MAS Revises Notices on Risk-Based Capital Adequacy Requirements
The Monetary Authority of Singapore (MAS) updated the set of frequently asked questions (FAQs) on the Securities and Futures (Reporting of Derivatives Contracts) Regulations 2013. The published FAQs are relevant for over-the-counter counterparties, are intended to aid implementation of the reporting obligations, and elaborate on the MAS intent for certain requirements set out under these regulations. Additionally, MAS revised notices 637 and 1111 on risk-based capital adequacy requirements for locally incorporated full and wholesale banks and for merchant banks, respectively. The revised Notice 1111 will be applicable from December 31, 2021 while Notice 637 will take effect on January 01, 2022, with certain exceptions that come into effect on December 31, 2021.
Notice 637 sets out the capital adequacy ratio and leverage ratio requirements for a locally incorporated banks, along with the methodology and process for calculating these ratios. This notice also sets out requirements for the internal capital adequacy assessment process of a bank as well as public disclosure requirements for a bank in relation to its capital adequacy and risk exposures. The MAS Notice 637 (Amendment No. 3) 2021 reflects changes to the MAS Notice 637 to:
- incorporate edits to the standardized approach to credit risk and the internal ratings-based approach related to the insertion of a new charge to be held by the Housing and Development Board under the Prime Location Public Housing model.
- incorporate clarifications by the Basel Committee on Banking Supervision to the standardized approach for counterparty credit risk (SA-CCR) framework and the revised capital requirements for bank exposures to central counterparties.
- implement revisions to the internal ratings-based approach application process.
- implement technical revisions to the disclosure framework.
The amendments related to insertion of the definition of “Housing and Development” in Part II and the amendments related to the insertion of a new charge to be held by Housing and Development Board under the Prime Location Public Housing model will be effective from December 31, 2021. Another notice that MAS revised is Notice 1111, which sets out the capital adequacy ratio requirements for a locally incorporated merchant bank, along with the methodology and process for calculating this ratio. The MAS Notice 1111 (Amendment) 2021 reflects changes to the MAS Notice 1111 to incorporate edits to the standardized approach to credit risk related to the insertion of a new charge to be held by the Housing and Development Board under the Prime Location Public Housing model.
Effective Date: December 31, 2021/January 01, 2022
Keywords: Asia Pacific, Singapore, Banking, Securities, Reporting, Basel, Regulatory Capital, SA-CCR, CCP, Disclosures, Standardized Approach, Merchant Banks, Notice 637, Notice 1111, FAQ, Securities and Futures Regulation, Derivatives, IRB Approach, MAS
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