Statute Details
- Title: Securities and Futures (Trading of Derivatives Contracts) Regulations 2019
- Act Code: SFA2001-S134-2019
- Type: Subsidiary Legislation (sl)
- Authorising Act: Securities and Futures Act (Cap. 289) (“SFA”)
- Enacting Formula (powers used): Sections 129N and 341 of the SFA
- Commencement: 14 March 2019
- Key Provisions (from extract): Regulation 1 (citation and commencement); Regulation 2 (definitions); Regulation 3 (specified derivatives contract); Regulation 4 (exemption from section 129J of the Act); Regulation 5 (keeping of books and other information); Schedule (specified derivatives contract)
- Amendments noted in extract: Amended by S 467/2021 with effect from 1 July 2021
- Current version status (as provided): Current version as at 27 Mar 2026
What Is This Legislation About?
The Securities and Futures (Trading of Derivatives Contracts) Regulations 2019 (“Derivatives Trading Regulations”) are subsidiary legislation made under the Securities and Futures Act (Cap. 289). In practical terms, they support Singapore’s regulatory framework for derivatives by prescribing which derivatives contracts are treated as “specified derivatives contracts” and by setting out compliance requirements for certain market participants.
The Regulations do not operate in isolation. They are designed to interact with specific provisions in the Securities and Futures Act—most notably the regime in the Act relating to “specified persons” and obligations connected to “specified derivatives contracts”. The Regulations also create targeted exemptions from an obligation in section 129J of the Act for certain categories of regulated financial institutions, based on objective criteria such as scale of activity and licensing status.
Finally, the Regulations impose record-keeping and information-retention duties on “specified persons” who are not exempt. These duties are aimed at enabling the Monetary Authority of Singapore (“MAS”) to supervise derivatives activity effectively, investigate compliance, and ensure that firms can produce relevant books and information for regulatory and enforcement purposes.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the short title and commencement date. The Regulations come into operation on 14 March 2019. This matters for practitioners because it determines when the regulatory obligations and definitions became legally effective, and it also helps interpret transitional issues (for example, which contracts fall within later “specified” categories).
2. Definitions tailored to derivatives activity (Regulation 2)
Regulation 2 defines several terms that are crucial for determining whether a bank qualifies for an exemption and for understanding the scope of “specified derivatives contract” concepts. The extract highlights three key definitions:
- “aggregate outstanding notional amount” (for a bank): the aggregate notional amounts of derivatives contracts that are (i) not exchange-traded, (ii) where the bank is a party, (iii) booked in Singapore, and (iv) outstanding.
- “booked in Singapore”: a derivatives contract is booked in Singapore where the contract is entered on the balance sheet or profit and loss accounts of a person, the person’s place of business is in Singapore, and the accounts relate to the person’s Singapore business.
- “outstanding”: a derivatives contract that has not expired and has not been terminated in accordance with the contract terms or by agreement.
These definitions are operational. For exemption purposes, a bank’s notional exposure is not measured in the abstract; it is measured by reference to contracts that meet the specific filters above (non-exchange-traded, booked in Singapore, outstanding, and where the bank is a party). This is the kind of detail that can materially affect whether a firm is exempt.
3. Prescribed “specified derivatives contract” (Regulation 3 and the Schedule)
Regulation 3 is a “prescription” provision. It states that any derivatives contract executed on or after 1 April 2020 that is set out in the Schedule is prescribed for the purposes of the definition of “specified derivatives contract” in section 129I of the SFA.
For lawyers, the practical takeaway is that the Regulations’ obligations are triggered only for contracts that (a) are executed on or after 1 April 2020 and (b) fall within the categories listed in the Schedule. The extract does not reproduce the Schedule content, but it is central: the Schedule effectively determines the contract types that are “specified”. In advice, counsel should always confirm the current Schedule wording and whether any amendments have expanded or narrowed the scope.
4. Exemption from section 129J of the Act (Regulation 4)
Regulation 4 provides exemptions from section 129J of the SFA for specified persons. The exemptions are structured around (i) banks with limited derivatives scale, (ii) banks with short operating history, and (iii) other regulated financial institutions.
The key exemption categories in the extract are:
- Banks with aggregate outstanding notional amount not exceeding $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 rolling, multi-quarter test—meaning a bank must consistently remain under the threshold, not merely at a single point in time.
- Banks carrying on business for less than one year. This is a time-based exemption, likely intended to avoid imposing full compliance burdens on newly established entrants before they have built up derivatives activity.
- Merchant banks holding (or treated as holding) a merchant bank licence under the Banking Act.
- Finance companies licensed under the Finance Companies Act (Cap. 108).
- Insurers licensed under the Insurance Act (Cap. 142).
- Holders of a capital markets services licence.
