“This has been achieved after an extensive review and sharpening of its risk management and operational processes, and the addition of new rules and procedures to enhance the safety and efficiency of its subsidiaries,” said the exchange
SGX will observe all the new CPSS-IOSCO PFMI Principles by January 13.
Further, SGX has injected sufficient capital into its two clearing houses, namely, Singapore Exchange Derivatives Clearing Limited (SGX-DC) that clears derivatives transactions and the Central Depository Pte Limited (CDP) that clears securities transactions.
SGX-DC has net equity capital of S$246 million, of which S$150 million is contributed to its Clearing Fund. At the same time, CDP, which clears securities transactions, has net equity capital of S$179 million of which S$60 million is contributed to its Clearing Fund.
In addition to capital adequacy, the exchange will introduce securities margining in the CDP effective 21 January 2013.
At the same time, increased transparency on matters relating to its risk management processes and systems will be disclosed in line with the new standards, said the exchange.
From March 2013, the exchange will publish daily reports on the total value and volume of short sales for each counter. The tagging of short sell orders and disclosure of short selling information will enable investors to make better-informed investment decisions.
Separately, SGX is seeking formal recognition from the US Commodity Futures Trading Commission (CFTC) for both its derivatives exchange (SGX-DT) and clearing house (SGX-DC) to maintain continuity in its global derivatives activities. It will also be seeking recognition from the European Securities and Markets Authority (ESMA) in due course.
“Recognising our robust regulatory framework and financial strength, customers have increased the use of SGX’s clearing services to manage their market exposures. In meeting the latest global regulatory requirements, we assure our customers that they can continue to efficiently expand their businesses and confidently manage their risks via SGX. Our standing as the clearing house and exchange of choice in Asia is further validated and made more secure,” said Mr Magnus Bocker, CEO of SGX.
Over the past two years, IOSCO, the standard setting body of securities regulators, has issued new standards on trading and clearing with the objectives of protecting investors, ensuring that markets are fair, efficient and transparent, and reducing systemic risk. Together, CPSS and IOSCO also published the Principles for Financial Market Infrastructures (PFMI) in April 2012, which established the global regulatory standards for clearing, payment and settlement.
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