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Singapore, European regulators agree on mutual recognition of derivatives trading venues

THE European Commission on Monday recognised a few Singapore trading venues authorised by the Monetary Authority of Singapore (MAS) as eligible for compliance with the EU trading obligation for derivatives.

This came shortly after it was announced in March that Singapore regulators and their US counterparts have agreed to mutually recognise some derivatives trading venues in either country. 

The latest decision will allow EU investment banks that operate as swap dealers in Asia to comply with their EU trading obligations under the Markets in Financial Instruments Regulation (MiFIR), and in line with the G-20 reforms for standardised derivatives, when dealing with derivatives with counterparties in Singapore.

Concurrently, MAS on Monday also adopted regulations to exempt certain EU multilateral and organised trading facilities from MAS' markets licencing requirements. 

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With this, Singapore participants can trade with EU counterparties on such EU trading venues in compliance with Singapore's derivatives trading obligations. 

Tharman Shanmugaratnam, MAS chairman, said: "The decisions adopted today will strengthen cross-border trading, enabling businesses in the EU and Singapore to access deeper pools of liquidity and hedge risks more efficiently."

Valdis Dombrovskis, commission vice-president in charge of financial stability, financial services and capital markets union, added that this will facilitate trade and economic exchanges between the EU and Singapore.

"Our adoption today confirms how global cooperation can bring tangible benefits to EU market participants trading interest rate and credit default derivatives on Singapore's trading platforms, and engaging with local counterparts in Asia, while Singapore firms will be able to use EU platforms."

This follows news in February of both sides working on a common stance on derivatives trading platforms, with the aim of connecting the two markets to boost liquidity and help companies hedge currency risks.