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 Formula / Maker: Monetary Authority of Singapore (MAS)
- Commencement: 14 March 2019
- Key Provisions (from extract): Regulations 1–5; Schedule (Specified derivatives contract)
- Most relevant concepts in extract: “Specified derivatives contract”, “aggregate outstanding notional amount”, exemptions from section 129J, record-keeping
- Notable amendment shown: 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 by the Monetary Authority of Singapore (MAS) under the Securities and Futures Act (SFA). In plain terms, the Regulations identify certain derivatives contracts and certain market participants, and then impose (or exempt) compliance obligations connected to the SFA’s derivatives framework.
The extract shows that the Regulations do three main things. First, they define key terms used for the derivatives regime, including how to measure an institution’s “aggregate outstanding notional amount” and what it means for a derivatives contract to be “booked in Singapore”. Second, they prescribe which derivatives contracts are treated as “specified derivatives contracts” for the purposes of the SFA. Third, they create targeted exemptions from a specific SFA obligation (section 129J), and they impose record-keeping requirements on “specified persons” who are not exempt.
For practitioners, the practical significance is that these Regulations operate as a gatekeeper: they determine which contracts and which entities fall within the “specified” category, whether an entity can rely on an exemption, and what documentation must be retained. This is particularly important for banks and other regulated financial institutions that trade over-the-counter or non-exchange-traded derivatives, where regulatory reporting, internal controls, and audit trails are central to compliance.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) confirms the identity of the instrument and its commencement date. The Regulations are cited as the “Securities and Futures (Trading of Derivatives Contracts) Regulations 2019” and come into operation on 14 March 2019. This matters for determining which obligations apply from which date, especially where contracts are executed around the commencement period.
Regulation 2 (Definitions) provides the interpretive foundation. The extract includes several definitions that are particularly relevant to exemption eligibility and record-keeping. For example, “aggregate outstanding notional amount” (in relation to a bank) is defined as the aggregate of notional amounts of every derivatives contract that is: (a) not exchange-traded; (b) where the bank is a party; (c) booked in Singapore; and (d) outstanding. The definition also clarifies what “booked in Singapore” means: the derivatives contract must be entered on the balance sheet or profit and loss accounts of a person whose place of business is in Singapore, and the relevant accounts must relate to that Singapore business.
The definition of “outstanding” is also important: it refers to derivatives contracts that have not expired and have not been terminated in accordance with the contract terms or by agreement. Finally, “place of business” is defined broadly to include head or main office, branches, representative offices, and any other office. For compliance teams, these definitions affect whether a contract is counted for exemption thresholds and whether an entity’s Singapore operations bring it within the scope of the Regulations.
Regulation 3 (Specified derivatives contract) is the “contract scope” 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. Although the extract does not reproduce the Schedule content, the structure indicates that the Schedule lists the particular types of derivatives contracts that are captured. Practically, lawyers must cross-check the Schedule to determine whether a given product type (and its execution date) falls within the “specified” category.
Regulation 4 (Exemption from section 129J of the Act) is the “entity scope and exemption” provision. It lists specified persons exempt from section 129J of the SFA. The extract shows several categories:
- Banks with limited aggregate outstanding notional amount: 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 threshold test with a multi-quarter stability requirement.
- Newly operating 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 having been granted a merchant bank licence) under the Banking Act is exempt.
- Finance companies: A finance company licensed under the Finance Companies Act (Cap. 108) is exempt.
- Insurers: An insurer licensed under the Insurance Act (Cap. 142) is exempt.
- Capital markets services licence holders: Any holder of a capital markets services licence is exempt.
From a practitioner’s perspective, the key is that the exemption is from section 129J of the SFA, not from the Regulations as a whole. The Regulations still impose record-keeping obligations under regulation 5 on specified persons who are not exempt. Therefore, counsel should not assume that an exemption from section 129J automatically eliminates all compliance duties under these Regulations.
