To support investor participation and market vibrancy while maintaining safeguards, on 6 February 2026, the Monetary Authority of Singapore (“MAS“) issued a Consultation Paper on “Proposed Change to Share Financing Requirement” proposing to raise the share financing threshold for initial public offerings (“IPOs“), employee share schemes and rights issues, from 80% to 90% of the subscription or purchase price. The consultation ends on 16 March 2026.
Share financing refers to credit facilities, advances, or loans provided to customers for subscribing or purchasing shares in IPOs, employee share option schemes or rights issues, before the shares are allotted. Share financing may be provided by banks, merchant banks, finance companies, insurers and holders of capital markets services licences (collectively, financial institutions or “FIs“). During this period, the financing is unsecured but becomes secured once shares are allotted.
| Current Share Financing Requirement | Proposed Change to Share Financing Requirement |
|---|---|
| Share financing is exempt from MAS' unsecured credit rules due to the short unsecured period between subscription and allotment ("Exemption"). The Exemption is subject to the safeguards that share financing facilities for IPOs, employee share option schemes and rights issues, are subject to a requirement that the aggregate amount of loans granted to and obtained by the customer (including all discounts, rebates and other benefits) for the subscription or purchase of those shares does not exceed 80% of the subscription price or purchase price of those shares. | The Exemption remains in place but MAS proposes to increase the financing threshold safeguard to 90% of the subscription or purchase price for IPOs, employee share option schemes, and rights issues. Under the revised requirement, the aggregate loans (including discounts, rebates and other benefits) for the subscription or purchase must not exceed 90%. MAS frames this as a risk proportionate approach to bolster participation and market vibrancy while maintaining meaningful safeguards and alignment with other jurisdictions. |
Risk Management Expectations
In addition to ensuring compliance with the share financing requirement, MAS emphasises that all FIs must continue to maintain robust credit risk management policies, including holistic assessments of customer creditworthiness, appropriate pre‑trade credit controls, and limits commensurate with available financial resources.
If you have any queries on the above, please reach out to our Contacts or KM at [email protected].
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