The Monetary Authority of Singapore (MAS) is planning to tighten its rules regarding CFDs trading. More onerous terms for the increasingly popular financial instruments could be on the way, in a development that is likely to affect thousands of private traders and investors in Singapore.
MAS is presently looking at preparing a consultation paper on the product. The Authority is particularly looking to target overseas providers that operate outside the regulations imposed by the Monetary Authority of Singapore.
‘If investors would like lower trading margins and the margins offered by local providers aren’t attractive, it is presently easy for people to use offshore brokers. These providers are not subject to local MAS rules and hereby represent a higher risk for investors as regards client monies and recourse in case of issues.’
The Authority is also looking at limiting the amount of leverage that retail investors can access for such ‘complex products’. MAS is also evaluating the possibility that such derivatives be moved into ore transparent trading systems and clearing houses. The Authority is consulting with the industry to understand better the costs and benefits of a trading mandate, taking into consideration the particularities of the local market.
Asian markets continue to keep abreast of regulatory in the USA and Europe. Meanwhile and separately in October in 2011, the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) also jointly published a consultation paper on the proposed regulatory regime for the ‘Over the Counter’ derivatives market in Hong Kong.