Page 15 - Building a Treasury Centre for Sustainable Growth

#1 Singapore is the largest FX centre in Asia Pacific

Legal and regulatory considerations
Clearing and trading obligations for specified interest Innovative and socially responsible products
rate swaps
▪ In line with the increasing global focus on
▪ • Banks with significant OTC derivatives activity sustainability investing, and the increasing
are subject to both clearing and trading obligations importance of positive ESG (environmental, social
under the SFA. Derivatives contracts that are subject and governance) impact on institutional investors.
to trading on an organised market operated by an SGX launched a suite of ESG-linked equity index
approved exchange or a recognised market operator derivative products in 2021. Following this, SGX
consist of fixed-to-floating interest rate swaps offered the world’s first green REIT derivative which
denominated in USD, EUR and GBP with the contract aims to allow global investors to manage exposure
specifications prescribed under the SFA. to the Japanese market while incorporating ESG
metrics into risk management. Complementing all
▪ • Derivatives contracts that are subject to clearing by
an approved or recognised clearing house comprise these efforts, SGX is developing Climate Impact X, a
fixed-to-floating interest rate swaps denominated new Singapore-based global carbon exchange and
in SGD, USD, EUR and GBP with the contract marketplace which will offer distinct platforms and
specifications prescribed under the SFA. products that cater to the needs of different carbon-
credit buyers and sellers.
Orderly and transparent organised markets

▪ MAS supervises market operators under the
SFA with the aims of promoting fair, orderly and
transparent markets and reducing systemic risk.
Systematically-important market operators are
regulated as approved exchanges, while the rest of
the market operators are regulated as recognised
market operators. Approved exchanges are subject
to more onerous statutory regulations. Currently,
there are four approved exchanges: Singapore
Exchange Securities Trading Limited (SGX-ST),
Singapore Exchange Derivatives Trading Limited
(SGX-DT), ICE Futures Singapore Pte. Ltd and Asia
Pacific Exchange Pte. Ltd.

Building a Treasury Centre for Sustainable Growth 13