On 9 July 2014, the Monetary Authority of Singapore (MAS) published a Consultation Paper on “Draft Regulations for Reporting of Foreign Exchange Derivatives Contracts”.
Regulations on interest rate and credit derivatives were issued previously, with a reporting commencement date ranging from 1st April 2014 to 1st October 2015. The draft regulations now aim to cover foreign exchange derivatives. Singapore is the third largest FX centre globally, after London and New York. In order to ensure a smooth implementation of the new regulations, MAS proposes a phase-in implementation, solely for banks, starting from 1 April 2015
Extra-territoriality linked to the trader
The existing definition of derivatives “Traded in Singapore” would be amended. It covered the transactions executed by a trading desk or by a trader physically located in Singapore. By deleting the reference to the trading desk and effectively narrowing its scope, MAS hopes to resolve a sticky issue. MAS suggests that the revised definition has regard to approaches taken by other regulators, as well as industry feedback.
It would be tied to the execution of a transaction by a trader, as opposed to a trading desk. The definition would require reporting for a transaction executed by a trader working temporarily outside Singapore. In order to be caught by the definition, the trader would also need to have performed, or have been authorised to perform, execution of derivatives contracts for more than half the precedent quarter in Singapore.
Masking of trades
MAS proposes to revise the list of jurisdictions which have blocking statutes. The firms in Singapore would benefit from a masking relief until 1 November 2015 for counterparties subject to the jurisdiction of the following countries:
- People’s Republic of China
- Republic of Korea
This relief would not apply to EU countries, since a similar relief is not available in the EU.
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