Statute Details
- Title: Financial Services and Markets (Resolution of Financial Institutions) Regulations 2024
- Act Code: FSMA2022-S403-2024
- Type: Subsidiary legislation (SL)
- Enacting Act: Financial Services and Markets Act 2022 (“FSMA 2022”)
- Regulation Number: S 403/2024
- Commencement: 10 May 2024
- Status / Version: Current version as at 27 Mar 2026
- Key Amendment Noted in Timeline: Amended by S 1065/2024 (effective 31 Dec 2024)
- Parts: Part 1 (Preliminary) to Part 9 (Miscellaneous)
- Main Themes: Resolution mechanics for financial institutions, including compulsory transfer of business, reverse/onward transfer, share transfer/restructuring, bail-in, termination rights, compensation, and exemptions
- Key Definitions (extract): “affected person”, “excluded financial institution”, “pertinent financial institution”, “financial contract”, and controller thresholds (e.g., 5%/12%/20%/50% controllers)
What Is This Legislation About?
The Financial Services and Markets (Resolution of Financial Institutions) Regulations 2024 (“Resolution Regulations”) are subsidiary rules made under the Financial Services and Markets Act 2022. In plain language, they provide the detailed “plumbing” for how Singapore resolves a failing or likely-to-fail financial institution that falls within the resolution framework under FSMA 2022.
When a financial institution is in distress, regulators may need to stabilise the institution quickly to protect financial stability, maintain critical functions (such as payment and clearing), and reduce systemic risk. The FSMA 2022 resolution regime includes tools such as compulsory transfer of business, bail-in of certain liabilities, and rules that preserve or modify contractual rights (for example, set-off and netting) so that resolution actions do not unravel key arrangements.
These Regulations translate those high-level statutory powers into operational requirements. They define key terms, specify how certain rights and liabilities are treated during resolution transactions, set out information requirements, and provide valuation and compensation mechanics. They also address termination rights and exemptions from moratorium provisions, ensuring that resolution actions interact coherently with contracts and market infrastructure.
What Are the Key Provisions?
1) Core definitions and scope (Part 1). Part 1 sets the foundation. It includes general definitions and targeted definitions for persons and institutions affected by resolution. The Regulations define concepts such as “affected person”, “excluded financial institution”, and “pertinent financial institution”. These labels matter because resolution powers and protections apply differently depending on the category.
Part 1 also defines “relevant provisions” and “financial contract”. The “financial contract” definition is particularly important because many resolution effects—especially around termination rights, set-off, and netting—turn on whether a relationship is characterised as a financial contract. In addition, the Regulations include controller threshold concepts (for example, “5% controller”, “12% controller”, “20% controller”, and “50% controller”) by reference to other sectoral statutes. This cross-referencing ensures that the resolution framework aligns with existing corporate control concepts used in banking, financial holding companies, payment systems, exchanges, clearing houses, and trust companies.
2) Compulsory transfer of business (Part 2). Part 2 deals with the compulsory transfer of the business of a “pertinent financial institution”. This is one of the central resolution tools: the authority can require the institution’s business to be transferred to another entity (or entities) to preserve continuity of critical operations.
Part 2 contains detailed rules on setting-off and netting rights (section 11). In resolution, counterparties often rely on contractual netting and set-off to reduce exposure. The Regulations specify how those rights are treated when a compulsory transfer occurs, aiming to prevent disorderly value destruction while still respecting legitimate contractual protections where appropriate.
Sections 12 and 13 address rights and liabilities connected with clearing and settlement arrangements of market infrastructure and designated systems. These provisions are crucial for maintaining the integrity of payment, clearing, and settlement processes during resolution. The Regulations also address secured liabilities (section 14) and protected covered bonds (section 15), which reflect the need to treat collateralised and covered-bond structures in a way that preserves market confidence and avoids destabilising collateral arrangements.
Section 16 requires information under section 67(2) of FSMA 2022. While the extract does not reproduce the content of FSMA 2022 section 67(2), the structure indicates that the Regulations specify what information must be provided to support the resolution decision-making and implementation process.
3) Reverse transfer and onward transfer (Part 3). Part 3 addresses scenarios where the initial transfer is later reversed or where the transferred business is further transferred onward. This is a practical feature of resolution: authorities may need flexibility to restructure the transferred operations, correct errors, or move assets/liabilities to a more suitable vehicle.
Part 3 again covers setting-off and netting rights (section 18) and rights and liabilities connected with clearing and settlement arrangements (section 19) and designated systems (section 20) in the context of reverse or onward transfer. It also addresses secured liabilities (section 21). These provisions ensure that the legal treatment of counterparties and market infrastructure remains coherent across multiple resolution steps.
Sections 22 and 24 require information under FSMA 2022 sections 71(2) and 73(2). Section 23 imposes restrictions on reverse transfer, signalling that reverse transfer is not unconstrained; it is likely subject to conditions designed to protect stability and avoid undermining the resolution outcome.
4) Compulsory transfer of shares or restructuring of share capital (Part 4). Part 4 provides for the information requirements under FSMA 2022 sections 76(2) and 79(2) (sections 25 and 26). These provisions relate to resolution actions that affect equity—either transferring shares compulsorily or restructuring share capital. In practice, these tools are often used to recapitalise the institution or convert equity into a form that supports resolution objectives.
