MAS Consults on Scope of Application of IAC Guidelines

By Regulatory News

June 06, 2019

MAS launched a consultation on the scope of application of the guidelines on Individual Accountability and Conduct, or IAC, for the financial institutions in Singapore. MAS proposes to extend the Guidelines to all financial institutions regulated by MAS. Comment period on this consultation ends on July 22, 2019. MAS has also published its response to the feedback received on an earlier consultation on the Individual Accountability and Conduct guidelines.

The information to be provided by a third party seeking authorization to assess the compliance of securitizations with the STS criteria provided for in Securitization Regulation should enable a competent authority to evaluate whether and, to what extent, the applicant meets the conditions of Article 28(1) of the Securitization Regulation. An authorized third party will be able to provide STS assessment services across EU. The application for authorization should, therefore, comprehensively identify that third party, any group to which this third party belongs, and the scope of its activities. With regard to the STS assessment services to be provided, the application should include the envisaged scope of the services to be provided as well as their geographical scope, particularly the following:

To facilitate effective use of the authorization resources of a competent authority, each application for authorization should include a table clearly identifying each submitted document and its relevance to the conditions that must be met for authorization.
To enable the competent authority to assess whether the fees charged by the third party are non-discriminatory and are sufficient and appropriate to cover the costs for the provision of the STS assessment services, as required by Article 28(1)(a) of Securitization Regulation, the third party should provide comprehensive information on pricing policies, pricing criteria, fee structures, and fee schedules.
To enable the competent authority to assess whether the third party is able to ensure the integrity and independence of the STS assessment process, that third party should provide information on the structure of those internal controls. Furthermore, the third party should provide comprehensive information on the composition of the management body and on the qualifications and repute of each of its members.
To enable the competent authority to assess whether the third party has sufficient operational safeguards and internal processes to assess STS compliance, the third party should provide information on its procedures relating to the required qualification of its staff. The third party should also demonstrate that its STS assessment methodology is sensitive to the type of securitization and that specifies separate procedures and safeguards for asset-backed commercial paper (ABCP) transactions/programs and non-ABCP securitizations.

The use of outsourcing arrangements and a reliance on the use of external experts can raise concerns about the robustness of operational safeguards and internal processes. The application should, therefore, contain specific information about the nature and scope of any such outsourcing arrangements or use of external experts as well as the third party's governance over those arrangements. Regulation (EU) 2019/885 is based on the draft regulatory technical standards submitted by ESMA to EC.

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Effective Date: June 18, 2019

Press Release

Proposed Rule 1

Proposed Rule 2

Proposed Rule 3

Presentation on Regulatory Framework (PDF)

Presentation on Resolution Plan Rules (PDF)

MAS, in April 2018, had consulted on the guidelines on Individual Accountability and Conduct and this consultation had ended on May 25, 2018. MAS has considered the comments received during the consultation period and made revisions to the Individual Accountability and Conduct guidelines, where appropriate. Respondents had various comments on the scope of application of the Individual Accountability and Conduct guidelines. In particular, three respondents proposed to extend the Guidelines to insurance brokers and approved trustees for collective investment schemes. Two others suggested to include registered fund management companies (RFMCs), while one was supportive of excluding RFMCs from scope. There was also one suggestion to extend the Individual Accountability and Conduct guidelines to all financial institutions regulated by MAS. Consequently, MAS has issued this consultation to extend the scope of application of the guidelines on Individual Accountability and Conduct.

The guidelines on Individual Accountability and Conduct reinforce financial institutions’ responsibilities in the areas of promoting the individual accountability of senior managers, strengthening the oversight of employees in material risk functions, and embedding standards of proper conduct among all employees. The guidelines set out five outcomes that financial institutions are expected to work toward through implementing appropriate policies and processes to address the MAS expectations underpinning each outcome.

Comment Due Date: July 22, 2019

Keywords: Asia Pacific, Singapore, Banking, Securities, Insurance, Operational Risk, Conduct Risk, Individual Accountability, Guidelines, MAS

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