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May 02, 2018

MAS published a response to the feedback received on draft regulations for mandatory clearing of derivatives contracts. MAS will require over-the-counter (OTC) derivatives to be cleared on central counterparties (CCPs) with effect from October 01, 2018. Central clearing will make the trading of OTC derivatives in Singapore safer, as it mitigates counterparty credit risks inherent in these trades.

The mandatory clearing requirement will apply to Singapore-Dollar and US-Dollar fixed-floating interest rate swaps, as these are the most widely traded interest rate derivatives in Singapore. Banks whose gross notional outstanding OTC derivatives exceed USD 20 billion will be required to clear their trades through CCPs that are regulated by MAS. These banks account for over 90% of OTC derivatives contracts (in terms of outstanding notional amount) in Singapore. The central clearing requirements will be effected through the Securities and Futures (Clearing of Derivatives Contracts) Regulations.

MAS had proposed the regulation for mandatory clearing of OTC derivatives in July 2015. The draft Securities and Futures (Clearing of Derivatives Contracts) Regulations sets out the implementation details on the set of products and persons subject to the clearing obligations under the Securities and Futures Act (Cap. 289). The list of respondents to the consultation is in Annex A and the full submissions are in Annex B and Annex C.

 

Effective Date: October 01, 2018

Keywords: Asia Pacific, Singapore, OTC Derivatives, CCPs, CCR, Securities, Clearing, MAS

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