From a practitioner’s perspective, the exemption analysis is fact-intensive. For banks, the exemption hinges on the firm’s notional amounts, the “booked in Singapore” concept, and the “outstanding” status of contracts. It also requires careful quarter-by-quarter measurement. For other categories, the exemption is licensing-based, which is typically easier to verify but still requires confirming the relevant licence status and whether the firm falls within the statutory category.
5. Keeping of books and other information (Regulation 5)
Regulation 5 is the compliance core of the extract. It applies to every “specified person” who is not exempt under regulation 4. It imposes two main retention duties:
- Books retention (Regulation 5(1)): any book that relates to a specified derivatives contract or to a transaction in a specified derivatives contract must be kept until at least 5 years after the last date of expiry or termination of the relevant contract or transaction.
- Information retention (Regulation 5(2)): any information that may be required by MAS for the purposes of the Act must be kept until at least 5 years after the last date of expiry or termination of the contract, agreement, or transaction to which the information relates.
Offences and penalties (Regulation 5(3))
A contravention of the retention obligations is an offence. On conviction, the person is liable to a fine not exceeding $50,000. If the offence is continuing, there is an additional further fine not exceeding $5,000 for every day or part of a day during which the offence continues after conviction. This structure is significant: it creates strong incentives to correct record-keeping failures promptly and to ensure systems are capable of producing retained records.
Interaction with the Act’s general provisions (Regulation 5(4))
Regulation 5(4) states that section 333(1) of the Act does not apply to any offence mentioned in paragraph (3). While the extract does not explain section 333(1), the legal effect is that the general rule in the Act is excluded for these specific offences. Practitioners should therefore not assume that general penalty mechanics apply; instead, they should treat the Regulation 5(3) penalty regime as self-contained for these offences.
How Is This Legislation Structured?
The Regulations are relatively concise and are structured as follows:
- Regulation 1 sets out the citation and commencement.
- Regulation 2 provides definitions used throughout the Regulations, including definitions that determine exemption eligibility for banks.
- Regulation 3 prescribes which derivatives contracts are “specified derivatives contracts” for the purposes of the SFA, by reference to the Schedule and a commencement date for contract execution (1 April 2020).
- Regulation 4 provides exemptions from section 129J of the SFA for specified persons, including banks meeting quantitative thresholds and other licensed entities.
- Regulation 5 imposes record-keeping and information-retention obligations and sets out offences and penalties for non-compliance.
- The Schedule lists the derivatives contracts that are prescribed as “specified derivatives contracts”. The Schedule is essential for determining the scope of the Regulations’ obligations.
Who Does This Legislation Apply To?
The Regulations apply to “specified persons” in the sense used in the Securities and Futures Act, but the extract clarifies that the record-keeping obligations in Regulation 5 apply only to specified persons who are not exempt under Regulation 4. Accordingly, a practitioner’s first step is to identify whether the client is a “specified person” under the SFA framework and then to assess whether the client falls into any exemption category.
In the extract, exemption categories include certain banks (subject to notional thresholds or a one-year business window), merchant banks, finance companies, insurers, and holders of capital markets services licences. If a client is exempt under Regulation 4, the retention obligations in Regulation 5 (as extracted) do not apply. However, counsel should still verify whether other obligations under the SFA or other subsidiary legislation apply to the client’s derivatives activities.
Why Is This Legislation Important?
This legislation is important because it operationalises Singapore’s derivatives regulatory policy in two ways: (1) by defining which derivatives contracts are “specified” and therefore fall within the SFA’s targeted regime, and (2) by imposing practical compliance duties—especially record retention—on firms that are not exempt.
From a compliance and enforcement perspective, Regulation 5’s five-year retention requirement is a concrete obligation that firms can translate into document management and regulatory reporting workflows. The penalties for continuing offences underscore that MAS expects firms to maintain records reliably and to be able to produce them when required. For legal practitioners, this means that advice on derivatives compliance should include not only substantive regulatory analysis but also governance around retention schedules, audit trails, and the ability to retrieve relevant books and information.
For banks, Regulation 4’s exemption test is particularly significant. The $20 billion notional threshold is measured using a defined concept of “aggregate outstanding notional amount” and requires compliance across multiple consecutive quarters. This creates a compliance monitoring challenge: firms must track notional amounts by contract type, booking location, and outstanding status, and must be able to demonstrate the basis for exemption eligibility if questioned by MAS.
Related Legislation
- Securities and Futures Act (Cap. 289) (including sections 129I, 129J, 129N, 341, and section 333(1) referenced in Regulation 5(4))
- Banking Act (Cap. 19)
- Finance Companies Act (Cap. 108)
- Insurance Act (Cap. 142)
- Futures Act (noted in metadata as related legislation)
Source Documents
This article provides an overview of the Securities and Futures (Trading of Derivatives Contracts) Regulations 2019 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.