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MAS seeks more bite to oversight of derivatives, securities

Proposed legislative changes also aimed at greater transparency
Thursday, February 12, 2015 - 05:50
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The Monetary Authority of Singapore (MAS) building at Shenton Way on March 13, 2014.

Singapore

THE Monetary Authority of Singapore (MAS) has proposed legislative amendments to strengthen its enforcement powers on over-the-counter (OTC) derivatives trading and the securities market. The proposals also call for effective disclosure of information to raise the bar on transparency.

These proposed amendments followed a comprehensive review of the Securities and Futures Act (SFA) to ensure that it remains current in view of market and international developments, said the financial watchdog in a statement.

The proposals include requirements to report short-selling of securities trading and publication of aggregate short positions for better transparency.

MAS is also seeking to enhance the authority's power to take action against market misconduct such as the dissemination of false or misleading information and raise the quantum of civil penalties as a more effective deterrent.

MAS said it would extend its regulatory regime to OTC derivatives trading platforms and intermediaries, and introduce simplified, principle-based definitions of securities and derivatives.

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

"The proposed legislative amendments will complete the OTC derivatives reforms in Singapore," said MAS.

As things stand now, the watchdog said it's not necessary to mandate a trading regime for OTC derivatives, but it would assume powers to do so if it was deemed necessary down the road.

"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," it said.

On Wednesday, the authority issued these proposed legislative amendments for consultation, following public feedback it had received on proposed reforms on OTC derivatives and securities market regulations in February 2012 and 2014 respectively.

The regulator embarked on these reforms three years ago to make the trading of OTC derivatives safer and more transparent.

To this end, the SFA was amended to cover the mandatory reporting and central clearing of OTC derivatives trades and regulation of OTC derivatives trade repositories and clearing facilities.

Public feedback and comments on the proposed amendments should be submitted by March 24.

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