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)
- Enacting Powers: Sections 129G and 341 of the Securities and Futures Act
- Commencement: 1 October 2018
- Key Provisions (from extract):
- Regulation 2: Definitions (including “aggregate outstanding notional amount”, “booked in Singapore”, “outstanding”, “place of business”, “business day”)
- Regulation 3: Prescribed derivatives contracts (via the Schedule) for the definition of “specified derivatives contract” in section 129B of the Act
- Regulation 4: Prescribed time for section 129C(1) of the Act (one business day after entry)
- Regulation 5: Exemptions from section 129C of the Act (threshold-based and category-based)
- Regulation 6: Record-keeping and information retention; offences and penalties
- Schedule: Specified derivatives contracts (prescribed for “specified derivatives contract”)
- Most Recent Version Noted: Current version as at 27 Mar 2026
- Noted Amendments in Timeline:
- S 680/2019 (11 Oct 2019)
- SL 264/2018 (1 Oct 2018)
- S 466/2021 (wef 1 Jul 2021)
What Is This Legislation About?
The Securities and Futures (Clearing of Derivatives Contracts) Regulations 2018 (“Clearing Regulations”) are subsidiary legislation made under the Securities and Futures Act (the “SFA”). In practical terms, the Regulations support Singapore’s regulatory framework for the clearing of certain derivatives contracts through central clearing arrangements, by (i) prescribing which derivatives contracts are treated as “specified derivatives contracts”, (ii) setting a timing rule for when obligations under the SFA apply, (iii) creating targeted exemptions for certain market participants, and (iv) imposing record-keeping and information retention duties.
At a high level, the Regulations operate as the “implementation layer” for the SFA’s clearing regime. They do not themselves create the clearing obligation in full; rather, they define the scope of the obligation (through the Schedule and definitions), specify when a relevant action must occur (the “prescribed time”), and carve out exemptions for specified persons that meet defined criteria. They also ensure enforceability by requiring regulated entities to keep books and transaction information for a minimum period and by providing for offences and penalties for non-compliance.
For practitioners, the key value of these Regulations lies in their operational detail: they translate statutory concepts such as “specified derivatives contract” and “section 129C” into concrete compliance steps—what contracts are covered, when the relevant clearing-related requirement is triggered, which entities can be exempted, and what documentation must be retained for supervisory and enforcement purposes.
What Are the Key Provisions?
1. Prescribed derivatives contracts (Regulation 3 and the Schedule)
Regulation 3 provides 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. This is the gateway provision for scope. If a derivatives contract falls within the Schedule, it is capable of being treated as a “specified derivatives contract”, which in turn affects whether the SFA’s clearing-related obligations (including those in section 129C) are engaged.
Practical implication: A lawyer advising a bank, merchant bank, finance company, insurer, or capital markets services licence holder must first map the firm’s derivatives product types and contract terms against the Schedule. The Schedule is therefore central to determining whether the firm is within the clearing regime’s orbit for particular trades.
2. Prescribed time for section 129C(1) (Regulation 4)
Regulation 4 states that, 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. The definition of “business day” in Regulation 2 excludes Saturdays, Sundays, and public holidays.
Practical implication: This timing rule is critical for compliance workflows. It affects operational processes such as trade capture, confirmation, allocation to clearing, and submission to a clearing house (or other clearing mechanism contemplated by the SFA). Firms should ensure that their systems can reliably identify the “day of entry” and compute the one-business-day deadline, including around weekends and public holidays.
3. Exemptions from section 129C (Regulation 5)
Regulation 5 exempts certain “specified persons” from section 129C of the SFA. The exemptions are both category-based and threshold-based, and they are linked to defined concepts such as “aggregate outstanding notional amount” and “booked in Singapore”.
The exemptions include:
- Banks with limited exposure: 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 for (i) the last day of the most recently completed quarter and (ii) the last day of each of the 3 consecutive quarters immediately preceding that quarter. This is a sustained-threshold test, not a one-off measurement.
- Newer 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 licensed (or treated as licensed) under the Banking Act is exempt.
- Finance companies: A finance company licensed under the Finance Companies Act is exempt.
- Insurers: An insurer licensed under the Insurance Act is exempt.
- Capital markets services licence holders: A holder of a capital markets services licence is exempt.
Key definitional mechanics: Regulation 2 defines “aggregate outstanding notional amount” for a bank as the aggregate notional amounts of derivatives contracts that are (a) not exchange-traded derivatives contracts, (b) to which the bank is a party, (c) booked in Singapore, and (d) outstanding. “Outstanding” means the contract has not expired and has not been terminated in accordance with the contract terms or by agreement. “Booked in Singapore” requires that the contract is entered on the balance sheet or profit and loss accounts of the person, that the person’s place of business is in Singapore, and that the accounts relate to the person’s Singapore business.
