From 14 March 2014 to 14 April 2014, the Monetary Authority of Singapore (the "MAS") sought feedback on the proposals in its consultation paper on "Draft Regulations to Enhance the Regulatory Framework for Unlisted Margined Derivatives Offered to Retail Investors" (the "Consultation Paper").
By way of background, the MAS had issued a consultation paper in May 2012 (the "earlier Consultation Paper") and sought feedback on proposed measures to better protect the interests of retail investors of unlisted margined derivatives such as contracts for differences ("CFD") and leveraged foreign exchange ("LFX"). The proposed measures include applying the current business conduct rules under the Securities and Futures Act (the "SFA") consistently to banks, and between banks and non-bank intermediaries, for all types of foreign exchange derivatives as well as other derivative contracts, in respect of their dealings with retail investors. It is also proposed to impose various requirements on capital markets services ("CMS") licence holders and certain entities exempted under the SFA who offer CFD and/or LFX, e.g. maintaining separate trust accounts for retail customers' transactions in listed and unlisted products. Another proposed change is to impose minimum margin requirement of 5% on CMS licence holders dealing in CFD on foreign exchange ("FX") and other LFX contracts with retail customers, and require a base capital requirement of S$5 million for CMS licence holders dealing in unlisted derivatives with retail customers.
The MAS issued its response to the feedback received on the proposals in the earlier Consultation Paper (the "Response") on 14 March 2014.
The MAS is now consulting on draft regulations to be issued pursuant to the SFA to effect the proposals set out in the earlier Consultation Paper. Where appropriate, the MAS has incorporated the comments from the earlier Consultation Paper into the draft regulations.
The following materials are available from the MAS website www.mas.gov.sg:
- Consultation Paper
- Annex 1 - Draft Securities and Futures Act (Amendment of Second Schedule) Order 2014
- Annex 2 - Draft Securities and Futures (Licensing and Conduct of Business) (Amendment) Regulations 2014
- Annex 3 - Draft Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licences) (Amendment) Regulations 2014
- Annex 4 - Draft Securities and Futures (Margin Requirements for Exempt Financial Institutions) Regulations 2014
- MAS Response to earlier Consultation Paper