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 authority: Monetary Authority of Singapore (MAS)
- Commencement: 14 March 2019
- Key provisions (as extracted): Regulations 1–5; Schedule (Specified derivatives contract)
- Amendment noted in extract: Amended by S 467/2021 with effect from 1 July 2021
- Status: Current version as at 27 Mar 2026 (per provided extract)
What Is This Legislation About?
The Securities and Futures (Trading of Derivatives Contracts) Regulations 2019 (“Derivatives Trading Regulations”) are subsidiary rules made by the Monetary Authority of Singapore (MAS) under the Securities and Futures Act (Cap. 289). In plain language, the Regulations support Singapore’s regulatory framework for derivatives trading by (i) prescribing which derivatives contracts are treated as “specified derivatives contracts” for certain statutory purposes, (ii) creating targeted exemptions from a specific regulatory requirement in the Securities and Futures Act (notably section 129J), and (iii) imposing record-keeping and information-retention duties on “specified persons” who are not exempt.
The Regulations are particularly relevant to financial institutions that trade or book derivatives in Singapore—especially banks and other regulated intermediaries. The framework is designed to ensure that MAS can supervise derivatives activities effectively and that firms maintain sufficient documentation for regulatory review, investigations, and potential enforcement actions.
While the extract provided does not reproduce the full text of the Securities and Futures Act provisions referenced (such as section 129J and the definition of “specified derivatives contract” in section 129I), the Regulations clearly operate as a “plumbing” instrument: they define key terms, identify which contracts fall within the statutory category, specify who may be exempt, and set out compliance mechanics (books and information retention) and consequences for breach.
What Are the Key Provisions?
1. Citation and commencement (Regulation 1)
Regulation 1 provides the formal citation and states that the Regulations come into operation on 14 March 2019. This matters for compliance timelines, especially where obligations are triggered by contract execution dates or by the effective date of amendments.
2. Definitions (Regulation 2)
Regulation 2 contains definitions that are central to determining whether a person is exempt and how the exemption thresholds are measured. The extract includes several important concepts:
- “aggregate outstanding notional amount” (for a bank): This is the aggregate notional amount of derivatives contracts that are (a) not exchange-traded derivatives contracts, (b) where the bank is a party, (c) booked in Singapore, and (d) outstanding.
- “booked in Singapore”: A derivatives contract is “booked in Singapore” when it is entered on the balance sheet or profit and loss accounts of a person, where (a) the person is a party, (b) the person’s place of business is in Singapore, and (c) the accounts relate to the person’s business in Singapore.
- “outstanding”: A derivatives contract is “outstanding” if it has not expired and has not been terminated in accordance with the contract terms or by agreement.
- “place of business”: Includes head or main office, branch, representative office, or any other office.
These definitions are not merely descriptive; they directly affect whether a bank qualifies for the exemption in Regulation 4(a), including the calculation of the $20 billion threshold and the identification of contracts that count toward it.
3. Specified derivatives contract (Regulation 3 and the Schedule)
Regulation 3 provides the key “trigger” for contract classification. 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 Act.
Practically, this means that firms must determine whether a given contract falls within the Schedule and whether it was executed on or after 1 April 2020. The Schedule is therefore the operational heart of the Regulations: it identifies the types of derivatives contracts that are captured. Although the extract does not reproduce the Schedule content, a practitioner would treat it as essential reading for scope analysis, product coverage, and internal compliance mapping.
4. Exemption from section 129J of the Act (Regulation 4)
Regulation 4 is a targeted exemption provision. It lists “specified persons” who are exempt from section 129J of the Securities and Futures Act. The extract shows that the exemption is not automatic for all market participants; it is conditional and category-based.
The exempt categories include:
- Banks with limited aggregate exposure: Banks licensed under section 7 or 79 of the Banking Act whose 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 (as amended with effect from 1 July 2021).
- Banks with short operating history: Banks licensed under section 7 or 79 of the Banking Act that have been carrying on business for less than one year.
- Merchant banks: Merchant banks licensed (or treated as having been granted a merchant bank licence) under the Banking Act.
- Finance companies: Licensed finance companies under the Finance Companies Act (Cap. 108).
- Insurers: Licensed insurers under the Insurance Act (Cap. 142).
- Capital markets services licence holders: Holders of a capital markets services licence.
