Statute Details
- Title: Securities and Futures (Clearing of Derivatives Contracts) Regulations 2018
- Act Code: SFA2001-S264-2018
- Type: Subsidiary Legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289) (“SFA”)
- Enacting powers: Sections 129G and 341 of the SFA
- Commencement: 1 October 2018
- Status: Current version as at 27 March 2026
- Key provisions (from extract): Regulations 2–6; Schedule (specified derivatives contracts)
- Key amendments noted in timeline: S 680/2019 (11 Oct 2019); S 466/2021 (effective 1 Jul 2021)
What Is This Legislation About?
The Securities and Futures (Clearing of Derivatives Contracts) Regulations 2018 (“Clearing of Derivatives Regulations”) are subsidiary legislation made under the Securities and Futures Act (Cap. 289). In plain terms, the Regulations support Singapore’s regulatory framework for derivatives clearing by identifying which derivatives contracts fall within the statutory concept of “specified derivatives contracts”, setting timing rules relevant to the clearing regime, and prescribing certain exemptions and record-keeping duties.
Although the extract focuses on definitions, specified contracts, a “prescribed time”, exemptions, and books/records, the Regulations are best understood as part of a broader statutory scheme in the SFA. In that scheme, the SFA imposes obligations connected to clearing derivatives contracts through clearing arrangements (typically involving central counterparties), and it also contains compliance and enforcement mechanisms. These Regulations operationalise key elements of that scheme by prescribing what counts as “specified derivatives contracts”, when certain deadlines are measured, and which market participants may be exempt from a particular statutory requirement.
Practically, the Regulations matter to banks, merchant banks, finance companies, insurers, and capital markets services licence holders that trade derivatives. They also matter to legal teams advising on compliance systems: whether a firm is within the clearing-related perimeter, whether it qualifies for an exemption, and what documentation and transaction information must be retained for regulatory purposes.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and commencement date. The Regulations came into operation on 1 October 2018. For practitioners, this matters when assessing historical compliance, transitional arrangements, and whether particular conduct occurred before or after the Regulations took effect.
2. Definitions that drive the clearing perimeter (Regulation 2)
Regulation 2 defines several terms that are used elsewhere in the Regulations and, indirectly, in the SFA framework. The most legally significant definitions in the extract are:
- “aggregate outstanding notional amount” (for a bank): This is the aggregate notional amount of every derivatives contract that is (i) not exchange-traded, (ii) to which the bank is a party, (iii) booked in Singapore, and (iv) outstanding. This definition is central to the exemption threshold for certain banks.
- “booked in Singapore”: A derivatives contract is “booked in Singapore” if the person is a party, the person’s place of business is in Singapore, and the relevant balance-sheet or profit and loss accounts relate to the Singapore business. This is a factual accounting/legal classification test.
- “outstanding”: A derivatives contract is outstanding if it has not expired and has not been terminated in accordance with the contract terms or by agreement.
- “business day”: Any day other than Saturday, Sunday, or public holiday.
- “place of business”: Includes head/main office, branch, representative office, or any other office.
3. Specified derivatives contracts (Regulation 3 and the Schedule)
Regulation 3 states that the derivatives contracts set out in the Schedule are prescribed for the purposes of the definition of “specified derivatives contract” in section 129B of the SFA. In other words, the Schedule is the gatekeeper: it determines which contract types are treated as “specified” and therefore fall within the clearing-related statutory definition.
For legal practitioners, the key point is that the Regulations do not themselves describe the contract categories in the extract; instead, they incorporate them by reference to the Schedule. Advisers should therefore treat the Schedule as essential primary material. When advising on whether a particular derivative is within scope, counsel should map the product’s characteristics to the Schedule’s prescribed categories and confirm whether the contract is exchange-traded or not, and whether it is booked in Singapore and outstanding (as relevant to other provisions).
4. Prescribed time for section 129C(1) of the SFA (Regulation 4)
Regulation 4 prescribes the time for the purposes of section 129C(1) of the SFA: the prescribed time is one business day after the day on which the specified derivatives contract is entered into.
This provision is significant because it clarifies how to calculate a compliance deadline measured from the trade date. In practice, firms often need to operationalise “entry into” (trade confirmation date, execution timestamp, or another contractual/legal moment) and then apply a business-day counting methodology. The “one business day after” rule reduces ambiguity and supports consistent compliance across trading desks and legal/compliance functions.
5. Exemption from section 129C of the SFA (Regulation 5)
Regulation 5 provides a list of “specified persons” who are exempt from section 129C of the SFA. The extract shows that exemptions are available to certain regulated financial institutions and are either threshold-based or based on licensing status and business history.
The exemptions include:
- Low notional threshold for banks: A bank licensed under section 7 or 79 of the Banking Act is exempt if its aggregate outstanding notional amount does not exceed $20,000,000,000. The threshold is tested using two lookback points: (i) for the last day of the most recently completed quarter, and (ii) for the last day of each of the 3 consecutive quarters immediately preceding that quarter. This is a sustained-threshold concept: exemption is not based on a single snapshot.