Practical implication: The exemption analysis is fact-intensive. For threshold-based exemptions, firms must calculate notional amounts for relevant contracts that meet the “booked in Singapore” and “outstanding” criteria. For new entrants, the “carrying on business” period must be assessed carefully. For other categories (merchant banks, finance companies, insurers, CMS licence holders), the exemption is categorical, but counsel should still confirm licensing status and whether the entity is “treated as having been granted” the relevant licence (as expressly stated for merchant banks).
4. Record-keeping and information retention (Regulation 6)
Regulation 6 imposes record-keeping duties on every “specified person” that is not exempt under Regulation 5. It requires that relevant books and transaction information and other information required by the Authority for the purposes of the SFA be kept for minimum periods.
Under Regulation 6(1):
- Books: kept 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: kept until at least 5 years after the date of expiry or termination of the contract, agreement, or transaction to which the information relates.
Enforcement and penalties: Regulation 6(2) provides that a contravention of Regulation 6(1) is an offence punishable on conviction by a fine not exceeding $50,000. For a continuing offence, there is an additional fine not exceeding $5,000 for every day (or part of a day) after conviction during which the offence continues.
Interaction with general provisions: Regulation 6(3) states that section 333(1) of the SFA does not apply to any offence mentioned in paragraph (2). While the extract does not reproduce section 333(1), the drafting indicates a deliberate exclusion of a general rule that might otherwise affect how offences are treated (for example, in relation to procedural or sentencing mechanics). Practitioners should therefore treat Regulation 6(2) as having its own specified penalty regime.
How Is This Legislation Structured?
The Regulations are structured as a short instrument with six regulations and a Schedule:
- Regulation 1 sets out the citation and commencement (1 October 2018).
- Regulation 2 provides definitions used throughout the Regulations, including key concepts for exemption calculations.
- Regulation 3 prescribes the derivatives contracts in the Schedule for the definition of “specified derivatives contract” in the SFA.
- Regulation 4 prescribes the timing rule for section 129C(1) of the SFA (one business day after entry).
- Regulation 5 sets out exemptions from section 129C for specified persons, including threshold-based and category-based exemptions.
- Regulation 6 imposes record-keeping and information retention obligations on non-exempt specified persons, with offences and penalties for contraventions.
- The Schedule lists the specified derivatives contracts that fall within the clearing regime’s scope.
Who Does This Legislation Apply To?
The Regulations apply to “specified persons” as that term is used in the SFA and as reflected in the exemption and record-keeping provisions. In the extract, Regulation 5 identifies the main categories: banks licensed under the Banking Act, merchant banks, finance companies, insurers, and holders of capital markets services licences. However, Regulation 6 makes clear that the record-keeping obligation applies only to specified persons who are not exempt under Regulation 5.
Accordingly, a practitioner should advise clients to conduct a two-step assessment: (1) determine whether the firm is a “specified person” within the relevant licensing category; and (2) determine whether the firm is exempt under Regulation 5 (either through the $20 billion aggregate notional threshold test, the “less than one year” test, or categorical exemptions). Only if the firm is not exempt will the Regulation 6 record-keeping duties and associated offences become directly relevant.
Why Is This Legislation Important?
These Regulations are important because they operationalise Singapore’s derivatives clearing policy. Clearing is intended to reduce systemic risk by ensuring that counterparty exposures are managed through robust central counterparties and standardised risk controls. While the SFA provides the overarching legal framework, the Clearing Regulations determine which derivatives are covered, when compliance actions are due, and which entities can be exempted—thereby shaping real-world market behaviour.
From a compliance perspective, the most significant practical impacts are:
- Scope clarity: Regulation 3 and the Schedule identify the derivatives contracts that can trigger clearing-related obligations under the SFA.
- Deadline certainty: Regulation 4’s “one business day after entry” rule affects trade processing and compliance monitoring.
- Exemption governance: Regulation 5 requires careful measurement of “aggregate outstanding notional amount” and confirmation of “booked in Singapore” and “outstanding” status for threshold-based exemptions, as well as verification of licensing and business tenure for categorical exemptions.
- Enforceability through records: Regulation 6 creates a clear retention period (at least five years after expiry/termination) and provides for meaningful financial penalties for non-compliance.
For lawyers, the Regulations also raise typical advisory issues: how to document the basis for exemption claims, how to evidence notional calculations across consecutive quarters, how to define and track “entry” dates for timing purposes, and how to ensure that record-keeping systems can produce transaction information and other data required by the Authority.
Related Legislation
- Securities and Futures Act (Cap. 289) (including sections 129B, 129C, 129G, 341, and the referenced section 333(1))
- Banking Act (Cap. 19)
- Finance Companies Act (Cap. 108)
- Insurance Act (Cap. 142)
- Futures Act (noted in the provided metadata as related legislation)
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.