MAS consults on proposed amendments to capital framework for approved exchanges and approved clearing houses

19 December 2023

On 4 December 2023, the Monetary Authority of Singapore (“MAS”) published a consultation paper seeking feedback on proposed amendments to the capital framework for approved exchanges (“AEs”) and approved clearing houses (“ACHs”). The consultation closes on 15 January 2024. 

AEs and ACHs are required to comply with a set of conditions aimed at ensuring safe and orderly function of the institutions. In particular, they have to ensure an entity’s commitment and ability to conduct its business as a going concern, provide for a financial buffer against unexpected losses, and allow for an orderly recovery or wind-down of the entity in distress. 

MAS’ proposals aim to ensure that the capital framework remains fit for purpose and up to date for AEs’ and ACHs’ business activities, and to adopt international practices, which may have evolved over time. 

MAS proposes to: 

  • introduce a liquidity requirement that is separate from the solvency requirement, to address the different purposes of each requirement; 
  • streamline the capital components and the deducted balance sheet components for the solvency requirement to strengthen the quality and availability of capital that contributes towards the eligible capital of an AE or ACH; 
  • introduce various amendments to the operational risk component, investment risk component and general counterparty risk component of the total risk requirement; and 
  • set out the requirements to submit and notify MAS on matters relating to an AE or ACH’s capital in the Securities and Futures (Organised Markets) Regulations 2018 and Securities and Futures (Clearing Facilities) Regulations 2013 for AEs and ACHs respectively. 

MAS intends to impose the proposed capital framework via a notice issued under the Securities and Futures Act 2001 for greater clarity and transparency. Feedback is sought on the draft Notice. 

Reference materials

The consultation paper is available on the MAS website www.mas.gov.sg.