Singapore wants to ensure that OTC derivative contracts are cleared and reported centrally. It also wants to regulate market operators, clearing facilities, trade repositories and market intermediaries for OTC derivative contracts.

The Monetary Authority of Singapore proposes to expand the reach of Chapter 289 Securities and Futures Act to regulate over-the-counter derivatives as follows:
(a) to mandate the central clearing and reporting of OTC derivatives;
(b) to extend the current regulatory regimes for market operators, clearing facilities and capital markets intermediaries to OTC derivatives; and
(c) to introduce a new regulatory regime for trade repositories.
The regulator wants interested parties to comment on its consultation paper by 26th March.

In 2009 the 'group of 20' (actually only 19) industrialised nations of the world, of which Singapore is not a member, said that all standardised OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest. OTC derivative contracts should be reported to trade repositories. Non-centrally cleared contracts should be subject to higher capital requirements.

Singapore therefore wants to ensure that OTC derivative contracts are cleared and reported centrally. It also wants to regulate market operators, clearing
facilities, trade repositories and market intermediaries for OTC derivative contracts. The MAS is working with the Singapore Foreign Exchange Markets Committee to encourage standardisation of OTC derivative products. It proposes to introduce legislation to provide for the mandatory central clearing of OTC derivative contracts on regulated central counterparties. It wants to move OTC derivative contracts trading to platforms where appropriate, and it proposes not to introduce a trading mandate (compelling all standardised OTC derivative contracts to be traded on exchanges or electronic trading platforms) at this stage, planning first to carry out a cost/benefit analysis. It does, however, propose to introduce legislation to compel relevant firms to report OTC derivative contracts to regulated trade repositories.

Regulation of centralised trading platforms is an IOSCO (International Organisation of Securities Commissions) recommendation, so the MAS wants to extend the current regulatory regime to operators of derivative contract markets. Similar to existing securities markets and futures markets, it intends to regulate trading platforms for derivative contracts whose key attributes are as follows.
(a) Systematic and recurring transactions are made on the trading platform.
(b) Bids and offers interact on the trading platform, allowing for the comparison and competition of bids and offers; in this respect, trading platforms may operate 'request for quote' (RFQ), 'indication of interest' (IOI) systems or other electronic systems, which allow for dissemination of potential bids or offers between buyers and sellers.
(c) Buyers and sellers have reasonable expectations of transacting according to the information on the trading platform.
(d) The trading platform allows for the conclusion of transactions influenced by prices provided on the trading platform, regardless of whether the final negotiation or execution of transactions is done outside the trading platform.