MAS proposes rule changes to strengthen market oversight

SINGAPORE - The Monetary Authority of Singapore (MAS) wants to amend the laws to strengthen its regulation of short selling and the derivatives market.

It put out a consultation paper on Wednesday on its proposed changes to the Securities and Futures Act (SFA), which governs capital market activity here.

One change concerns short selling, which is the practice of selling borrowed assets such as shares in hopes of making money by repurchasing them later at a lower price.

The MAS said in a statement on Wednesday that it aims to improve transparency in the short selling of securities by requiring more disclosure.

From the middle of next year, investors must report their short positions to MAS, which will then publish aggregated figures. The regulator had already proposed this change in August last year but said today that it wanted to make it part of the SFA.

Another change is aimed at making the derivatives market safer for investors.

To that end, the MAS will "extend its regulatory regime to OTC (over-the-counter) derivatives trading platforms and intermediaries, and introduce simplified, principles-based definitions of securities and derivatives", it said.

Derivatives, such as options and futures, are financial instruments that derive their value from underlying assets such as stocks and commodities.

Over-the-counter derivatives refer to those that are traded directly between two parties rather than through a centralised exchange.

The MAS also said that while it "has assessed that it is not necessary to mandate a trading regime for OTC derivatives for now, it will assume powers to implement a trading regime if such a regime was deemed necessary in the future".