2 The second response paper addresses feedback on proposals to require the central clearing and reporting of OTC derivatives transactions. Most respondents were supportive of MAS’ proposals to require OTC derivatives transactions to be centrally cleared by eligible central counterparties and reported to trade repositories.
3 Some had concerns that cross-border trades may attract potentially overlapping or conflicting requirements across multiple jurisdictions. To address such concerns, MAS proposes an equivalency approach. When a counterparty in Singapore enters into a derivatives contract with a foreign counterparty located in a jurisdiction that offers equivalent safeguards, in MAS’ assessment, the Singapore counterparty will satisfy MAS’ clearing and reporting obligation if it fulfils the requirements in the foreign jurisdiction.
4 There were other suggestions on conducting periodic reviews on the clearing and reporting obligations and relevant thresholds to take into account changing market conditions. MAS agrees that such reviews are important to ensure that the clearing and reporting obligations reduces systemic risk and enhances market transparency.
5 To implement the key elements1 of the clearing and reporting obligations as set out in the public consultation on regulation of OTC derivatives and MAS’ response to feedback received, MAS is seeking public feedback on the draft legislative amendments to the Securities and Futures Act. The consultation paper can be found on MAS’ website.
6 MAS invites interested parties to give their views and comments on the consultation paper by 31 August 2012.
1 MAS will consult on the operational details of the clearing and reporting obligations after further study, taking into account the consultation feedback as well as evolving international standards and practices.
Note to Editor:
MAS received extensive feedback on the consultation paper issued on 13 February 2012 on the regulatory oversight of the OTC derivatives market in Singapore. We have carefully considered and reviewed the feedback received and will issue our response to the feedback in phases, as some feedback requires further study and consideration. In our first response paper issued on 23 May 2012, MAS addressed feedback received on (i) extending the regulatory regime for clearing facilities to OTC derivatives; and (ii) introducing a new regulatory regime for trade repositories.
MAS notes that international standard-setting bodies are still in the midst of developing standards pertaining to OTC derivatives reforms. We will continue to monitor developments in areas where international consensus is pending and will take guidance from international standards where appropriate before issuing public consultations on these areas at a later stage.