- Newly established banks: A bank licensed under section 7 or 79 of the Banking Act that has been carrying on business for less than one year is exempt.
- Merchant banks: A merchant bank holding a merchant bank licence (or treated as having been granted such a licence) under the Banking Act is exempt.
- Finance companies: Licensed finance companies under the Finance Companies Act (Cap. 108) are exempt.
- Insurers: Licensed insurers under the Insurance Act (Cap. 142) are exempt.
- Capital markets services licence holders: Holders of a capital markets services licence are exempt.
From a compliance perspective, the most legally complex exemption is the $20 billion notional threshold for banks. It requires accurate calculation of aggregate outstanding notional amounts across all relevant derivatives that meet the definition criteria (not exchange-traded, booked in Singapore, outstanding, and party to the bank). It also requires governance around quarterly measurement and evidence retention.
6. Keeping of books and other information (Regulation 6)
Regulation 6 imposes record-keeping duties on specified persons who are not exempt under Regulation 5. This is a core compliance obligation because it supports regulatory oversight and enforcement.
Retention periods (Regulation 6(1)) are set at:
- Books: Keep relevant books until at least 5 years after the last date of expiry or termination of the contract, agreement, or transaction to which the book relates.
- Transaction information and other information: Keep until at least 5 years after the date of expiry or termination of the contract, agreement, or transaction to which the information relates.
Offence and penalties (Regulation 6(2)): A specified person who contravenes Regulation 6(1) commits an offence and is liable on conviction to:
- a fine not exceeding $50,000; and
- for a continuing offence, an additional fine not exceeding $5,000 for every day or part of a day during which the offence continues after conviction.
Non-application of section 333(1) of the SFA (Regulation 6(3)): The extract states that section 333(1) of the SFA does not apply to offences mentioned in Regulation 6(2). While the extract does not reproduce section 333(1), practitioners should note that this carve-out can affect how offences are treated procedurally or substantively under the SFA’s general enforcement provisions.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with a straightforward architecture:
- Regulation 1 sets out citation and commencement.
- Regulation 2 provides key definitions used throughout the instrument.
- Regulation 3 prescribes the derivatives contracts in the Schedule for the SFA definition of “specified derivatives contract”.
- Regulation 4 prescribes the relevant timing rule for section 129C(1) of the SFA.
- Regulation 5 lists exemptions from section 129C of the SFA for specified persons.
- Regulation 6 imposes record-keeping obligations and sets penalties for contraventions.
- The Schedule contains the list of specified derivatives contracts (the product perimeter).
Who Does This Legislation Apply To?
The Regulations apply to “specified persons” as that term is used in the SFA and in these Regulations. Based on the extract, the exemption provisions in Regulation 5 indicate that the relevant population includes banks licensed under the Banking Act, merchant banks, finance companies, insurers, and holders of capital markets services licences.
However, Regulation 6(1) makes the practical scope clearer: every specified person who is not exempt under Regulation 5 must keep relevant books and transaction information for the prescribed retention periods. Therefore, a firm’s obligations depend on (i) whether it is a “specified person” under the SFA framework and (ii) whether it qualifies for an exemption under Regulation 5—most notably, for banks, whether it meets the sustained notional threshold or other exemption conditions.
Why Is This Legislation Important?
Even though the extract does not reproduce the full clearing obligations in the SFA, these Regulations are important because they define the operational boundaries around that clearing regime. The Schedule (via Regulation 3) determines which derivatives contracts are “specified” and therefore potentially subject to the SFA’s clearing-related requirements. The prescribed time rule (Regulation 4) clarifies how to calculate compliance timing from the date the contract is entered into.
For practitioners, the exemption framework in Regulation 5 is equally significant. It can materially change a firm’s compliance obligations. For example, a bank may be exempt if its aggregate outstanding notional amount remains below the $20 billion threshold across specified quarter-end measurements. This requires robust data governance, accurate notional aggregation, and careful classification of contracts as exchange-traded or not, and as booked in Singapore.
Finally, Regulation 6’s record-keeping requirements and penalties provide a compliance “backbone”. Firms that are not exempt must retain books and transaction information for at least five years after expiry or termination. The offence provisions, including daily continuing-offence fines, create strong incentives to implement effective retention policies, audit trails, and defensible record management—especially where derivatives contracts may have long tenors or complex termination mechanics.
Related Legislation
- Securities and Futures Act (Cap. 289) (including sections 129B, 129C, 129G, 341, and section 333(1) referenced in Regulation 6(3))
- Banking Act (Cap. 19)
- Finance Companies Act (Cap. 108)
- Insurance Act (Cap. 142)
- Futures Act (not detailed in the extract, but listed in the statute metadata as related)
Source Documents
This article provides an overview of the Securities and Futures (Clearing of Derivatives Contracts) Regulations 2018 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.