On June 3 2015, the Monetary Authority of Singapore (MAS) published a consultation paper entitled“Policy Consultation on Regulatory Framework for Intermediaries Dealing in OTC Derivative Contracts, Execution-Related Advice, and Marketing of Collective Investment Scheme” (the Consultation Paper), which proposes:
- a regulatory framework for capital markets intermediaries dealing in over-the-counter (OTC) derivative contracts; and
- refinements to rules governing financial advisory services.
This follows the earlier consultation paper entitled “Consultation Paper on Proposed Amendments to the Securities and Futures Act” which was published by the MAS in February 2015, to complete the expansion of the scope of the Securities and Futures Act, Chapter 289 of Singapore (SFA) to regulate derivative contracts, including the expansion of the Capital Markets Services (CMS) licensing requirement to intermediaries dealing in OTC derivative contracts (OTC Intermediaries). Our last briefing on the consultation paper can be found here.
Key amendments proposed in the Consultation Paper
A summary of the key amendments proposed in the Consultation Paper is set out below.
|REGULATORY FRAMEWORK FOR LICENSED OTC INTERMEDIARIES|
|Admission Criteria for the Application for a CMS License||
|Business Conduct Requirements||
|Risk Mitigating Requirements for Non-Centrally Cleared Derivatives||
|Capital and Financial Requirements||
|Representative Notification Framework||
|OTHER PROPOSED AMENDMENTS FOR FINANCIAL ADVISORY SERVICES|
|Marketing of Collective Investment Schemes||
For entities and their representatives already dealing in or advising on OTC derivative contracts, the MAS has proposed a one-year transitional period, from the date of effect of the new regime, for such entities to submit the relevant applications or notifications. Entities which submit the requisite applications or notifications with MAS within the transitional period will be allowed to continue with their OTC derivative activities until such time that MAS decides on the application or notification.
Please refer to the Consultation Paper for the complete set of proposals which can be found here. The deadline for comments and feedback to be submitted to the MAS is July 3, 2015.