Singapore regulator urges law change for sound financial system
Gets astute on financial statute
The Monetary Authority of Singapore (MAS) is calling for a second reading of a Bill that it says will ensure a sound and resilient financial system for the city-state.
MAS is pushing for “The Monetary Authority of Singapore (Amendment) Bill 2017″ because it says it needs to update its laws and regulations that deal with resolution, “so as to ensure effective handling of a financial institution (FI) that gets into serious trouble, and especially to avoid contagion or a loss of confidence in the system”.
As way of background, in 2015 and 2016, MAS says it consulted the industry and the public on the proposed enhancements to the resolution regime for FIs. With this feedback, it set out its ideas.
The new Bill includes “explicit powers” for MAS to require FIs to prepare recovery plans and submit such information to MAS for resolution planning.
It also includes legal provisions for MAS to temporarily block counterparties’ rights to terminate contracts with an FI in resolution. Certain counterparties, such as central banks, payment systems, approved or recognised clearing houses, and depositories, will not be subject to these powers.
For FIs that operate in multiple jurisdictions, the Bill brings in a statutory framework for MAS to recognise resolution actions taken by a foreign resolution authority on FIs in Singapore. But such recognition will be subject to conditions, including “that it must not prejudice domestic financial stability” or “run contrary to Singapore’s national or public interest”.
In addition, the Bill introduces two amendments relating to MAS’ financial arrangements with the Singapore government.
The first amendment allows MAS to revise the level of its paid-up capital, but subject to the approval of the government and the MAS board. The second amendment sets the condition under which MAS can return profits to the government. MAS’ profits are channelled into a general reserve fund.
