Monetary Authority of Singapore (MAS) has been constantly expanding the scope of reporting requirements for financial derivative instruments to align its reporting standards with the latest regulatory reporting guidelines in the US and the European markets. It is evident in the proposed revisions to derivatives reporting under MAS 610 guidelines. The proposed revisions are also in alignment with the two amendments introduced under ‘Securities and Futures (Reporting of Derivative Contracts) Act’ which expanded the scope of reporting of over-the- counter (OTC) derivatives. However, MAS 610 reporting requires additional granular details related to trades and counterparties.
Exhibit 1: A timeline of changes introduced in Derivatives Reporting under DTCC and MAS 610 reporting
A summary of proposed revisions to reporting Financial Derivatives in MAS 610:
Appendix B3 in the proposed MAS 610 is a revised version of Annexure 1G in the extant MAS 610 where banks need to report ‘Gross Amounts’ and ‘Fair Values’ of financial derivatives by type of derivative instrument (futures, forwards etc.) and by nature of underlying asset (interest rate, equity etc.). The following are the key changes proposed and the corresponding challenges:
Another appendix dedicated to reporting of financial derivatives in the proposed MAS 610 is the Appendix I which collects turnover of foreign exchange, interest rate, and commodity derivatives. This is a revised version of Appendix 2 in the current MAS 610. The following are the key changes proposed and the corresponding challenges:
Appendix F in the revised MAS 610 is used for reporting MAS 612 classified assets. Financial
derivatives are also required to be reported under ‘Other Gradable Assets’ as specified in the reporting forms.
Even though MAS hasn’t mandated reconciliation of derivatives reporting in MAS 610 with DTCC or other financial reporting for now, the efforts of MAS to introduce uniformity across reporting requirements by introducing similar revisions/amendments are quite evident. Banks will do good to study the fast-changing reporting requirements for financial derivatives across reports before starting their journey towards compliance.