ANNUAL REPORT 2002 / 2003
FINANCIAL SECTOR - KEY REGULATORY AND SUPERVISORY INITIATIVES
1998, MAS has embarked on a strategic shift in our regulatory and supervisory
philosophy. MAS has now established a regulatory framework that aims to be more
flexible and integrated. Supervision of financial institutions has also been
transformed from a bottom-up, audit-based approach to one that is more holistic
Risk-Based Regulatory Regime
of risk-based regulatory frameworks for banks, insurers and securities companies
continued apace. For banks, the New Basel Capital Accord (“New Accord”) is
expected to be finalised by the end of 2003. The New Accord emphasises risk
management and will require banks to have improved risk assessment capabilities.
MAS welcomes the New Accord and intends to follow the implementation schedule
set by the Basel Committee on Banking Supervision.
ensure a smooth transition to the new capital standard, MAS has been in close
consultation with the Singapore-incorporated banks to assess the impact. MAS
will explore how the proposals can be best adapted for local market conditions
within the supervisory discretion provided in the New Accord. We are fine-tuning
our framework for setting individual bank capital adequacy requirements
according to the risk profile and risk management capabilities.
securities and futures intermediaries, a risk-based capital framework came into
force in October 2002. The new framework applies to capital markets services
licence holders, with the exception of non-member securities dealers and futures
brokers. A similar framework for the latter will be developed in the coming
the insurance industry, a risk-based capital framework was rigorously tested
last year and will be applied in 2004. The major changes in the investment
environment in the past decade and the wider range of products have increased
the risks borne by insurers, and they need a sufficient financial buffer to
manage this risk.
new framework measures asset and liability risk more effectively, with early
indicators of weaknesses that will trigger closer supervisory attention. Last
year, MAS also introduced a Liquidity Supervision Framework for individual
banks. Banks opt for a risk-determined minimum liquid asset requirement
specific to themselves. This is subject to MAS’ periodic assessment of the
bank’s liquidity risk management system and processes, its liquidity risk
exposure and cashflow volatility.
|Risk-Based Regulatory Regime||Prudential Policies||Enhancing MAS' Supervisory Role||Greater Consistency in Standards Across Sectors|
|Building Strong Pillars for Good Corporate Governance||Additional Requirements||Building Confidence with Sound Market and Business Conduct|
|Upholding Professional and Ethical Standards||Laying Strong Foundation for Financial Innovation||Managing Technology Risks|
|Improved Securities Trading and Clearing System||Safer Settlement System for Foreign Exchange||Payment Systems|
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