In a significant move set for October 2024, the MAS will implement changes to the over-the-counter (OTC) derivatives reporting requirements.
According to MAPFinTech, this initiative aims to align Singapore’s regulatory framework with the International Organization of Securities Commissions and the Committee on Payments and Market Infrastructures’ (IOSCO-CPMI) recommendations on critical derivatives elements.
By the compliance deadline of October 21st, 2024, market participants are required to adjust their reporting practices to meet the updated standards. The MAS Rewrite introduces several critical amendments designed to boost transparency, enhance data accuracy, and increase regulatory oversight within the derivatives market.
One of the notable changes is the adoption of the ISO 20022 XML Data Format. This new requirement will standardise data exchange, enhancing interoperability among market participants and regulatory bodies. Additionally, the introduction of Unique Trade Identifiers (UTI) and Unique Product Identifiers (UPI) will enable better traceability and risk assessment, aligning with modalities in other major jurisdictions such as the EU, the UK, the ASIC, and the USA.
The MAS Rewrite also redefines the management of lifecycle events through the integration of Event Type and Action Type fields. This update will require entities to modify their reporting systems to handle numerous new combinations of data fields effectively. Moreover, mandatory reporting on the valuation of derivatives and associated collateral will provide a more transparent view of exposure and credit risk.
Participants must now include broader and more detailed information in their reports. These enhancements include additional details like Notional Schedule fields, Spreads, Options, Other Payment Types, and more. Such comprehensive reporting is aimed at granting regulators deeper insights into market activities.
Another key aspect of the rewrite is the introduction of new intraday and end of day reports. These reports are designed to enhance transparency and support participants in better managing risks, ensuring compliance, and making informed decisions. Furthermore, the MAS stipulates a T+2 reporting timeline, where reports must be submitted within two business days post-transaction.
The requirement for reporting significant issues to regulatory authorities is another new mandate. This measure is intended to improve regulatory oversight and ensure timely interventions to address and mitigate potential risks, thereby maintaining the integrity and stability of the financial market.
In conclusion, the MAS Rewrite heralds a new chapter in derivatives reporting in Singapore. With its comprehensive reforms, it aims to fortify the transparency, data quality, and regulatory oversight of the derivatives market. Market participants must quickly adapt to these changes to maintain compliance and operational efficiency in the new regulatory environment.
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