Background

The Monetary Authority of Singapore (the "MAS") is consulting on proposed amendments to the Securities & Futures (Reporting of Derivatives Contracts) Regulations ("SF(RDC)R") to implement the reporting of commodity and equity derivatives contracts and other revisions to complete the implementation of the OTC derivatives trade reporting regime in Singapore. The consultation ends on 15 February 2016.

This update takes a look at the proposed amendments to the SF(RDC)R.

Reporting of Commodity and Equity Derivatives Contracts

The OTC derivatives reporting regime in Singapore came into force on 31 October 2013. Currently, only interest rate, credit and foreign exchange derivatives contracts have to be reported to licensed trade repositories or licensed foreign trade repositories, pursuant to Part VIA of the Securities and Futures Act and the SF(RDC)R. The MAS is proposing to amend the SF(RDC)R to also require the reporting of commodity and equity derivatives contracts, which would complete the implementation of the OTC derivatives trade reporting regime in Singapore. A summary of what needs to be reported and what is excluded from reporting is set out below.

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Information to be Reported

A summary of the required information proposed to be reported is set out in the table below:

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Reporting Obligations for Non-Bank Financial Institutions ("FIs")

The MAS proposes to exempt the following non-bank FIs from reporting obligations:

  1. non-bank FIs (such as subsidiaries of banks incorporated in Singapore, insurers and holders of capital markets services ("CMS") licences) with annual aggregate gross notional amount of specified derivatives contracts of less than S$5 billion. This would mean that, unless other exemptions apply, non-bank FIs who exceed this threshold will be subject to reporting requirements;

  2. all approved trustees and licensed trust companies; and

  3. brokers1 and banks whose counterparties are retail investors (i.e. non-accredited or non-institutional investors).

Importantly, the existing temporary relief from reporting requirements granted to holders of a CMS licence for fund management or real estate investment trust management with managed assets of less than S$8 billion is proposed to cease after 31 October 2017. Once the existing temporary relief lapses, holders of a CMS licence for fund management or real estate investment trust management will need to rely on other exemptions, or otherwise be subject to trade reporting requirements.

Proper record keeping expected of all non-bank FIs

While certain non-bank FIs may be exempted from the reporting obligations, the MAS will still require such entities to submit information regarding their trade activity on a periodic basis to ensure the MAS continues to have sight over the OTC derivatives activities conducted by these entities. The format and frequency of these submissions will be prescribed in due course for each class of FI.

Implementation Schedule

The proposed implementation schedule for the remaining reporting phases is summarised in the table below. More details can be found in the Consultation Paper.

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Resources

  1. Consultation Paper on Proposed Amendments to the Securities & Futures (Reporting of Derivatives Contracts) Regulations

  2. Draft amendments to the Securities & Futures (Reporting of Derivatives Contracts) Regulations

  3. Template for Response to Consultation Paper

All written comments on the proposals should be sent to derivatives@mas.gov.sg by 15 February 2016, using the suggested template.