On 31 October 2013, the following provisions of the Securities and Futures Act (the “SFA”) came into force:
- Part VIA which mandates reporting of over-the-counter (“OTC”) derivatives to licensed trade repositories or licensed foreign trade repositories (collectively, the “TRs”); and
- Part VIB which mandates central clearing of OTC derivatives on central counterparties.
The changes were introduced pursuant to the Securities and Futures (Amendment) Act 2012. Part VIA of the SFA is supplemented by the new Securities and Futures (Reporting of Derivatives Contracts) Regulations 2013 which came into force on 31 October 2013.
Mandatory reporting of OTC derivatives
Part VIA of the SFA requires a “specified person”, who is a party to a “specified derivatives contract”, to report to a TR such prescribed information on the “specified derivatives contract” and any amendment, modification, variation or change to such information within a prescribed time frame.
“Specified persons” include:
- licensed banks in Singapore;
- subsidiaries of a bank incorporated in Singapore;
- merchant banks approved as financial institutions under the Monetary Authority of Singapore Act;
- other financial institutions regulated by the MAS (namely, licensed finance companies, licensed insurers, holders of capital markets services licences (“CMSL holders”) and approved trustees referred to in section 289 of the SFA); and
“significant derivatives holders”, which is defined as persons satisfying all of the following requirements on the last day of any quarter:
- they are not any of the entities in paragraphs (a) to (d) above;
- they are resident in Singapore; and
- the aggregate gross notional amount, for the year ending on the last day of a quarter, of the “specified derivatives contracts” to which they are parties and are booked and/or traded in Singapore exceeds S$8 billion.
The reporting regime for OTC derivatives will be implemented in two phases. As of 31 October 2013, the following derivatives contracts are prescribed as “specified derivatives contracts”:
- interest rate derivatives contracts which are traded or booked in Singapore; and
- credit derivatives contracts which are traded or booked in Singapore.
Reporting of other asset classes of derivatives contracts (including foreign exchange, equity and commodity derivatives contracts) will commence in the second phase after October 2014.
While “specified persons” may voluntarily comply with the reporting requirements for OTC derivatives under Part VIA of the SFA which took effect on 31 October 2013, they are not obliged to do so in respect of interest rate and credit derivatives contracts until the respective reporting commencement dates listed in the table below.
Click here to view table.