The Monetary Authority of Singapore (MAS) has set out its proposals for the city state to comply with the G20 commitment to arrange central clearing and reporting of OTC derivatives trades.
The proposals include mandatory central clearing of OTC derivative trades at regulated central counterparties, and mandatory reporting of OTC derivative trades to regulated trade repositories. However, the proposals stop short of forcing derivatives to be traded on exchanges or electronic platforms, unlike similar G20-endorsed measures in the US and Europe, namely the Dodd-Frank Act and the European Market Infrastructure Regulation.
The Singaporean regulator also pledged to align the treatment of OTC derivatives with that of securities and futures where possible. MAS is also currently working with the Singapore Foreign Exchange Market Committee to encourage standardisation of OTC derivatives.
“The proposals will reduce systemic risk, improve transparency and protect against market abuse in Singapore’s OTC derivatives market, in a manner consistent with the G20 recommendations,” said Teo Swee Lian, deputy managing director, financial supervision at MAS.
Singapore is not an official member of the G20. However, the country’s prime minister, Lee Hsien Loong, represented Singapore at the 2011 G20 meetings. MAS stated in July 2011 that it would meet the objectives set by the G20. Public consultation on proposal closes on 26 March.