Securities and Futures (Clearing Facilities of Approved Exchanges or Recognised Market Operators) (Exemption) Regulations 2023

On September 5, 2023, the Securities and Futures (Clearing Facilities of Approved Exchanges or Recognised Market Operators) (Exemption) Regulations 2023 was published on Singapore Statutes Online, the official journal of Singapore. The regulations provide that approved exchanges or recognised market operators that establish or operate a „clearing facility“ are exempt from section 49(1) of the Securities and Futures Act 2001 subject to certain conditions. Section 49(1) requires that only approved and recognized clearing houses may establish or operate a clearing facility. The purpose of the regulations is to exempt approved exchanges or recognized market operators from having to be registered as a clearing house so long as they only engage in certain clearing-related activities.
To qualify for exemption, the following conditions must hence be met:
– All transactions cleared or settled using the clearing facility must be executed on an organized market established or operated by the approved exchange or recognized market operator.
– The transactions must not be routed by the approved exchange or recognized market operator to approved clearing houses, recognized clearing houses, or other entities operating clearing facilities.
– Transactions cleared or settled using the clearing facility must be verified in terms of their terms or obligations, and they may involve multilateral netting arrangements.
The exemption mentioned above will cease if any transaction cleared or settled using the clearing facility:
– Is not executed on an organized market established or operated by the approved exchange or recognized market operator.
– Is routed to approved clearing houses, recognized clearing houses, or other clearing facilities.
– Is not cleared or settled as specified in the conditions outlined for exemption.
Approved exchanges or recognised market operators that qualify for the exemption must notify the Monetary Authority of Singapore (MAS) in writing as follows:
– If the clearing facility was established before September 7, 2023, it must notify the Authority of their reliance on the exemption by October 7, 2023.
– If the clearing facility is established on or after September 7, 2023, it must notify the Authority within 14 days after its establishment.
– Similar notification requirements apply for the commencement of the operation of a clearing facility.
Failure to comply with the notification requirements can result in significant penalties as outlined in the regulations.