FIA Asia and ASIFMA have submitted a joint letter to the Monetary Authority of Singapore (MAS) in response to the public consultation for the mandatory clearing of over-the-counter (OTC) derivative contracts. Central clearing seeks to mitigate counterparty credit risks inherent in OTC derivatives trades. The MAS proposal affects only Singapore-dollar and US-dollar OTC contracts, which are the most widely traded interest rate derivatives in Singapore.
The joint response supported the proposal to adopt mandatory clearing requirements that are largely consistent with other jurisdictions and welcomed the MAS' proposal to limit the extraterritorial application of the proposed clearing mandate. The industry also urged the MAS to approve and recognise more clearinghouses in Singapore to avoid artificially bifurcating the existing swaps market, help avoid creating additional concentration risk and help minimise disruptions to the market. The full response can be accessed in the pdf below. MAS Consultation on Clearing Regulations (ASIFMA FIA Response) (Submission) 520549-4-2614 v0.1.pdf