings such that a net amount becomes payable.

3 In determining which payment system to designate, MAS will take systemic risks into account.  It is intended that the MAS Electronic Payment System (MEPS), the large value payment system operated by MAS, would be a designated system under this legislation.  Continuous Linked Settlement (CLS) system, which is a global payment system that aims to reduce foreign exchange settlement risk, is also a potential system that could be designated.

4 The MAS-AGC study highlighted the importance of a sound legal environment in avoiding disruption to payment systems that could in turn trigger systemic disruptions in financial markets or more widely across the economy. The study recommended reforms to the existing legal framework.

5 The draft Payment and Settlement Systems (Finality and Netting) Bill and joint paper 'Legal Protection of Financial Payment Systems' from the study the can be downloaded below in PDF format and viewed and printed with Adobe Acrobat Reader.

6 Comments should be submitted to one of the following addresses:

(a) email : paymentsystems@mas.gov.sg
(b) fax : 62299659
(c) post :

Market Infrastructure and Risk Advisory Department 
Monetary Authority of Singapore
10 Shenton Way MAS Building
Singapore 079117

7 The closing date for comments is 11 September 2002. 

 

Last Modified on 26/11/2016