Monetary Authority of Singapore Annual Report 2012/2013


Developments in OTC Derivatives Markets

Following global regulatory reforms of the OTC derivatives market, MAS has been working closely with the industry to respond to the new regulatory environment.

In September 2012, the Singapore Foreign Exchange Market Committee (SFEMC) issued a public statement to commit to meet high standards for electronic execution and confirmation of OTC interest rate derivative transactions by 30 June 2013. This reflects the industry’s commitment to increase the level of standardisation of the OTC derivatives market, and towards transparency and more effective risk management.

In the aspect of OTC derivatives clearing, total clearing volume and product offering have increased over the past year. For commodities derivatives, SGX AsiaClear reported a healthy 77% y-o-y increase in total clearing volume for energy, freight and dry bulk-related derivatives in 2012. SGX AsiaClear continued to anchor itself as the leading clearing house globally for iron ore derivatives with the launch of iron ore options clearing in September 2012 and a record year of 109.7 million metric tonnes of iron ore swaps and options cleared. It also expanded its product offering with the introduction of a futures contract suite called AsiaClear Futures, providing customers the continuity to tap on the fast-growing liquidity pool in iron ore swapsand other Asian commodities. In OTC financial derivatives clearing, SGX Asiaclear continued to witness steady growth since its launch in November 2010. As at end of Q1 2013, SGX cleared over S$340 billion in notional value of SGD and USD Interest Rate swaps, as well as Asian FX Forwards.

To help the region meet impending OTC derivatives trade reporting obligations, the Depository Trust & Clearing Corporation (DTCC) opened its Asia Pacific global data centre and office headquartered in Singapore in December 2012. DTCC was selected by international industry associations as the preferred global trade repository across the asset classes. The Singapore-based data centre is DTCC’s first in Asia and part of its global triangulated infrastructure designed to support DTCC’s Global Trade Repository services. This development will contribute to increased transparency in the OTC derivatives market.