Statute Details
- Title: Securities and Futures (Prescribed Underlying Thing) Regulations 2020
- Act Code: SFA2001-S381-2020
- Legislation Type: Subsidiary legislation (SL)
- Authorising Act: Securities and Futures Act (Cap. 289)
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Commencement: 18 May 2020
- Primary Purpose: Prescribe what constitutes an “underlying thing” for specified derivatives and futures contracts
- Key Provisions: Regulation 1 (citation and commencement); Regulation 2 (prescribed underlying thing); Regulation 3 (revocation)
- Current Version Reference: Current version as at 27 Mar 2026 (per the provided extract)
What Is This Legislation About?
The Securities and Futures (Prescribed Underlying Thing) Regulations 2020 (“Underlying Thing Regulations”) are subsidiary rules made by the Monetary Authority of Singapore (MAS) under the Securities and Futures Act (SFA). In plain language, the Regulations identify which assets or categories of assets count as an “underlying thing” for certain types of derivatives—particularly where the underlying exposure may involve digital assets.
The SFA uses the concept of an “underlying thing” as part of the legal framework for determining whether a contract is a regulated derivatives product. For practitioners, the practical significance is that the classification of the underlying determines how the contract is treated under Singapore’s securities and futures regulatory regime, including how it may be traded, offered, and supervised.
These Regulations specifically address three scenarios: (i) futures contracts traded on an organised market established or operated by a recognised market operator; (ii) futures contracts traded on an organised market established or operated by an approved exchange; and (iii) derivatives contracts (other than futures contracts) traded on an organised market established or operated by an approved exchange. The Regulations also define “payment token” in a way that is tailored to digital representations of value that function as a medium of exchange.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) is straightforward. It provides the short title and states that the Regulations come into operation on 18 May 2020. For compliance planning, this matters because it marks the date from which the prescribed categories apply, and it also frames the transition from the earlier 2018 Regulations that are revoked by Regulation 3.
Regulation 2 (Prescribed underlying thing) is the core provision. It is drafted to operate “for the purposes of paragraph (a)(v) of the definition of ‘underlying thing’ in section 2(1) of the Act.” In other words, the SFA’s definition is not self-contained; it delegates to MAS the power to prescribe what counts as an underlying thing for specific derivative contexts. Regulation 2 then fills that delegated gap.
Under Regulation 2(1), MAS prescribes the following:
(a) Futures contracts on an organised market established or operated by a recognised market operator: “any intangible property that is not a payment token.” This is a deliberate carve-out. It means that where the market operator is “recognised,” the Regulations treat “payment tokens” differently from other intangible property. The underlying thing for such futures contracts is limited to intangible property excluding payment tokens.
(b) Futures contracts on an organised market established or operated by an approved exchange: two categories are prescribed: (i) “any payment token”; and (ii) “any intangible property.” Unlike the recognised market operator scenario, the approved exchange scenario expressly includes both payment tokens and other intangible property. This broader inclusion is important for product classification and for determining whether a particular futures contract’s underlying exposure falls within the statutory “underlying thing” concept.
(c) Derivatives contracts (other than futures contracts) on an organised market established or operated by an approved exchange: the Regulations prescribe “any payment token.” Notably, for non-futures derivatives traded on an approved exchange, the prescribed underlying thing is limited to payment tokens, and does not expressly include other intangible property. This suggests a more targeted regulatory approach for non-futures derivatives.
Regulation 2(2) (Definition of “payment token”) provides a detailed definition that is crucial for legal analysis. A “payment token” is defined as any digital representation of value that satisfies four cumulative elements:
(a) Expressed as a unit: the digital representation must be expressed as a unit.
(b) Value not permanently fixed by the issuer at issuance: the value must be determined “in any way” other than being permanently fixed by the issuer at the time the digital representation is issued to a single currency or two or more currencies. This is a technical but meaningful boundary: it distinguishes tokens whose value is not simply pegged permanently by the issuer at issuance.
(c) Intended/accepted as a medium of exchange: the token is (or is intended to be) accepted by the public, or a section of the public, as payment for goods or services or for the discharge of a debt. This focuses on functional use in commerce and debt settlement, not merely on whether the token can be traded.
(d) Transferable, storable or tradable electronically: the token must be capable of electronic transfer, storage, or trading. This aligns the definition with the digital nature of the instrument.
For practitioners, the definition is likely to be the main battleground in disputes or regulatory assessments. Whether a particular digital asset qualifies as a “payment token” will depend on the token’s characteristics and intended use, and on how its value is determined.
Regulation 3 (Revocation) revokes the earlier Securities and Futures (Prescribed Underlying Thing) Regulations 2018 (G.N. No. S 627/2018). This ensures that the 2020 Regulations replace the 2018 framework. From a legal research and compliance perspective, revocation matters because it affects which version applies to contracts, representations, and regulatory decisions made during the relevant periods.
How Is This Legislation Structured?
The Regulations are compact and consist of three provisions:
Regulation 1 sets out citation and commencement.
Regulation 2 prescribes the “underlying thing” categories and defines “payment token.” This is the substantive section.
Regulation 3 revokes the 2018 Regulations.
Although the document is short, it is legally significant because it operates by reference to the SFA’s definition of “underlying thing.” The Regulations therefore function as a definitional bridge between the SFA’s statutory framework and MAS’s prescribed categories for derivatives traded on particular types of markets.
Who Does This Legislation Apply To?
In practical terms, the Regulations apply to persons and entities whose activities involve trading, offering, or otherwise dealing with derivatives and futures contracts that fall within the SFA’s regulatory scope—particularly where the contract’s underlying exposure relates to intangible property and/or digital assets.
However, the Regulations do not regulate “everyone” directly through operational obligations (such as licensing or reporting) within the text itself. Instead, they determine classification: what counts as an “underlying thing” for the SFA’s definition. That classification then affects how the contract is treated under the broader SFA regime. The market context is also central: the Regulations distinguish between organised markets established or operated by a recognised market operator and those established or operated by an approved exchange.
Why Is This Legislation Important?
This legislation is important because it clarifies how Singapore’s derivatives regulatory framework accommodates digital assets. By prescribing “payment tokens” and intangible property as underlying things in specified market contexts, MAS provides legal certainty for market participants seeking to structure or trade derivatives linked to digital asset exposures.
From a practitioner’s perspective, the Regulations are likely to be relevant in at least three common workflows:
(1) Product classification and legal characterisation: Lawyers must determine whether a given contract’s underlying qualifies as an “underlying thing.” If it does, the contract may fall within the SFA’s derivatives framework; if it does not, the regulatory treatment may differ.
(2) Token qualification analysis: The definition of “payment token” is a technical test. Counsel advising on whether a digital asset is a “payment token” must analyse the token’s unit structure, value determination mechanism, intended public acceptance as payment, and electronic transferability.
(3) Market-operator and venue mapping: The Regulations’ different treatment depending on whether the organised market is established or operated by a recognised market operator versus an approved exchange means that venue selection and market status can affect the legal analysis. This is particularly relevant for exchange operators, clearing houses, and trading participants.
Finally, the revocation of the 2018 Regulations indicates that MAS intended to update the legal framework as market practices and digital asset developments evolved. For compliance and litigation readiness, practitioners should ensure they rely on the correct version applicable at the relevant time and understand that the 2020 Regulations supersede the 2018 instrument.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, section 2(1) definition of “underlying thing” and section 341 (power to make regulations)
- Futures Act — referenced in the provided metadata (for broader context on futures regulation)
Source Documents
This article provides an overview of the Securities and Futures (Prescribed Underlying Thing) Regulations 2020 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.