February 20, 2019

EC and MAS announced a common approach for EU and Singapore derivatives trading venues to support the G20 reforms for standardized derivatives to be traded on trading platforms. The common approach is intended to facilitate the ability of the EU financial counterparties to comply with the EU derivatives trading obligation under Article 28 of the Markets in Financial Instruments Regulation (MiFIR) by executing swap transactions on organized markets authorized in Singapore. Likewise, Singapore counterparties can engage with EU counterparts on the Multilateral Trading Facilities (MTF) or Organized Trading Facilities (OTF) of EU in compliance with the derivatives trading obligation of Singapore.

The EC Vice-President Valdis Dombrovskis intends to propose that EC adopt an equivalence decision to recognize a list of organized markets in Singapore, which are operated by an approved exchange or a recognized market operator, as platforms eligible for the execution of derivatives subject to EU "on-venue" trading obligation, provided the requirements of MiFIR are met. Before EC can adopt an equivalence decision, member state authorities must vote in favor of the draft decision in the European Securities Committee. MAS intends to propose the adoption of regulations to exempt EU MTFs and OTFs from the requirement to be an approved exchange or a recognized market operator under section 7(1) of the Securities and Futures Act (SFA). The same list of EU MTFs and OTFs will also be prescribed under section 129J(1)(a) of the SFA as facilities that can be used to satisfy the trading obligations of Singapore. The list of venues covered by the MAS exemptions and by EC equivalence decision may be amended or updated, depending on changes or developments in the markets, including future authorization of trading venues on both sides.

MAS and EC services intend to work together to ensure that the common approach is put in place and followed in a coordinated manner. The authorities will continuously monitor the impact of this to assess whether any further action is appropriate. MAS expects to notify the Commission services of its list of eligible approved exchange and recognized market operator while the Commission services expect to notify MAS of its list of trading venues under MiFIR, eligible for exemption and prescription by MAS.

 

Related Link: EU and MAS Joint Statement

Keywords: Asia Pacific, Europe, EU, Singapore, Banking, Securities, Derivatives Trading, MiFIR, MAS, EC

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