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) — powers under sections 129N and 341
- Enacting Authority: Monetary Authority of Singapore (MAS)
- Commencement: 14 March 2019
- Key Provisions (from extract): Regulation 2 (Definitions); Regulation 3 (Specified derivatives contract); Regulation 4 (Exemption from section 129J of Act); Regulation 5 (Keeping of books and other information); Schedule (Specified derivatives contract)
- Latest version status (as provided): Current version as at 27 Mar 2026
- Notable amendment (as provided): Amended by S 467/2021 with effect from 1 July 2021
- Instrument identifier (as provided): SL 134/2019 (14 Mar 2019)
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 (SFA). In plain language, the Regulations support a regulatory framework for the trading of derivatives contracts in Singapore by (i) prescribing which derivatives contracts are treated as “specified derivatives contracts”, (ii) identifying certain persons who may be exempt from a particular SFA obligation (section 129J), and (iii) imposing record-keeping duties on regulated market participants.
The Regulations are closely tied to the SFA’s derivatives regime. They do not create a standalone trading regime from scratch; rather, they operationalise parts of the SFA by defining key terms, setting out which contracts fall within the “specified” category, and specifying when and for whom certain compliance requirements do not apply. They also ensure that, even where exemptions exist, the MAS can obtain information and that firms maintain adequate documentation for supervisory and enforcement purposes.
For practitioners, the practical significance is twofold. First, the Regulations determine whether a firm’s derivatives activity is captured by the “specified derivatives contract” concept and therefore whether the firm is a “specified person” subject to the Regulations’ record-keeping obligations. Second, the Regulations carve out exemptions from section 129J of the SFA for certain categories of financial institutions, based on objective criteria such as notional amount thresholds and licensing status.
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 compliance planning: obligations that depend on the Regulations’ commencement apply from that date, subject to any transitional or effective-date provisions elsewhere in the SFA or amendments to these Regulations.
2. Definitions that drive scope (Regulation 2)
Regulation 2 defines several terms that are essential to understanding who is exempt and how the exemption is calculated. The extract includes definitions of:
- “aggregate outstanding notional amount” (for certain banks): the aggregate notional amounts of derivatives contracts that are (a) not exchange-traded, (b) where the bank is a party, (c) booked in Singapore, and (d) outstanding.
- “booked in Singapore”: an accounting-based concept—entry of the derivatives contract on the balance sheet or profit and loss accounts of a person where the person’s place of business is in Singapore and the accounts relate to the person’s Singapore business.
- “outstanding”: contracts that have not expired and have not been terminated in accordance with the contract terms or by agreement.
- “place of business”: head or main office, branch, representative office, or any other office.
These definitions are not merely academic. They determine the measurement of the exemption threshold and whether a particular derivatives contract is counted. For example, a bank’s exemption eligibility depends on whether the relevant contracts are “booked in Singapore” and “outstanding” as defined.
3. Prescribed “specified derivatives contract” (Regulation 3 and the Schedule)
Regulation 3 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.
Although the extract does not reproduce the Schedule’s content, the structure is clear: the Schedule lists the particular derivatives contracts that are captured. The key practitioner takeaway is that the “specified” status is not determined solely by the type of instrument (e.g., interest rate swaps, FX forwards) but also by whether the contract appears in the Schedule and whether it was executed on or after the specified date (1 April 2020). This creates a compliance “cut-in” date and a contract-type “inclusion list”.
4. Exemption from section 129J of the SFA (Regulation 4)
Regulation 4 is the most consequential compliance gateway in the extract. It exempts certain “specified persons” from section 129J of the SFA. While the extract does not set out the content of section 129J itself, the Regulations make clear that section 129J imposes obligations on specified persons, and Regulation 4 identifies who does not have to comply with that particular obligation.
The exemptions include:
- Licensed banks with limited activity: Banks licensed under section 7 or 79 of the Banking Act are exempt if their 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 multi-quarter stability test, designed to prevent “gaming” by temporary reductions.
- Newly established banks: Banks licensed under section 7 or 79 of the Banking Act that have been carrying on business for less than one year are exempt.
- Merchant banks: Merchant banks licensed (or treated as having been granted a merchant bank licence) under the Banking Act are exempt.
- Finance companies: Finance companies licensed under the Finance Companies Act (Cap. 108) are exempt.
