MAS Proposes Legislative Amendments to Strengthen Regulation of Derivatives Trading and the Securities Market
Singapore, 11 February 2015… The Monetary Authority of Singapore (MAS) issued for consultation today proposed legislative amendments to the Securities and Futures Act (SFA) to effect reforms to the regulation of over-the-counter (OTC) derivatives trading and the securities market. This consultation follows the feedback MAS received on these reforms.
Making OTC derivatives markets safer
2. Three years ago, MAS embarked on reforms to make the trading of OTC derivatives safer and more transparent. To this end, the SFA was amended to cater for the mandatory reporting and central clearing of OTC derivatives trades as well as the regulation of OTC derivatives trade repositories and clearing facilities.
3. The proposed legislative amendments will complete the OTC derivatives reforms in Singapore. MAS will extend its regulatory regime to OTC derivatives trading platforms and intermediaries, and introduce simplified, principles-based definitions of securities and derivatives.
4. While MAS has assessed that it is not necessary to mandate a trading regime for OTC derivatives for now, it will assume powers to implement a trading regime if such a regime was deemed necessary in the future. MAS will continue to monitor developments, consult the industry closely, and conduct detailed analysis to determine the conditions that might make a trading mandate necessary.
5. MAS is also proposing to transfer regulatory oversight of commodity derivatives from the Commodity Trading Act (CTA), currently administered by International Enterprise (IE) Singapore, to the SFA.
Strengthening the securities market
6. The proposed legislative amendments to the SFA will allow MAS to strengthen Singapore’s securities market in two key areas:
The proposal to require reporting of short selling of securities trading and publication of aggregate short positions will improve transparency in the short selling of securities.
The enforcement-related proposals will enhance the authorities’ powers to take action against market misconduct such as the dissemination of false or misleading information, and increase the quantum of civil penalties that may be applied so as to increase their deterrent effect.
7. Please click here to view the consultation paper on the proposed legislative amendments to the SFA. We welcome interested parties to email their comments to SFA_FAA_LegisConsult@mas.gov.sg by 24 March 2015.
1Public consultations were launched on proposed OTC derivatives reforms on 13 February 2012 and on proposed securities market regulations on 7 February 2014. You may view MAS’ response to the feedback here.
2The transfer was first proposed in a separate Consultation Paper on the transfer of regulatory oversight of commodity derivatives from IE Singapore to MAS published on 13 February 2012. You may view the agencies’ joint response to the feedback here.
3You may view MAS’ and SGX’s response to the feedback here.