30 October 2018

The Monetary Authority of Singapore (“MAS”) has issued its Response to feedback received from the consultation paper on proposed changes to MAS Notice 105 Appointment of Custodian and Fund Manager (“MAS 105”).

Between 9 November 2016 to 9 December 2016, MAS conducted a public consultation on proposals to (i) enhance the requirements for safeguarding assets of insurance funds when insurers appoint custodians and sub-custodians to hold such assets; and (ii) refine and streamline the information collected on custody arrangements.

Among other things, MAS had proposed a mandatory requirement for insurers to appoint only custodians and sub-custodians that are licensed, registered or authorised to act as custodians in the jurisdiction where the custody account is maintained. Further, insurers would be required to include a mandatory provision in the custody agreement stating that the title of the custody account should be maintained in the name of the insurer licensed in Singapore, and the custodian and sub-custodian should identify the assets as belonging to the respective insurance fund established by the insurer under section 17(1) of the Insurance Act, either through sub accounts or otherwise. Respondents were mostly supportive of these proposals. An outline of the mandatory requirements and guidelines on the appointment and ongoing monitoring of custodians and sub-custodians and provisions to be included in a custody agreement can be found in Appendices 1 and 2 of the Response.

MAS had also proposed to collect the reporting requirements on insurers’ custodian information under MAS 122 Notice on Asset and Liability Exposures for Insurers (“MAS 122”). MAS has made some changes to the submission template and the final templates can be found in Appendices 3 and 4 of the Response. Under the proposed reporting requirements, insurers will only be required to make annual electronic submission of custodian information to MAS under MAS 122. Accordingly, the current reporting requirement under MAS 105 will be removed.

To reduce the reporting burden of insurers, MAS had sought comments on the preferred reporting template (i.e. Option 1 to report aggregated custodian information by types of assets, or Option 2 to report custodian information by individual asset). In this regard, MAS notes the broadly even preferences for both options among respondents, and will permit insurers to submit the custodian information using either Option 1 or Option 2.

Implementation and transitional arrangements

MAS will start collecting the custodian information under MAS 122 for asset position as at 31 December 2019. The first set of returns will be due by 31 March 2020. The implementation timeline to effect other changes in the revised MAS 105 will also be deferred to 1 January 2020.

MAS has clarified that the revised MAS 105 is applicable to all existing and new custody agreements starting from the implementation date. The transitional period of one year is given for insurers to implement the requirements, including time required to re-negotiate existing contracts.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg:

 

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