MAS Revises Notices and Guidelines Applicable to Banks in Singapore
MAS revised Notice 1005A that sets out the credit grading treatment for credit facilities granted support in response to the ongoing COVID-19 outbreak, between January 01, 2021 and December 31, 2021. Notice 1005A clarifies that, for the stipulated period, a merchant bank is not required to classify the credit facility of a borrower, just because the borrower is being granted extended credit support measures. Instead, merchant banks should holistically assess a borrower’s ability to fully repay its credit facilities. The revised Notice 1005A applies to merchant banks in Singapore and takes effect from June 30, 2021. MAS has also revised Notice 631 with respect to the mean of "customer" under Banking Act, guidelines on margin requirements, and guidelines on fit and proper criteria.
The following are the key highlights of the announced revisions:
- Notice 631 on meaning of customer under Banking Act. This notice specifies that, under section 40A of the Banking Act, the term "customer" excludes any company carrying on merchant banking business or investment banking business. The notice applies to all banks in Singapore and takes effect on July 01, 2021.
- Guidelines on margin requirements for non-centrally cleared over-the-counter (OTC) derivatives contracts. The guidelines cover the scope of products and entities, margin calculations and methodologies, and eligible collateral and haircuts. These revised guidelines, which have been issued pursuant to section 321 of the Securities and Futures Act (Cap. 289), apply to the MAS Covered Entities and take effect on July 01, 2021.
- Guidelines on fit and proper criteria. The guidelines set out the fit and proper criteria that apply to all relevant persons carrying out any MAS-regulated activity. The relevant person is expected to be competent, honest, have integrity, and be of sound financial standing. The guidelines cover definitions of relevant persons, scope of application, and criteria for considering whether a relevant person is fit and proper. The revised guidelines became effective immediately on publication.
Additionally, MAS has updated the list of frequently asked questions (FAQs) on the Securities and Futures (Reporting of Derivatives Contracts) Regulations 2013. The FAQs, which are relevant for over-the-counter counterparties, are intended to aid in the implementation of the reporting obligations and elaborate on MAS’ intent for certain requirements set out under the Securities and Futures (Reporting of Derivatives Contracts) Regulations. MAS also announced the cancellation of several Notices and Directives, which had been issued under the MAS Act and held relevance for merchant banks, with effect from July 01, 2021. The cancelled instruments cover topics such as corporate governance, capital adequacy, credit risk, and the MAS approach to resolution.
Effective Date: June 30, 2021 (Notice 1005A)/July 01, 2021
Keywords: Asia Pacific, Singapore, Banking, Margin Requirements, COVID-19, Credit Risk, Merchant Banks, Loan Repayment, Banking Act, OTC Derivatives, FAQ, Securities and Futures Regulation, Loan Moratorium, Capital Adequacy, Governance, Operational Risk, MAS
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
