Statute Details
- Title: Securities and Futures (Prescribed Underlying Thing) Regulations 2020
- Act/Regulation Type: Subsidiary legislation (SL)
- Act Code: SFA2001-S381-2020
- Authorising Act: Securities and Futures Act (SFA) (Cap. 289), specifically section 341
- Commencement: 18 May 2020
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Key Provisions: Regulation 1 (citation and commencement); Regulation 2 (prescribed underlying thing); Regulation 3 (revocation)
- Current Version (as provided): Current version as at 27 Mar 2026
- Legislative Instrument Number: SL 381/2020 (dated 18 May 2020)
What Is This Legislation About?
The Securities and Futures (Prescribed Underlying Thing) Regulations 2020 (“Underlying Thing Regulations”) are a targeted set of rules made under the Securities and Futures Act (SFA). In plain terms, they identify what kinds of assets or digital value may count as an “underlying thing” for certain derivatives and futures arrangements regulated under Singapore’s financial regulatory framework.
The SFA uses the concept of an “underlying thing” as part of the legal architecture for determining whether a contract falls within the regulatory perimeter for derivatives and futures. The Regulations therefore play an enabling role: they “prescribe” specific categories of intangible property and digital representations of value (commonly understood in practice as certain forms of tokens or tokenised value) so that market participants and regulators can classify contracts consistently.
Most importantly, the Regulations distinguish between futures contracts and other derivatives contracts, and also distinguish between contracts traded on different types of organised markets—namely those established or operated by “recognised market operators” versus those established or operated by “approved exchanges”. This reflects a policy choice to calibrate regulatory treatment based on the trading venue and the nature of the contract.
What Are the Key Provisions?
Regulation 1: Citation and commencement. This is a standard provision. It states that the Regulations may be cited as the Securities and Futures (Prescribed Underlying Thing) Regulations 2020 and that they come into operation on 18 May 2020. For practitioners, the commencement date matters when assessing whether a contract classification or regulatory compliance step occurred before or after the Regulations took effect.
Regulation 2: Prescribed underlying thing. This is the substantive core. It applies “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 definition is broad, but the Regulations specify which assets qualify as underlying things in particular contexts.
Regulation 2(1) sets out three categories, each tied to the type of contract and the trading venue:
- Futures contract traded on an organised market established or operated by a recognised market operator: the prescribed underlying thing is any intangible property that is not a payment token.
- Futures contract traded on an organised market established or operated by an approved exchange: the prescribed underlying things are (i) any payment token and (ii) any intangible property.
- Derivatives contract (other than a futures contract) traded on an organised market established or operated by an approved exchange: the prescribed underlying thing is any payment token.
These distinctions are legally significant. They mean that the same digital asset concept may qualify as an underlying thing in one contractual setting but not another. For example, under the Regulations, payment tokens are expressly included for futures on approved exchanges and for non-futures derivatives on approved exchanges, but for futures on recognised market operators the prescribed category excludes payment tokens and instead focuses on intangible property that is not a payment token.
Regulation 2(2): Definition of “payment token”. The Regulations provide a detailed definition of “payment token” as “any digital representation of value” that satisfies all of the following characteristics:
- Expressed as a unit (i.e., the digital representation is denominated in units).
- Value is not permanently fixed by the issuer at issuance (the value may be determined in some way other than being permanently fixed by the issuer at the time it is issued to a single currency or two or more currencies).
- Intended/accepted as a medium of exchange by the public or a section of the public for goods/services or for discharging a debt.
- Transferable, storable or tradable electronically.
For legal practitioners, this definition is likely to be the focal point in contract classification and regulatory analysis. It is not limited to “cryptocurrencies” in a colloquial sense; rather, it is functional and criteria-based. The definition also includes a valuation feature: if the value is permanently fixed by the issuer at issuance to a currency or currencies, it may fall outside the “payment token” definition. Conversely, if the value is determined otherwise (for example, by market mechanisms) and the token is used or intended to be used as a medium of exchange, it is more likely to qualify.
Regulation 3: Revocation. The Regulations revoke the earlier Securities and Futures (Prescribed Underlying Thing) Regulations 2018 (G.N. No. S 627/2018). This matters for historical compliance and for interpreting how the regulatory regime evolved. If a contract was entered into or a compliance assessment was made under the 2018 Regulations, counsel should consider whether the 2020 Regulations changed the categories of underlying things or the way payment tokens and intangible property are treated.
How Is This Legislation Structured?
The Regulations are concise and structured into three provisions:
- Regulation 1 sets out the citation and commencement.
- Regulation 2 prescribes the “underlying thing” categories and defines “payment token”. This is the operative section for classification purposes.
- Regulation 3 revokes the 2018 predecessor instrument.
There are no additional parts or schedules in the extract provided. The legislative design is therefore “definition and prescription” rather than a detailed compliance code. The Regulations function as a definitional bridge between the SFA’s general framework and the specific asset categories relevant to derivatives and futures contracts.
Who Does This Legislation Apply To?
Although the Regulations are made by MAS under the SFA, their practical effect is felt by market participants who trade or structure derivatives and futures contracts in Singapore, as well as by trading venues and intermediaries that must ensure that contracts fall within (or outside) the SFA’s derivatives/futures regulatory perimeter.
In particular, the Regulations apply to contracts traded on organised markets that are established or operated by either a recognised market operator or an approved exchange. The classification of the trading venue is therefore central. Parties structuring contracts should identify the venue’s regulatory status and then map the contract type (futures versus other derivatives) to the corresponding prescribed underlying thing categories.
Why Is This Legislation Important?
First, the Regulations provide legal certainty for the classification of derivatives and futures contracts involving intangible assets and digital value. Without a prescription of underlying things, the SFA’s definition could be harder to apply consistently. By specifying what counts as an underlying thing, MAS enables clearer regulatory determinations for market participants and reduces ambiguity in contract documentation and regulatory filings.
Second, the Regulations reflect a calibrated approach to digital assets. The definition of “payment token” is not merely descriptive; it is a gatekeeping concept that determines whether a digital representation of value can serve as an underlying thing for particular contract types. This has downstream implications for licensing, conduct requirements, risk management expectations, and investor protection measures that attach to regulated derivatives and futures.
Third, the venue-based distinctions (recognised market operator versus approved exchange) highlight that regulatory treatment may vary depending on where the contract is traded. For practitioners, this means that compliance advice cannot be generic. Counsel should consider both (i) the contract structure and (ii) the trading venue’s status, because the prescribed underlying thing categories differ across these dimensions.
Finally, the revocation of the 2018 Regulations signals that the regulatory perimeter is dynamic. Where market practices evolve—particularly in the tokenisation of value and the development of derivatives products—MAS may update the prescribed categories. Practitioners should therefore treat the Regulations as part of a living compliance landscape and verify the current version when advising on contract classification and regulatory obligations.
Related Legislation
- Securities and Futures Act (Cap. 289) — in particular, the definition of “underlying thing” in section 2(1) and the regulation-making power in section 341.
- Futures Act — referenced in the provided metadata (note: the operative authorising Act for these Regulations is the SFA).
- Securities and Futures (Prescribed Underlying Thing) Regulations 2018 (G.N. No. S 627/2018) — revoked by Regulation 3.
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.