21 June 2012

The Editor
Business Times

Dear Editor,

The article, “Singapore accused of ‘regulatory arbitrage” (BT, 16 June 2012), is misleading. 

MAS is committed to the G20 objective of strengthening the regulation of OTC derivatives.  We intend to implement fully the global OTC derivatives reform agenda. The G20 has not recommended implementing a trading mandate.  In fact, the G20 has stated that all standardised OTC derivatives should be traded on exchanges or electronic trading platforms, where appropriate. In line with this recommendation, MAS has requested views on the potential benefits and costs of implementing a trading mandate in our February consultation paper. 

MAS is carefully considering the consultation feedback before deciding whether to introduce a trading mandate.  Other regulators in the region have taken a similar approach.  This is not a decision to be taken lightly.  The International Organisation of Securities Commissions (IOSCO) has highlighted the possible unintended consequences of a trading mandate, such as the withdrawal of liquidity by some market participants, making it costly for others to hedge their risks.  Taking pause to carefully deliberate the issues related to a trading mandate is a sensible approach, not regulatory arbitrage. 

Angelina Fernandez
Director (Communications)
Monetary Authority of Singapore