Knowledge Highlights 3 June 2025
MAS proposes changes to margin requirements for product financing provided by CMS licence holders
On 22 May 2025, the Monetary Authority of Singapore (“MAS”) published its consultation paper on proposed amendments to the Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licences) Regulations (“SF(FMR) Regulations”). The consultation closes on 21 June 2025.
The SF(FMR) Regulations require a holder of a capital markets services licence (“CMS licence holder”) to meet various margin requirements when providing the regulated activity of product financing. Following a review of the margin requirements which have remained unchanged since 2002, MAS proposes two changes which aim to support investor demand and overall market vibrancy while continuing to balance the risk of over-leveraging by a CMS licence holder.
Aggregate margin exposure limit
Under regulation 24(3)(a) of the SF(FMR) Regulations, a CMS licence holder’s overall product financing activities must not exceed 300% of its free financial resources, i.e. the aggregate of margin exposures of all its customers must not exceed 300% of its free financial resources.
Following its review, MAS proposes to raise the overall limit from 300% to 500% to allow a CMS licence holder to better support investors’ trading interest in specified products. The proposed revised limit will also align Singapore’s requirements more closely with those in other jurisdictions where such limits range between five times and 10 times of a broker’s regulatory capital.
Aggregate margin exposure limit in respect of specified products that are not quoted on an approved exchange
Regulation 24(3)(b) of the SF(FMR) Regulations requires a CMS licence holder to ensure its product financing activities in respect of specified products offered on a non-approved exchange do not exceed 100% of its free financial resources, i.e. the aggregate of margin exposures of all customers in respect of specified products, other than specified products quoted on an approved exchange, must not exceed 100% of its free financial resources. “Specified products” is defined in the Securities and Futures Act 2001 to mean securities, specified securities‑based derivatives contracts, or units in a collective investment scheme.
MAS proposes to remove this requirement, given that the overall aggregate margin exposure limit requirement under regulation 24(3)(a) of the SF(FMR) Regulations is sufficient to limit the leverage risk of a CMS licence holder. This change will simplify MAS’ product financing requirements and better align the requirements in Singapore with other jurisdictions.
Reference materials
The following materials are available from the MAS website www.mas.gov.sg:
