Certain clearing house licensing exemptions for Approved Exchanges and Recognised Market Operators

On 8 September 2023, the Monetary Authority of Singapore (“MAS”) published its response to its July 2022 industry consultation on proposed exemptions for approved exchanges (“AEs”) and recognised market operators (“RMOs”) that provide certain clearing and settlement services. 

The industry feedback received supported the MAS’ proposal to exempt AEs and RMOs that provide certain clearing and settlement services, from needing to be additionally regulated as an approved clearing house (“ACH”) or recognised clearing house (“RCH”) under the Securities and Futures Act 2001 (“SFA”).


Under the current SFA regime, to promote safe and efficient clearing facilities and reduce systemic risk, the MAS regulates persons that establish or operate a clearing facility or hold themselves out as operating a clearing facility, as an ACH or RCH. 

With the emergence of new business models, the MAS has observed that AEs and RMOs may also provide post-trade services such as verifying transactions conducted on the organised markets that they operate, and calculating the obligations of parties under those transactions, before the transactions are cleared or settled bilaterally between the transacting parties. 

Under the current SFA regime, these post-trade services could fall within the scope of ACH or RCH activities. However, the MAS is of the view that these services conducted by the AEs and RMOs do not increase systemic risks posed by such entities to the wider financial system, and thus do not warrant additional regulatory obligations. 

Exemption for AEs and RMOs

Accordingly, the MAS will proceed to exempt AEs and RMOs that provide such post-trade services from being regulated as ACHs or RCHs, by way of a class exemption under section 49(6) of the SFA and the Securities and Futures (Clearing Facilities of Approved Exchanges or Recognised Market Operators) (Exemption) Regulations 2023.  

The exemption is available to any AE or RMO that establishes or operates a clearing facility, if every transaction that is cleared or settled by that clearing facility is:

  1. executed on an organised market established or operated by the AE or RMO; 
  2. not routed to an ACH or RCH; and
  3. only cleared or settled on the AE’s or RMO’s clearing facility by trade verification and / or calculation of obligation.

Notification requirement for exempted AEs and RMOs

Any AE or RMO that wishes to rely on the exemption must notify the MAS in writing that it (i) has established or commenced operation of a clearing facility that provides such post-trade services, and (ii) will be relying on the exemption. This notification requirement will apply to all AEs and RMOs (including existing RMOs) that avail themselves of the exemption.