In the Consultation Paper on Proposed Amendments to Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licences) Regulations (“Regulations“), the Monetary Authority of Singapore (“MAS“) proposes changes to support investor demand while balancing the risk of over-leveraging by a holder of a capital markets services licence for product financing (“CMSL holder“). Comments on the proposals should be submitted by 21 June 2025.
The Regulations set out the margin requirements for product financing by a CMSL holder. Since their implementation in 2002, the margin ratios for product financing have remained unchanged. The present proposals are intended to better align the margin requirements of CMSL holders with other jurisdictions and to better support overall market requirements.
Streamline Aggregate Margin Exposure Limit
Current Requirements: Under regulation 24(3)(a) of the Regulations, a CMSL holder’s overall product financing activities must not exceed 300% of its free financial resources.
Proposed Changes: Increase the overall limit from 300% to 500% to allow a CMSL holder to better support investors’ trading interest in specified products.
Streamline Aggregate Margin Exposure Limit in respect of Specified Products that are not Quoted on an Approved Exchange
Current Requirements: Under regulation 24(3)(b) of the Regulations, a CMSL holder must ensure that its product financing activities, in respect of specified products offered on a non-approved exchange, do not exceed 100% of its free financial resources.
Proposed Changes: Remove this requirement, given that the overall aggregate margin exposure limit requirement under regulation 24(3)(a) of the Regulations is sufficient to limit the leverage risk of a CMSL holder.
For details of the amendments, please refer to Annex A of the Consultation Paper.
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