The Monetary Authority of Singapore (MAS) has issued a Consultation Paper on proposed amendments to the regulations for the reporting of derivatives contracts (Regulations) on 18 January 2016, as part of the ongoing development of the regulatory regime governing OTC derivatives. MAS also released its proposed implementation schedule for new reporting phases in relation to the reporting of derivatives contracts.
Key changes proposed in the Consultation Paper seek to:
Expand Reporting Requirements to New Classes of Derivative Contracts
MAS proposes to expand the reporting requirements to include new classes of derivatives contracts, namely:
- commodity derivatives contracts, which would capture forwards, swaps, and options that are related to commodities or commodity indices, or contracts with cash flows determined by reference to one or more commodities.
MAS is proposing to exclude certain commodity contracts from the reporting requirements, such as physically-settled commodity derivatives contracts entered into for commercial purposes and certain commodity sale and purchase agreements which may contain some form of optionality where such contracts are executed for commercial purposes and intended for physical settlement (e.g. contracts for the purchase of raw material containing options for non-delivery). - equity derivatives contracts, which would capture (i) rights, options or derivatives related to stocks or shares issued or proposed to be issued by a corporation or body unincorporated, (ii) contracts related to equities or equity indices, or (iii) derivatives of a unit in a business trust.
MAS currently proposes to exclude exchange-traded equity derivatives contracts (e.g. structured warrants) from the reporting obligations.
Introduce New Data Fields to be reported for Derivative Contracts
MAS proposed the inclusion of new data fields to identify the booking location and the location of the trader desk, in line with those required by international regulators.
MAS has also sought feedback on implementing the reporting of collateral information.
Revise Reporting Obligations for Prescribed Entities
MAS proposes to revise the reporting obligations and exemptions for non-bank financial institutions, including:
- subjecting non-bank financial institutions (such as subsidiaries of banks incorporated in Singapore, insurers and capital markets services licence holders) to reporting requirements if their annual aggregate notional amount of over-the-counter derivatives transactions exceed S$5 billion.
However, non-bank financial institutions would be required to make periodic submissions of certain aggregated information (to be prescribed by MAS at a later date) relating to derivatives contracts;
- exempting approved trustees and licensed trust companies from the reporting requirements; and
- excluding brokers (being capital markets services licence holders) and banks from reporting derivatives transactions transacted with retail investors (being non-accredited or non-institutional investors).
Implementation Timeline
MAS has released the proposed implementation schedule for the new reporting phases, which span from 1 July 2016 to 1 November 2018. The schedule can be found here.
