The regulatory reporting is crucial for any financial services firm, let it be in Europe or Asia-Pacific, and the next couple of months are going to be busy for Singapore-regulated companies.
The Monetary Authority of Singapore (MAS) has expanded its regulatory reporting scope to include FX, commodity and equity OTC derivative contracts. Though the deadline for that was initially set for last year, the regulator pushed it to October 1, 2021, due to the ongoing pandemic.
Sophie Gerber, a Director at Sophie Grace and TRAction Fintech
“The expansion of the MAS reporting regulations is part of the Singaporean regulator’s aim to align itself with international reporting standards,” said Sophie Gerber, a Director at Sophie Grace and TRAction Fintech.
The new MAS rules will require insurers, subsidiaries and other financial market licensees to report on the activities with further asset classes. Though banks and other market participants are already reporting on these, they will likely need changes on their additional clients base that will be under the regulatory scope.
Ron Finberg, Director of Global Regulatory Reporting Solutions at IHS Markit
“While the reporting is new for many firms, it is an area most companies had done initial preparation of scope and responsibilities since the beginning of last year,” Ron Finberg, Director of Global Regulatory Reporting Solutions at IHS Markit, told Finance Magnates.
Challenges Ahead
But, there will be many challenges in front of the companies with new reporting regulations, the biggest one being in front of institutions that will report on these derivative contracts for the first time.
Finberg explained: “A challenge that we are finding many firms dealing with is that the types of derivatives contracts under the scope for Equities, Commodities and FX are very different from the existing ones for Interest Rates and Credit that they currently report. The existing format for capturing data of something like a CDS or IRS is much different than an FX Option or Equity Swap or CFD. Therefore, firms need to work with the different variables and reporting lifecycles that account for these new products that come under the scope.”
No Room for Errors
Additionally, the timing of the reporting went against the companies as trade volume skyrocketed across markets with the impact of Covid-19 on economies. This will likely lead to reporting errors that will eventually cost the companies money.
“If you’re reporting trades via a delegated third-party it is important to get in touch with your reporting delegate as soon as practicable. This will allow your reporting delegate to ensure your systems are equipped to extract the additional data required to report foreign Exchange , commodity and equity OTC derivative contracts before the deadline,” Gerber suggested.
“Most firms operating in Singapore already have related companies in jurisdictions that have implemented this type of reporting, e.g. ASIC, HKMA, EMIR and MiFIR.”
Moreover, she pointed out another important aspect, which is DTCC being the only trade repository authorized by MAS.
“DTCC is not facilitating the use of reporting aggregators, which means that clients will also have to onboard with DTCC as well as the third-party delegate,” Gerber said, adding, “we are finding a number of TRAction’s existing clients have approached us to assist with their MAS entity where we are already doing the reporting for another regime in their group.”
"DTCC Data Repository Singapore (DDRS) is currently facilitating financial services companies and vendor reporting for single or multiple asset classes. Within the MAS jurisdiction, this means that the client and the third-party delegate will need to be onboarded to DDRS to meet their reporting obligations," a spokesperson from DTCC clarified.
"DDRS currently offers the aggregation service for CFD and Margin Forex Service Providers in jurisdictions where retail trades fall into scope within the local trade reporting rules. These rules are currently not applicable for the MAS jurisdiction."
