MAS FAQ Update: OTC Derivative Reporting Regulation Changes Explained
In preparation for the large change of technical standards and validations to their Over the Counter (OTC) derivative reporting regulation, the Monetary Authority of Singapore (MAS), has issued an update (link) to their FAQ for the regulation.
The FAQ took into account industry feedback as well as included information that had previously been shared as part of feedback of their consultation papers for the new regulation standards. Topic in the FAQ include areas where MAS is aiming to better harmonize the regulation formats to that of other global regulations, provide clarifications on new reporting fields and issues guidance on how to report certain lifecycle events. Some of the key items covered by MAS that go into effect on October 21st 2024 for the regulation update include:
Position reporting for contracts for difference (CFDs) – One of the notable differences of MAS regulation to that of similar regulation in the EU and Australia was the lack of ‘position level’ reporting format to allow for compressing multiple transactions to a netted end of day position. Position reporting is notably used for exchange traded derivatives (ETD) such as futures under European Market Infrastructure Regulation (EMIR) and adopted by many firms for CFDs. After receiving industry feedback from CFD brokers, MAS stated that they are harmonizing their regulation to be similar to that of other regulations and adding a new Inclusion to Position (INCP) value to available Event Types.
LEI should of head office and not branch – Changing existing guidance, the FAQ stated that in cases where a Singapore branch is used to transact a trade, the legal entity identifier (LEI) of the reporting entity used on the report should be that of the head office. This change takes effect for October 21st, 2024 and amends the current guidance from MAS to the use LEI of the Singapore branch.
Collateral clarifications – Getting added into the October update is collateral and margin details. The FAQ clarified that in cases where a sub-agreement exists defining collateral structure that is different than the master agreement, counterparties should follow the format included with the sub-agreement. The FAQ also covered the question of how to report collateral when an agent is submitting the report but not a counterparty to the trade. MAS explained exemptions existed in cases where the agent isn’t reasonably expected to have access to such collateral and margin information (specific details of the when to use the exemption are covered in the FAQ).
Reporting obligation field – Due to questions about how to report this field in cases where a counterparty has obligations in multiple jurisdictions, this new field won’t be reportable at the October go live date.
FX Swap ID and Package ID clarification – With the addition of new package fields, MAS clarified that for an FX Swap that is reported as two separate legs, firms are to link the two submissions using a common value in the FX Swap ID field and not the Package ID. If the FX Swap is part of a larger group of trades, the both the FX Swap and Package ID field can be reported for the same line.
Interim UTIs – As part of the updated regulation, MAS is adopting the global standards for Unique Transaction Identifiers (UTI). This includes a waterfall approach for determining the entity responsible for generating the UTI. In cases where a firm is a UTI receiver, and the UTI hasn’t been shared to report in time, MAS clarified that counterparties can report using an interim UTI. When the correct UTI is provided, a new report should be reported with the interim UTI entered in the Prior UTI field. (More on Cappitech’s UTI Connect solution to solve for UTI Enrichment)
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