28 June 2018
On 23 May 2018, the Monetary Authority of Singapore (“MAS”) issued the following documents relating to the Securities and Futures Act (“SFA”) and Financial Advisers Act (“FAA”):
- Frequently Asked Questions (“FAQs”) on Product Definitions; and
- FAQs on SFA and FAA Activities Validation via the Data Validation (“DV”) Module in the Representative Notification System (“RNS”),
which provide guidance to the industry relating to changes that will be implemented by the Securities and Futures (Amendment) Act 2017 (“2017 Amendment Act”).
By way of background, on 9 January 2017, the Securities and Futures (Amendment) Bill 2016 was passed by the Parliament. The 2017 Amendment Act was gazetted on 16 February 2017. The provisions in the 2017 Amendment Act have yet to come into force.
The 2017 Amendment Act will, among other things, implement the regulatory regimes for market operators and market intermediaries for over-the-counter (“OTC”) derivatives. Arising from these reforms, MAS will re-organise and introduce simple, principles-based definition of products in the securities and derivatives industry that are regulated under the SFA and fine-tune the categories for “regulated activities” for capital markets services licence holders.
FAQs on Product Definitions
These FAQs provide guidance on the revised product definitions arising from the changes pursuant to the 2017 Amendment Act. The questions covered by the FAQs include:
- Does the revised definition of “securities” include bonds and exchange-traded funds?
- What should participatory notes and credit-linked notes be classified as?
- Should OTC derivatives contracts which are centrally-cleared be considered as exchange-traded derivatives contracts?
- Should contracts for differences fall under the definition of OTC derivatives contracts?
- Are spot foreign exchange contracts regulated under the amended SFA and FAA?
FAQs on SFA and FAA Activities Validation via the DV Module in the RNS
These FAQs aim to provide guidance to the industry on the review and validation of mappings of the current activities to those under the amended SFA and FAA following changes from the 2017 Amendment Act. The review and validation are performed via the DV Module in the RNS. Industry briefings on the DV Module were conducted in May 2018 and slides used at the briefing were circulated to the industry on 1 June 2018.
The topics covered by the FAQs include:
- Addition and removal of activities
- Activities that require no validation
- Appointment of new representatives
- Representatives who serve only accredited investors or institutional investors
- Paragraph 9 and paragraph 11 arrangements under the SFA and FAA respectively
- “Export to CSV” function in the DV Module
- Deadline for validation and issuance of new licence
The FAQs are available on the MAS website www.mas.gov.sg:
- FAQs on Product Definitions
- FAQs on Securities and Futures Act and Financial Advisers Act Activities Validation via the Data Validation Module in the Representative Notification System