Approved Exchanges and Recognised Market Operators Providing Limited Post-Trade Services Exempted from Being Regulated as Clearing House

The Securities and Futures (Clearing Facilities of Approved Exchanges or Recognised Market Operators) (Exemption) Regulations 2023 which came into effect on 7 September 2023, introduces an exemption from being regulated as a clearing facility under the Securities and Futures Act 2001 (“SFA“) for approved exchanges (“AEs“) and recognised market operators (“RMOs“) which provide certain clearing and settlement services in the form of limited post-trade services after the execution of a trade on its platform.

Scope of Exemption 

The exemption will be granted to an AE or a RMO that establishes or operates a clearing facility only in respect of certain limited post-trade services, where every transaction that is to be cleared or settled by that clearing facility is:

(a)    executed on an organised market that is established or operated by the AE or RMO;

(b)    not routed to an approved clearing house (ACH) or a recognised clearing house (RCH); and

(c)    only cleared or settled on the AE or RMO’s clearing facility by trade verification and/or calculation of obligation, and not by the AE or RMO acting as a central counterparty or clearing or settling trades on a centralised basis.

Notification Requirement 

To qualify for the exemption, an AE or RMO must notify MAS in writing within stipulated timeframes. MAS clarified that the notification requirement applies to all AEs and RMOs, including existing RMOs, that avail themselves of the exemption.

Failure to comply with the obligation to notify MAS is an offence that is punishable on conviction to a fine not exceeding S$150,000 and, in the case of a continuing offence, to a further fine not exceeding S$15,000 for every day or part of a day during which the offence continues after conviction.

Legislative Background

In July 2022, MAS issued a Consultation Paper setting out the proposals and the draft Regulations. We covered the main aspects of the Consultation Paper in our earlier Legal Update here. MAS also shared its Response to feedback received on the Consultation Paper, available here.