5) Bail-in powers (Part 5). Bail-in is a key resolution mechanism that imposes losses on shareholders and certain creditors by converting or writing down eligible liabilities. Part 5 contains the operational rules for bail-in.
Sections 27 and 28 define “Division 6 FI” and “eligible instrument”. Section 30 imposes restrictions on eligible instruments, which is essential to prevent bail-in from applying to liabilities that should be protected (for example, certain retail deposits or liabilities excluded by the statutory framework). Section 31 requires a disclosure requirement, supporting transparency and market discipline.
Section 29 requires information under FSMA 2022 section 84(4). Together, Parts 5 and 6 indicate that the Regulations are designed to ensure bail-in decisions are supported by the right information, and that eligible instruments are handled consistently.
6) Termination rights and contractual recognition (Part 6). Resolution regimes often need to manage termination rights that counterparties may exercise upon insolvency or resolution events. Part 6 addresses this by specifying who is excluded from FSMA 2022 section 93 (section 32) and by requiring contractual recognition of sections 92 and 93 (section 33).
Section 33A provides for the expiry of suspension by notice under section 93 in respect of a reinsurance contract. This indicates that the Regulations tailor termination/suspension mechanics for reinsurance relationships, which can be complex and long-dated.
7) Compensation (Part 7). Where resolution tools affect rights, the law typically provides compensation to affected parties to the extent required by the FSMA 2022 framework. Part 7 sets out the compensation process.
Sections 35 to 38 cover the form, manner and timing for payment of compensation, the criteria for appointment and removal of a valuer, valuation principles, and information to be specified in the valuation report. For practitioners, these provisions are critical because compensation outcomes often depend on valuation methodology, assumptions, and the scope of information provided to the valuer.
8) Exemption from moratorium provisions (Part 8). Section 39 provides an exemption from moratorium provisions of FSMA 2022. Moratorium rules typically pause certain enforcement actions during resolution. Exemptions are important for specific categories of claims or contracts where immediate action is necessary or where the statutory moratorium would be disproportionate.
9) Miscellaneous (Part 9) and schedules. Part 9 includes revocation (section 40) and saving and transitional provisions (section 41). The Regulations also include schedules: the First Schedule lists “affected persons”; the Second Schedule lists “relevant provisions”; the Third Schedule addresses “significant shareholders”; and the Fourth Schedule addresses “significant shareholder provisions”. These schedules are often where practitioners find the practical mapping between categories of persons and the resolution rules that apply to them.
How Is This Legislation Structured?
The Regulations are organised into nine Parts. Part 1 contains preliminary matters and definitions. Part 2 covers compulsory transfer of business, including treatment of set-off/netting, market infrastructure arrangements, secured liabilities, and covered bonds, plus information requirements. Part 3 extends similar concepts to reverse and onward transfers, including restrictions and information requirements.
Part 4 addresses equity-level resolution actions (share transfer or share capital restructuring) through information requirements. Part 5 sets out bail-in mechanics, including definitions of eligible instruments, restrictions, and disclosure. Part 6 focuses on termination rights and contractual recognition, including special handling for reinsurance contracts. Part 7 provides compensation procedures and valuation framework. Part 8 provides exemptions from moratorium provisions. Part 9 contains revocation and transitional provisions. The schedules then provide categorisation lists and mapping of resolution-relevant provisions.
Who Does This Legislation Apply To?
The Regulations apply to “pertinent financial institutions” and to “affected persons” identified by the First Schedule. In practical terms, this includes the institution under resolution, its counterparties, and other stakeholders whose rights may be impacted by resolution actions—such as creditors, counterparties to clearing and settlement arrangements, and persons with significant shareholding interests.
Because the Regulations also define “significant shareholders” and “significant shareholder provisions” (Third and Fourth Schedules), they likely capture shareholders whose holdings or control thresholds trigger particular resolution consequences or information obligations. The controller threshold definitions in Part 1 further indicate that the Regulations are designed to align with existing regulatory concepts of control across multiple financial sectors.
Why Is This Legislation Important?
These Regulations are important because they make the FSMA 2022 resolution regime workable in real-world contractual and market-infrastructure settings. Without detailed rules on set-off/netting, clearing and settlement arrangements, secured liabilities, and termination rights, resolution actions could be undermined by counterparties exercising contractual remedies or by legal uncertainty about how rights survive a transfer or bail-in.
For practitioners, the Regulations are particularly significant in three areas. First, the treatment of netting, set-off, and market infrastructure rights affects exposure calculations and operational continuity for counterparties and system operators. Second, the bail-in eligibility and restrictions determine which instruments can be written down or converted, which in turn affects capital structure planning and creditor risk. Third, the compensation and valuation framework influences dispute risk and settlement leverage when affected parties challenge resolution outcomes.
Finally, the Regulations’ emphasis on information requirements and disclosure supports procedural fairness and regulatory accountability. Even where resolution decisions are urgent, the law aims to ensure that affected parties and the market receive sufficient information to understand the basis for resolution measures and any compensation claims.
Related Legislation
- Financial Services and Markets Act 2022
- Banking Act 1970
- Business Trusts Act 2004
- Companies Act 1967
- Finance Companies Act 1967
- Financial Advisers Act 2001
Source Documents
This article provides an overview of the Financial Services and Markets (Resolution of Financial Institutions) Regulations 2024 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.