The Monetary Authority of Singapore has proposed that futures and options brokerages would have to ensure that retail customers have sufficient understanding of derivatives before they can execute transactions. The Singaporean regulator said the proposals have been designed to protect retail customers that do not have the required skill set to trade such complex instruments.
The MAS released the proposal yesterday (January 28) for market participants as part of its market consultation process. The consultation is part of a legislative reform process which has been taking place since the collapse of Lehman Brothers. The new proposals will place constraints on both exchange traded and over-the-counter (OTC) derivatives trading.
The Singaporean regulator said it has proposed the requirement because “customers without the requisite knowledge or prior experience may not be able to understand the features and risks of the investment product being sold to him”.
In the listed markets,...