MAS to Introduce Transaction Reporting for FX Derivatives for Banks, Spot FX Exempted

According to an announcement by the Monetary Authority of Singapore, the regulator is proposing to enact a reporting mechanism for all foreign exchange related Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term, forwards and options transactions. Non-deliverable forwards and options as well as exotic options will also be included in the regulatory framework. According to the document, Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term, termination, amendments, modifications and variations to transactions should be reported no later than two business days after the event.

Singapore's version of the Dodd-Frank Act has provided enough leeway for institutions to start preparing for this process, and FX derivatives have been among the latest financial instruments to be included, with interest rate and credit derivatives contracts already covered by existing regulations since last year.

According to the MAS, spot transactions should be exempted from the reporting mechanism, while the time frame proposed varies, depending on the preparedness of the industry. The phasing of the obligatory reporting has been proposed to be rolled out in three phases. First by entity type, followed by contract type and concluding with reported information type.

The MAS has proposed that the initial phase of reporting obligations commence with banks from the 1st of April, 2015, for which the draft regulations should come into effect by the end of September this year.

Notably, according to the draft, regulations will require all transactions traded in Singapore to be reported as opposed to all transactions booked in the country. For now, retail FX is not likely to be affected in a major way, and with deadlines for bank implementation way into 2015, further information relating to other entities is expected in the coming quarters.

The draft is not final and serves as an invitation for comments which have to be submitted to the MAS by August 8.