Exercising its powers under the Securities and Futures Act (SFA), the Monetary Authority of Singapore (MAS) recently passed the:
- Securities and Futures (Trading Venues for Derivatives Contracts in the United States of America) Regulations 2019 (in operation on 14 March 2019); and
- Securities and Futures (Trading Venues for Derivatives Contracts in the European Union) Regulations 2019 (in operation on 2 April 2019)
to respectively prescribe 21 European Union and 23 US operators of multilateral or organised derivatives trading facilities and swap execution facilities.
These prescribed operators are exempted from compliance with:
- the approved exchange (AE) or recognised market operator (RMO) requirements under the SFA; and
- the mandatory trading obligations under the Securities and Futures (Trading of Derivatives Contracts) Regulations 2019.
MAS has based the exemption on substituted compliance, recognising that the types of interest rate swaps which would be subject to the SFA if they are traded in Singapore by counterparties are already subjected to these mandatory trading obligations:
- in the US: Commodity Exchange Act (CEA); and
- in the EU: Markets in Financial Instruments Regulation (MiFIR).
The EU Commission and the US Commodity Futures Trading Commission have taken the following reciprocal action:
|for investment banks operating as swap dealers in Singapore, accepting the SFA requirements as equivalent to their EU trading obligation under MiFIR (Commission Implementing Decision)||exempting MAS-regulated derivatives trading facilities from the requirement to register as swap execution facilities on the basis that although the SFA's requirements are not identical to the CEA, both frameworks achieve comparable regulatory outcomes (CFTC Order of Exemption)|