Safety check: MAS proposes reforms to OTC derivatives and securities

A trading regime could be implemented in the future.

Three years ago, MAS embarked on reforms to make the trading of OTC derivatives safer and more transparent.

Recently, the Monetary Authority of Singapore (MAS) issued for consultation today proposed legislative amendments to the Securities and Futures Act (SFA) to effect reforms to the regulation of over-the-counter (OTC) derivatives trading and the securities market.

In a media release, MAS details that the proposed legislative amendments will complete the OTC derivatives reforms in Singapore. MAS will extend its regulatory regime to OTC derivatives trading platforms and intermediaries, and introduce simplified, principles-based definitions of securities and derivatives.

While MAS has assessed that it is not necessary to mandate a trading regime for OTC derivatives for now, it will assume powers to implement a trading regime if such a regime was deemed necessary in the future.

MAS will continue to monitor developments, consult the industry closely, and conduct detailed analysis to determine the conditions that might make a trading mandate necessary.

MAS is also proposing to transfer regulatory oversight of commodity derivatives from the Commodity Trading Act (CTA), currently administered by International Enterprise (IE) Singapore, to the SFA.

The proposed legislative amendments to the SFA will allow MAS to strengthen Singapore’s securities market in two key areas: The proposal to require reporting of short selling of securities trading and publication of aggregate short positions will improve transparency in the short selling of securities. The enforcement-related proposals will enhance the authorities’ powers to take action against market misconduct such as the dissemination of false or misleading information, and increase the quantum of civil penalties that may be applied so as to increase their deterrent effect.