Singapore legislation
Regulation 54B
of Securities and Futures (Licensing and Conduct of Business) Regulations
Regulation 54B
Exempt persons dealing in non-centrally cleared derivatives contracts on behalf of accredited investors, expert investors or institutional investors
Subregulation 1
A person exempted from holding a capital markets services licence under section 99(1)(a), (b) or (c) of the Act who deals in non-centrally cleared derivatives contracts with accredited investors, expert investors or institutional investors must implement policies and procedures to ensure the following:
that written trading relationship documentation is signed with each counterparty before, or at the time when, the person enters into a non-centrally cleared derivatives contract, except where —
that derivatives contract is the only transaction between the exempt person and that counterparty; and
the person provides a written trade confirmation of the material rights and obligations of the exempt person and that counterparty under that derivatives contract;
that a written trade confirmation of the material terms of each non-centrally cleared derivatives contract is provided to each counterparty, as soon as practicable after the execution of each non-centrally cleared derivatives contract;
that the person’s records of the material terms and valuations of each non-centrally cleared derivatives contract in its portfolio are reconciled, at regular intervals, with each counterparty’s records of such material terms and valuations;
that the necessity of portfolio compression in relation to the person’s portfolio of non-centrally cleared derivatives contracts is assessed at regular intervals; and
that, in the case of any dispute arising from any discrepancy between the person’s records of the material terms or valuations of any non-centrally cleared derivatives contract in its portfolio with a counterparty’s records of such material terms and valuations, agreement is sought with that counterparty on a dispute resolution mechanism to resolve that dispute.
Subregulation 2
In this regulation —
Definition
“non-centrally cleared derivatives contract” means an OTC derivatives contract that —
is not, and is not intended to be, cleared or settled by a person operating a clearing facility through which parties to the contract substitute, through novation or otherwise, the credit of the person operating the clearing facility for the credit of the parties; and
is booked in Singapore;
Definition
“portfolio compression” means a process —
that is applied to a portfolio of derivatives contracts;
under which some or all of the derivatives contracts in the portfolio are —
modified to reduce their notional amount; or
terminated and replaced with one or more new derivatives contracts which have the effect of reducing notional exposures between the participants; and
that is conducted for the purposes of reducing counterparty risk or operational risk for the participants.