31 January 2018

From 20 December 2017 to 19 January 2018, the Monetary Authority of Singapore (“MAS”) sought feedback on the proposals set out in its consultation paper on “Proposed Amendments to Widen the Scope of Eligible Collateral Relating to Commodities and Equity Securities in MAS Notice 637”.

MAS proposes to amend MAS Notice 637 on “Risk Based Capital Adequacy Requirements for Banks Incorporated in Singapore” to revise the list of eligible collateral that may be recognised for credit risk mitigation purposes. Specifically, MAS proposes to:

  • recognise commodities as eligible physical collateral for banks using the foundation internal ratings-based approach for credit risk;
  • widen the scope of eligible equity securities to those listed on any regulated exchange (i.e. an exchange regulated by MAS or other financial services regulatory authority); and
  • in relation to eligible equity securities included in a main index which qualify for a 15% haircut, clarify the definition of main index as one which is referenced by futures or options traded on a regulated exchange.

Reference materials

The consultation paper is available on the MAS website www.mas.gov.sg or by clicking here.

 

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