THE Monetary Authority of Singapore (MAS) will take over a portion of the supervision of brokers from exchanges and provide an additional layer of market surveillance as it adapts to having more than one exchange in Singapore, MAS deputy managing director Ong Chong Tee said on Thursday.
The new framework takes effect this year.
The change that will affect the exchanges the most is in terms of how exchange members are supervised.
Currently, Singapore Exchange's (SGX) supervision of its members includes checking on statutory requirements such as capital and reserve amounts, business conduct, anti-money laundering and counter-terrorist financing, and operational resilience.
But SGX is no longer the sole exchange in the Singapore derivatives market. Intercontinental Exchange is now operating in Singapore and Eurex is expected to open its doors around 2017.
Requiring each exchange to perform the same level of member supervision will impose upon exchange members the onerous task of undergoing three separate inspections a year with many overlaps, Mr Ong said.
Delegating one of the exchanges as a lead regulator is also problematic from a competitive standpoint - lead regulator that is also an exchange may have unfair access to information that its rivals do not.
MAS will therefore take on the role of the lead regulator with a focus on statutory requirements, while the exchanges focus their supervisory work on matters such as risk management and trading rules, Mr Ong said.
As the top-level regulator, MAS will also be able to supervise members with full knowledge of activities and exposures at each of the separate exchanges and even over-the-counter transactions.
In terms of market surveillance, MAS is building up its capabilities to add a layer of oversight on top of what the exchanges are already doing.
As with member supervision, MAS is hoping to improve surveillance by virtue of its position at the top of the information web with knowledge of positions both on and off exchanges.
MAS is also investing in technology to add data analytics to its surveillance capabilities, Mr Ong said.
But exchanges will continue to self-regulate when it comes to listing rules.
"Much work has been done to enhance the exchange's role around listings," Mr Ong said. "We believe that SGX - as the only securities exchange in Singapore - remains an appropriate listing authority."