Well-Functioning Capital Markets

MAS proposed regulatory amendments to allow REITs to exercise greater flexibility in their fundraising processes

2 July 2019

The public consultation sought feedback on the possible approaches to recalibrate the leverage limit for REITs. MAS also proposed amendments to the existing regulations to provide greater flexibility for REITs to optimise their capital structure, and streamline their fundraising process. This would make the fundraising process for REITs more efficient and bring it in line with that of companies and business trusts.

SGX RegCo removed the Minimum Trading Price (MTP) requirement 

11 May 2020

Since the introduction of the MTP requirement in 2015 to reduce the risks of potential manipulation, MAS and SGX RegCo had introduced more pre-emptive and targeted measures to detect and deter market manipulationThese included: (a) imposing trading restrictions on accounts involved in unusual activities in a stock and issuing alerts to trade with caution; (b) providing guidance on how SGX Members can enhance their internal trade surveillance programme, through the SGX Trade Surveillance Handbooks; (c) alerting an SGX Member to potential market misconduct relating to that Member's trades, through the Members' Surveillance Dashboard; and (d) setting out principles, in the MAS-SGX Trade Surveillance Practice Guide, on implementing robust trade surveillance operations to enable Members to curb misconduct as early as possible.. In contrast, the MTP requirement had turned out to be a blunt tool in addressing the risk of market manipulation. In addition, issuers on the MTP watch-list faced challenges in borrowing from banks and developing business relationships. SGX RegCo therefore decided to remove the MTP requirement following a public consultation.

MAS worked with SGX RegCo to adopt a risk-based approach to quarterly reporting (QR) 

9 January 2020

SGX RegCo had adopted a risk-based approach where QR was imposed only on issuers with audit issues or regulatory concerns. This shift to semi-annual reporting was aligned to practices in the EU, UK and Australia. SGX RegCo also introduced new measures to strengthen the continuous disclosure regime, and established a whistle-blowing office to follow up promptly on feedback about companies.

MAS commenced publication of weekly reports on aggregate short positions to improve transparency and enable investors to make more informed trading decisions

4 July 2019

This follows from the introduction in October 2018 of the regime for investors to report short positions in SGX-listed securities to MAS.

MAS chose not to proceed with Collateralised Trading Requirement for Trading of Listed Securities

18 February 2020

Having assessed the combined market impact of initiatives such as shorter settlement period for listed securities and the reporting of short positions, MAS decided not to introduce collateral requirement for the trading of listed securities in Singapore. In making this decision, MAS also considered prevailing market conditions, such as the falling contra trading levels and new measures which had been introduced by the industry to improve credit risk management practices.

MAS and ACRA set up a joint forum to review accounting-related and disclosure issues to strengthen coordination on the surveillance of Singapore’s capital markets

Ongoing

MAS strengthened coordination with the Accounting and Corporate Regulatory Authority (ACRA) and the Commercial Affairs Department (CAD) in the surveillance and investigation of capital markets offences. In addition to the MAS-CAD joint investigation arrangement, MAS had set up a joint forum with ACRA to review accounting and disclosure issues involving SGX-listed issuers. These arrangements supported the objective of ensuring that the capital market was well-regulated and corporate malfeasance was thoroughly investigated.

MAS published the Trade Surveillance Practice Guide, as part of continuous efforts to safeguard Singapore’s reputation as a global financial centre

5 August 2019

The guide outlined principles for effective trade surveillance operations at the brokers, and clarified regulatory expectations on brokers’ operations to improve their capabilities in this area.

Singapore’s regulatory framework for benchmarks recognised by European Commission (EC) to be equivalent

29 July 2019

The EC recognised Singapore’s regulatory framework for benchmarks to be equivalent to the European Union (EU) Benchmarks Regulation. This enabled financial institutions in the EU to continue trading financial instruments that reference benchmarks regulated in Singapore (i.e. SIBOR and Singapore Dollar Swap Offer Rate).

MAS consulted on the Proposed Regulatory Approach for Derivatives Contracts on Payment Tokens, to regulate payment token derivatives traded on Approved Exchanges

20 November 2019

MAS proposed to allow payment token derivatives to be traded on Approved Exchanges and to regulate the activity under the Securities and Futures Act. The proposal would allow Approved Exchanges in Singapore to meet the needs of institutional investors for a regulated product to gain or hedge exposure to payment tokens. MAS also issued public advisories to remind consumers that payment tokens and their derivatives were not suitable for most retail investors and introduced additional measures to protect retail investors.

MAS published a paper on the effects of dark trading on the liquidity of Singapore’s equities market

7 November 2019

The growth of dark trading in equities had driven academic research and attracted attention from regulators concerned about its effects on market quality. The paper analysed and simulated the effects of dark trading on the market quality and efficiency of Singapore’s equity market. The results concluded that the presence of dark trading could result in a positive impact on the market quality of stocks listed on the Singapore Exchange, particularly for stocks with small or medium market capitalisations of up to S$2 billion. In addition, the positive impact was sustained where the level of dark trading remained under 30% of the level traded on the stock exchange.

MAS established an industry-led Steering Committee to facilitate the transition from SOR to the SORA interest rate benchmark

30 August 2019

The expected discontinuation of LIBOR after end-2021 would impact the sustainability of SOR, which was a key interest rate benchmark in Singapore. To prepare for a smooth transition, the industry steering committee had been providing strategic direction on the development of new products and markets based on SORA, engaging with stakeholders to seek feedback and raise awareness on issues related to the transition from SOR to SORA.

Since August 2019, the committee made swift progress to establish market infrastructure and conventions for the trading of SORA derivatives, kick-started initiatives to build liquidity in SORA derivatives and floating rate notes, and had been providing market guidance on contractual fallbacks for legacy SOR products. Work on SOR to SORA transition was expected to proceed steadily over the next 18 months, ahead of the expected discontinuation of the SOR benchmarks after end-2021.