Regulation 5 (Keeping of books and other information) sets out record retention requirements. It applies to every “specified person” who is not exempt under regulation 4. The obligations are twofold:
- Books relating to specified derivatives contracts or transactions: such books must be kept until at least 5 years after the last date of expiry or termination of the relevant contract or transaction.
- Information required by the Authority: any information that MAS may require for purposes of the SFA must also be kept for at least 5 years after the last date of expiry or termination of the contract, agreement, or transaction to which the information relates.
Enforcement and penalties: A contravention of regulation 5(1) or 5(2) is an offence. On conviction, the person is liable to a fine not exceeding $50,000, and for a continuing offence, an additional fine not exceeding $5,000 for every day (or part of a day) the offence continues after conviction. The Regulations also provide that section 333(1) of the SFA does not apply to offences mentioned in regulation 5(3), which is a technical but important drafting point affecting how certain procedural or penalty-related provisions operate.
How Is This Legislation Structured?
The Regulations are structured in a straightforward, practitioner-friendly way:
- Regulation 1 sets out citation and commencement.
- Regulation 2 provides definitions that control interpretation across the instrument.
- Regulation 3 identifies which derivatives contracts are “specified derivatives contracts” by reference to execution date (on or after 1 April 2020) and the Schedule.
- Regulation 4 provides exemptions from a specific SFA obligation (section 129J) for enumerated categories of regulated entities, including threshold-based and time-in-business-based exemptions for banks.
- Regulation 5 imposes record-keeping duties and sets out offences and penalties for non-compliance.
- The Schedule lists the specified derivatives contracts. Although the extract does not show the Schedule’s content, it is central to determining whether a particular derivative product is captured.
Who Does This Legislation Apply To?
The Regulations apply to “specified persons” in the context of the SFA’s derivatives framework. While the extract does not define “specified person” directly, regulation 4 indicates that the exemption categories include banks (under the Banking Act), merchant banks, finance companies, insurers, and holders of capital markets services licences. This suggests that the underlying SFA regime is aimed at regulated entities that trade derivatives, particularly those dealing with non-exchange-traded contracts.
Critically, regulation 5 applies only to specified persons who are not exempt under regulation 4. Therefore, the compliance question for a practitioner is often two-step: (1) does the entity fall within the “specified person” category and trade a “specified derivatives contract” (as defined by regulation 3 and the Schedule)? and (2) if so, is the entity exempt from section 129J under regulation 4, and if not exempt, what record-keeping duties under regulation 5 must be implemented?
Why Is This Legislation Important?
These Regulations are important because they translate the SFA’s derivatives policy into operational compliance requirements. Derivatives trading—especially over-the-counter derivatives—creates complex documentation and data retention needs. MAS’s record-keeping requirement ensures that, even after contracts expire or terminate, the relevant books and information remain available for regulatory review, investigations, and supervisory assessments.
The exemption framework in regulation 4 is also significant. By carving out certain regulated entities and by using objective criteria (such as a notional threshold measured over multiple quarters, or a one-year “new business” period), the Regulations reduce compliance burdens for entities that are either structurally different (e.g., merchant banks, insurers, finance companies) or have limited exposure under the defined metrics. For banks, the $20 billion notional threshold and the multi-quarter test are particularly consequential: they require robust internal measurement and governance to ensure that the exemption remains available when assessed.
Finally, the penalty structure in regulation 5 underscores enforcement seriousness. A fine up to $50,000, plus daily penalties for continuing offences, creates a strong incentive for regulated entities to implement document retention policies that align with the 5-year post-expiry/termination timeline. For legal teams, this typically means coordinating contract lifecycle management, data archiving, and audit-ready recordkeeping across trading, operations, risk, and compliance functions.
Related Legislation
- Securities and Futures Act (Cap. 289) — including sections 129I and 129J (as referenced), and sections 129N and 341 (authorising powers)
- Banking Act (Cap. 19) — sections 7 and 79 (licensing references)
- Finance Companies Act (Cap. 108) — licensing references
- Insurance Act (Cap. 142) — licensing references
- Futures Act — referenced in the metadata (contextual derivatives regulatory landscape)
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.