MR. MARKUS POH LEONG KEE MS. YONG CHANG LING
Legal Associate (Corporate Practice) Legal Associate (Corporate Practice)
T: (65) 6322 2217 T: (65) 6322 2237
F: (65) 6534 0833 F: (65) 6534 0833
E: markuspoh@loopartners.com.sg E: yongchangling@loopartners.com.sg
Loo & Partners LLP
143 Cecil Street, Level Ten, GB Building
Singapore 069542
www.loopartners.com.sg
In February 2015, the Monetary Authority of Singapore (“MAS”) issued a Consultation Paper on the proposed amendments to the Securities and Futures Act (“SFA”) to be in line with the current market and international developments, and to strengthen MAS’ enforcement regime.
Given the detailed nature of the Consultation Paper, this update will only highlight salient features of the proposed amendments.
1. Regulation of OTC derivations
MAS proposed to revise the definition of “derivative contract” in a simpler and principles-based manner comprising of the following key elements:
(a) replace references to “futures contracts” with “derivatives contract” throughout the SFA;
(b) simplify the definition of “securities” and introduce a new “securitiesbased derivative contract” to be a sub-set of the “derivative contract” definition;
(c) introduce a catch-all term “capital markets products” for the purposes of making references to all regulated products; and
(d) introduce a new definition of “organised market” to replace the existing definitions of “market”, “securities market” and “futures market” under Part I and in the First Schedule to the SFA.
2. Reporting of OTC derivatives
MAS proposed to amend provisions in Part VIA of the SFA concerning reporting of information on a specified derivatives contract, by a specified person, who acts as an agent of a party to that contract to clarify that such contracts would have to be reported so long as they are booked in Singapore.
3. New regulated activities
MAS will introduce a new regulated activity of “dealing in OTC derivatives” as well as another regulated activity of “dealing in capital markets products”, which will encompass the existing regulated activities of “dealing in securities”, “trading in futures contracts” and “leveraged foreign exchange trading”.
4. Strengthening the MAS’ enforcement regime
MAS proposed to raise the ceiling for the amount that may be imposed as a civil penalty by amending section 232 of the SFA to provide that the civil penalty ceiling will be the greater of either S$2 million or 3 times the amount of benefit obtained, in all cases.
5. Fund management
MAS proposed to revise the definition of “fund management” to mean “undertaking on behalf of a customer (whether on a discretionary authority granted by the customer or otherwise) – (a) the management of a portfolio of capital markets products; (b) the management of a collective investment scheme; or (c) entering into spot foreign exchange contracts for the purpose of managing the customer’s funds, but does not include real estate investment trust management”.
MAS intends to licence and regulate managers of a collective investment scheme (“CIS”) that invest in physical assets only if the CIS is offered to retail investors. There will be a class exemption granted to managers of CIS that are offered only to accredited or institutional investors.
The proposed amendments to the SFA will have important implications for Singapore’s securities market.