ANNUAL REPORT 2002 / 2003
THE FINANCIAL SECTOR - KEY REGULATORY AND SUPERVISORY INITIATIVES
Safer Settlement System for Foreign Exchange
one of the largest foreign exchange (FX) trading centres in the world, Singapore
has been striving to develop a safer FX settlement environment. In July 2001,
MAS published a report based on a survey of the Singapore banking industry that
highlighted significant exposures in current FX settlement practices. This
report also underscored market participants’ demand for FX settlement risk
reduction measures, in particular, Continuous Linked Settlement (CLS).
is a real-time global settlement system that aims to eliminate FX settlement
risk that can occur when each leg of an FX transaction is settled separately due
to time-zone differences. This service allows both legs of a FX trade submitted
by members to be settled simultaneously across the books of CLS.
went live in September 2002 with the participation of over 60 international
banks and seven major currencies – the US Dollar, Euro, Yen, Pound Sterling,
Swiss Franc, Canadian Dollar and Australian Dollar. Its daily transaction volume
has reached an average of 60,000 payment instructions and a gross value of some
US$600.0 billion as of February 2003.
In December 2002, Singapore enacted the Payment and Settlement Systems (Finality and Netting) Act to provide for the protection of payment and settlement systems from disruptions that may lead to risks to the financial system. This Act, coupled with the designation of CLS as a system protected under the Act, paves the way for the Singapore Dollar to be included as a CLS settlement currency later in 2003.
The three Singapore banks Development Bank of Singapore Ltd (DBS Bank), Oversea-Chinese Banking Corporation Ltd (OCBC Bank), and United Overseas Bank (UOB), which have been CLS shareholders since October 2001 started participating as CLS settlement members in December 2002. For efficiency, the three banks have established a common utility Clearing & Payment Services Pte Ltd to aggregate and share the processing of their CLS transactions.By participating in CLS and helping to develop a safer FX settlement environment, Singapore reinforces its position as a leading FX trading centre and as a key node in the global financial system.
|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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