the Monetary Authority of Singapore (MAS)
A spokesperson for the Monetary Authority of Singapore (MAS) discusses the potential merits of the transfer of regulatory oversight of commodity derivatives from the International Enterprise Singapore to the MAS.
What was the motivation behind the proposal to transfer regulatory oversight of commodity derivatives under IE Singapore’s Commodity Trading Act to the MAS (SFA Securities Futures Act)? Moreover, what will be the benefits of the proposed transfer of regulatory oversight of commodity derivatives?
Currently, entities that engage in broking transactions in both commodity derivatives and commodity futures, are dually licensed by IES and MAS. Entities operating a market listing commodity derivatives and commodity futures would also require authorization under both the CTA and the SFA. These entities therefore have to comply with two sets of rules and regulations under the CTA and the SFA respectively. The commodity derivatives sector has been growing and evolving over the years and the characteristics of increasingly standardized commodity derivatives are becoming similar to those of commodity futures. The blurring of the distinction between such commodity derivatives and commodity futures may give rise to instances where it is unclear whether a particular contract falls within the regulatory ambit of the CTA or the SFA. Therefore, to streamline licensing and compliance requirements, IES and MAS proposed to transfer the regulatory oversight of commodity derivatives from the CTA to the SFA.
Specifically, how has the MAS communicated and worked with the commodity trading industry to discuss the potential transfer of regulatory oversight of commodity derivatives to the MAS, and what has been the general response of the industry to the regulatory proposals?
In 2012, MAS and IES issued a joint consultation paper on the proposal to transfer the regulatory oversight of commodity derivatives under the Commodity Trading Act to the Securities Futures Act. In developing the regulatory framework for commodity derivatives intermediaries, MAS and IES have been engaging and considering views from commodity trading firms. MAS will conduct a public consultation on the proposed regulatory framework for OTC derivatives, including commodity derivatives, in due course.
As Singapore‘s central bank, how does the Monetary Authority of Singapore endeavor to maintain Singapore’s position as a global financial powerhouse, with attention given to the specific macro-economic policy initiatives the MAS promotes?
As an international financial centre strategically located in the heart of Asia, Singapore is well positioned to ride on Asia’s economic growth and serve the region’s financial needs. Our approach is to put in place the right fundamentals to facilitate this role. There are three key aspects to this:
1) To build a trusted and reputable financial system which is well regarded by the international community:
MAS seeks to establish sound regulation of a high standard that allows well-managed risk taking and innovation, and which emphasizes the stable and sustainable development of the financial services sector. Over the years, investors and financial institutions have come to know Singapore as a jurisdiction that they can fully trust. This trust is based on political stability, rule of law, transparency, consistency in policy approach, and robust and independent supervision. In the face of financial markets regulatory tightening worldwide post crisis, Singapore remains committed to its promise to be a reputable financial centre in good standing with the rest of the world. Our regulatory regime is aligned to international standards and best practices, providing confidence to investors and clients who use our financial sector for their investment or financing needs. We will continue to maintain its high standards of transparency and integrity, oversight of fund flows and take action against suspicious and improper transactions.
2) To ensure the availability of skilled and competent talent for sustainable growth:
The financial industry is growing in sophistication and complexity. To support and sustain the growth of the financial industry, it is critical that industry practitioners possess the right skills and knowledge in order to perform their roles well. MAS has invested heavily in attracting talent and building up the competencies of our financial sector workforce. We facilitate through a broad range of programs aimed at deepening the skills of our talent pipeline. We also introduced the Financial Industry Competency Standards, a national competency framework that is job-specific and practice-oriented.
3) To develop a cost-competitive and pro-business environment:
Singapore was ranked as Asia’s most competitive economy in the World Economic Forum Global Competitiveness Index 2012–2013. Singapore’s clear legal framework, coupled with a stable social and political environment, provides businesses and investors with a trusted and conducive environment for investments. The approach of both the Singapore government and MAS is to be responsive and proactive to changes in the business environment. In areas such as regulation, supervision, tax and market access, we are prepared to listen and make changes where necessary in order to make it conducive for FIs to operate here. The Political and Economic Risk Consultancy (PERC) has consistently rated Singapore’s corporate governance standards as being amongst the best in Asia.