MAS Amends Notice 122 on Asset and Liability Exposures for Insurers

By Regulatory News

May 30, 2019

MAS issued the revised MAS Notice 105 on Insurers’ Appointment of Custodians and made consequential amendments to MAS Notice 122 on Asset and Liability Exposures for Insurers. The revised MAS Notice 105 will take effect on January 01, 2020 and will apply to all existing and new custody arrangements. The revised MAS Notice 122 shall take effect on May 30, 2019.

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.

Related Links

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 August 2018, had issued its response to the feedback received on a consultation paper on the review of MAS Notice 105, which sets out requirements on insurers’ appointment of custodians and fund managers. As mentioned in the response to the consultation paper, insurers are required to submit custodian information based on the template under the revised MAS Notice 122 for asset positions as at December 31, 2019. This will be due for submission by March 31, 2020.

Effective Date: January 01, 2020 (MAS Notice 105); May 30, 2019 (MAS Notice 122)

Keywords: Asia Pacific, Singapore, Insurance, MAS Notice 122, Asset and Liability Exposures, MAS Notice 105, MAS

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MAS Amends Notice 122 on Asset and Liability Exposures for Insurers

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