Expected Delays to MAS Trade Reporting

This article was written by Quinn Perrott who is the General Manager of TRAction Fintech. TRAction Fintech provides derivative trade reporting services in Australia, UK, Europe, Singapore and Hong Kong.

Reporting Requirements in Singapore

The Monetary Authority of Singapore (MAS) published proposed updates to the Securities & Futures (Reporting of Derivatives Contracts) Regulations in January 2016. MAS is now looking to implement the required reporting of commodity and equity derivatives contracts to complete the implementation of Trade Reporting regulations in Singapore. Currently only interest rate, credit and foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term derivatives contracts are required to be reported to a licensed trade repository.

Commodity Derivatives Contracts

MAS is looking to implement the reporting of all forwards, Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term and options that are related to commodities or commodity indices but will exclude certain types of commodity contracts for the reporting requirements which are entered into for commercial purposes.

Equity Derivatives Contracts

For the purposes of trade reporting in Singapore, MAS is proposing that equity derivatives contracts be reported. Equity Derivatives Contracts would refer to rights, options or derivatives related to stocks or shares issued or proposed to be issued by a corporation or body unincorporated, contracts related to equities of equity indices or derivatives of a unit in a business trust.

Securities based derivatives fall within in the definition of securities rather than derivatives under Singapore law. However MAS, intends to subject securities-based derivatives to reporting requirements.

Reporting Timeline

1. New data fields – The proposed inclusion of new data fields to identify the booking location and the location of the trader desk for equity derivatives contracts would come into effect from 1 July 2016. Reporting of collateral information would come into effect on 1 November 2016.

2. New reporting phases for banks and merchant banks – Banks and merchant banks will be required to commence reporting of commodity and equity derivatives contracts from 1 November 2016.

3. New reporting Phases for Non-Bank Financial Institutions and SDHs – MAS proposes that trade reporting or non-bank financial institutions and SDHs would commence from 1 November 2017 beginning with the reporting of interest rates and credit derivatives contracts which are traded in Singapore. The final reporting phase for foreign exchange, commodity and equity derivatives would commence from 1 November 2018.

We note that the indicative date of 1 November 2016 is currently only the proposed commencement date as stipulated in the original consultation material and has not been confirmed by MAS.

Reporting of OTC Derivatives in Singapore commenced in 2013. In July 2014, MAS provided temporary relief from the requirement to report certain derivative contracts. The implementation of the proposed amendments would complete the gradual phase in of trade reporting requirements in Singapore.

Interestingly the MAS has not formalised or passed legislation in relation to the reporting requirements. Currently, MAS has not responded to the consultation or provided any further requirements. The MAS recently published a draft field set and has requested feedback from the industry.

Until MAS proceeds to formalise its reporting requirements, TRAction Fintech considers the indicative commencement date of 1 November 2016 an unlikely go-live date for the purposes of reporting.