SGX to amend financial and capital requirements for bank and remote members

One of the changes aims to rely on the requirements by the home regulator instead of SGX.

The Singapore Exchange (SGX) is asking for feedback on its proposal to recalibrate the financial and capital requirements of Remote Clearing Members (RCM), Remote Trading Members (RTM), Bank Clearing Members (BCM), and Bank Trading Members (BTM).

According to an announcement, the proposed amendments are to the Clearing Rules of SGX-Derivatives Clearing and the Central Depository, the Trading Rules of SGX-Securities Trading, and the Futures Trading Rules. “The amendments take into account global regulatory developments and are aimed at reflecting the levels of risk the members pose,” it said.

The proposed changes include the removal of SGX-imposed risk-based capital (RBC) requirements on Bank Members and Remote Members and reliance on the respective home regulator’s financial and capital requirements.

To monitor the members’ financial conditions, SGX will require quarter capital adequacy reports, regular liquidity reports, and have BTMs and BCMs to notify of any reduction in excess 20% of their regulatory capital.

SGX also proposed the redefinition of base capital for Bank and Remote Members and the removal of net liquid capital (NLC) requirements for RTMs.

SGX RegCo CEO Tan Boon Gin commented, “We have concluded from developments in the global regulatory landscape and the experience we have acquired through the years of regulating Remote Members and Bank Members that room exists for us to adjust and improve our regulatory framework. If our proposals are accepted, our markets and the Singapore financial industry will benefit from increased relevance and competitiveness. The Members will also enjoy greater capital efficiency.”

The public can submit feedback on the proposed amendments till 27 July 2018. The changes are targeted to be effective in the fourth quarter of 2018.