- Insurers: Insurers licensed under the Insurance Act (Cap. 142) are exempt.
- Capital markets services licence holders: Any holder of a capital markets services licence is exempt.
From a legal practice perspective, the exemption analysis is highly fact- and status-dependent. For banks, the notional amount threshold requires careful calculation and evidence. For others, the exemption is tied to licensing categories. Practitioners should therefore confirm (i) the entity’s licensing status, (ii) whether the entity is within the definition of the relevant “bank” category, and (iii) for threshold-based exemptions, the quarterly notional amount computations and booking location.
5. Keeping of books and other information (Regulation 5)
Regulation 5 imposes record-keeping obligations on specified persons who are not exempt under Regulation 4. It has three main elements:
- Retention of books: Books relating to a specified derivatives contract or a transaction in such a contract must be kept until at least 5 years after the last date of expiry or termination of the contract/transaction.
- Retention of information: Information required by the Authority for purposes of the SFA 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.
- Offence and penalties: Contravention of the retention duties is an offence. On conviction, the fine is up to $50,000, and for a continuing offence, an additional fine up to $5,000 for every day or part of a day during which the offence continues after conviction.
Regulation 5(4) further clarifies that section 333(1) of the SFA does not apply to offences mentioned in paragraph (3). While the extract does not explain section 333(1), the drafting indicates that the general penalty or procedural rule in section 333(1) is displaced for these specific record-keeping offences. Practitioners should therefore not assume that the general SFA penalty framework automatically applies; the Regulations’ penalty regime is the controlling one for these offences.
How Is This Legislation Structured?
The Regulations are structured in a straightforward manner:
- Regulation 1 sets out citation and commencement.
- Regulation 2 provides definitions that are used throughout the Regulations, particularly for exemption calculations.
- Regulation 3 prescribes which derivatives contracts are “specified derivatives contracts” by reference to execution date (on/after 1 April 2020) and the Schedule.
- Regulation 4 provides exemptions from section 129J of the SFA for specified categories of persons.
- Regulation 5 sets out record-keeping duties, retention periods, and penalties for non-compliance.
- The Schedule lists the specified derivatives contracts (not reproduced in the extract), which is central to determining whether a particular derivatives contract is within scope.
Who Does This Legislation Apply To?
The Regulations apply to “specified persons” in the context of the SFA derivatives regime. Based on Regulation 4, the exemption categories include banks (including merchant banks), finance companies, insurers, and holders of capital markets services licences. This suggests that the underlying SFA obligations (including section 129J) are directed at regulated financial institutions and market intermediaries that engage in derivatives trading.
However, Regulation 5 makes the record-keeping obligations conditional: it applies to every specified person who is not exempt under Regulation 4. Therefore, practitioners must conduct a two-step assessment: (1) whether the entity is a “specified person” under the SFA framework and (2) whether it falls within any exemption category in Regulation 4. If exempt, Regulation 5’s retention duties do not apply; if not exempt, the entity must implement retention controls for books and information relating to specified derivatives contracts and transactions.
Why Is This Legislation Important?
These Regulations matter because they translate high-level statutory obligations into operational compliance requirements. In derivatives markets, supervisory effectiveness depends on the ability to reconstruct trades, verify contract status (e.g., outstanding/terminated), and assess compliance with the SFA’s derivatives trading rules. Regulation 5’s five-year retention period is therefore a key enforcement tool.
For banks, the exemption regime is particularly significant. The $20 billion aggregate outstanding notional amount threshold, measured across multiple consecutive quarters, creates a clear compliance boundary. Institutions near the threshold need robust governance over notional calculations, contract booking location, and classification of exchange-traded versus non-exchange-traded derivatives. Misclassification could lead to an incorrect exemption claim and potential regulatory exposure.
Finally, the Regulations’ linkage to the Schedule and the 1 April 2020 execution date means that compliance teams must ensure contract-level identification. Legal and compliance functions should coordinate with trading and operations teams to tag contracts that fall within the Schedule and to ensure that retention policies cover the correct population of contracts and related transactions.
Related Legislation
- Securities and Futures Act (Cap. 289) — including sections 129I, 129J, 129N, 341, and section 333(1) (as referenced)
- Banking Act (Cap. 19) — sections 7 and 79; merchant bank licensing framework
- Finance Companies Act (Cap. 108)
- Insurance Act (Cap. 142)
- Futures Act (listed 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.