Why this matters: Section 129J of the Act is the statutory provision from which these persons are exempt. Although the extract does not state what section 129J requires, the structure indicates that section 129J imposes some obligation on specified persons (likely linked to derivatives trading and/or regulatory controls). Regulation 4 carves out specific entities, either due to their size (the $20 billion notional threshold), their transitional status (less than one year), or their regulatory category (merchant banks, finance companies, insurers, and capital markets services licence holders).
5. Keeping of books and other information (Regulation 5)
Regulation 5 imposes record-keeping duties on specified persons who are not exempt under Regulation 4. This is the most concrete compliance obligation in the extract.
Retention period: For non-exempt specified persons, Regulation 5 requires retention of:
- Books relating to a specified derivatives contract or a transaction in such a contract, for at least 5 years after the last date of expiry or termination of the contract/transaction.
- Information that MAS may require for the purposes of the Act, for 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: A contravention of Regulation 5(1) or (2) is an offence. On conviction, the person is liable to a fine not exceeding $50,000. For a continuing offence, there is an additional fine of up to $5,000 for every day or part of a day during which the offence continues after conviction.
Procedural note: Regulation 5(4) states that section 333(1) of the Act does not apply to any offence mentioned in Regulation 5(3). This is a technical provision that affects how the offence is treated under the Act’s general enforcement or procedural regime. Practitioners should check section 333(1) to understand the precise legal consequence (for example, whether it relates to presumptions, compounding, or other procedural mechanisms).
How Is This Legislation Structured?
The Derivatives Trading Regulations are structured in a straightforward manner:
- Regulation 1 sets out the citation and commencement date.
- Regulation 2 provides definitions used throughout the Regulations, including concepts needed to measure bank exemptions.
- Regulation 3 prescribes which derivatives contracts are “specified derivatives contracts” by reference to execution date (on or after 1 April 2020) and the Schedule.
- Regulation 4 lists categories of specified persons exempt from section 129J of the Securities and Futures Act.
- Regulation 5 sets out the record-keeping and information retention obligations, including offences and penalties.
- The Schedule contains the actual list/specification of derivatives contracts that fall within the “specified derivatives contract” category.
Who Does This Legislation Apply To?
The Regulations apply to “specified persons” in relation to “specified derivatives contracts”. The extract indicates that the exemption regime in Regulation 4 is framed around regulated entities: banks (under the Banking Act), merchant banks, finance companies, insurers, and holders of a capital markets services licence. The record-keeping obligations in Regulation 5 apply to specified persons who are not exempt under Regulation 4.
For banks, the applicability is particularly nuanced because exemption depends on quantitative thresholds and time periods: the bank’s aggregate outstanding notional amount must be below $20 billion for the last day of the most recently completed quarter and for each of the three consecutive quarters immediately preceding it. This means that compliance teams must implement ongoing measurement and governance to determine whether the exemption remains available quarter by quarter.
Why Is This Legislation Important?
For practitioners, the Regulations are important because they translate broad statutory derivatives oversight into concrete compliance duties. The record-keeping requirement in Regulation 5 is a classic supervisory tool: it ensures that MAS can reconstruct derivatives positions, transactions, and related documentation long after execution—particularly after expiry or termination—when disputes, audits, or enforcement actions may arise.
The exemption framework in Regulation 4 is equally significant. It reflects a policy approach that calibrates obligations based on entity type and risk/scale. For banks, the $20 billion notional threshold and the requirement that the threshold be met consistently across multiple quarters reduce the risk of “temporary” compliance and require sustained monitoring. For other regulated entities (finance companies, insurers, and capital markets services licence holders), the exemption is category-based, which may simplify compliance but still requires careful internal classification of whether the entity is within the exempt category.
Finally, the penalties for non-compliance—up to $50,000 and additional daily fines for continuing offences—create a strong incentive for robust retention controls. Lawyers advising regulated firms should therefore focus not only on whether a contract is a “specified derivatives contract” under the Schedule, but also on whether the firm’s systems can reliably retain books and required information for the full five-year period after expiry or termination.
Related Legislation
- Securities and Futures Act (Cap. 289) (including sections 129I, 129J, 129N, 341, and section 333(1))
- Banking Act (Cap. 19) (sections 7 and 79)
- Finance Companies Act (Cap. 108)
- Insurance Act (Cap. 142)
- Futures Act (not detailed in extract, but listed in provided metadata)
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.