Tharman Shanmugaratnam
Singapore
“EDB conducts regular reviews to GIP to ensure its effectiveness in attracting only top-tier business leaders who are interested to drive the growth of their businesses and investments from Singapore.”
“MAS may vary the size of the additional capital requirement imposed on the bank and take other regulatory actions depending on the outcome of ongoing reviews. MAS requires all retail banks in Singapore to ensure that their mission critical systems supporting digital banking are resilient.”
“This question will be answered in the reply to Dr Tan Wu Meng's Parliamentary Question filed for tomorrow's Sitting. [Please refer to "Probe into Recent Disruptions of DBS' Digital Bank and Physical ATM Services and Preventive Measures Implemented", Official Report, 5 July 2023, Vol 95, Issue 107, Written Answers to Questions for Oral Ans…”
“Borrowing from the banks is one of the ways in which MAS carries out MMOs to soak up such excess liquidity. Like other central banks, MAS does this daily through an auction system, enabling MAS to withdraw liquidity through the Primary Dealers that submit the most competitive prices.”
“To mitigate consumer over-indebtedness, the Monetary Authority of Singapore (MAS) requires financial institutions (FIs) to implement a range of safeguards when extending mortgage loans and unsecured credit.”
“The Monetary Authority of Singapore imposes on external asset managers the same stringent regulatory standards for anti-money laundering and countering the financing of terrorism that it imposes on banks.”
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“The Government has introduced several measures over the years to help Singaporeans monetise their housing assets so as to meet their financial needs. In March 2017, the Monetary Authority of Singapore (MAS) announced that mortgage equity withdrawal loans need not be subject to the total debt servicing ratio framework if the loan amount is less than 50% of the market value of the property. This measure is particularly relevant to retirees who wish to monetise their housing assets. MAS has also not set any age limit on borrowers who can apply for mortgage equity withdrawal loans. However, like all loans, financial institutions will conduct credit assessments and, in some cases, they may request for a joint borrower or guarantor to be named. To facilitate such loan arrangements, MAS does not require that a joint borrower of a mortgage equity withdrawal loan be the owner of the underlying property. We encourage individuals facing cashflow pressures to discuss with their financial institutions the possible relief options. Besides mortgage equity withdrawal loans, there are other ways for older Singaporeans to monetise their housing assets, such as renting out the property or a room for rental income, right-sizing, or applying for the HDB Lease Buyback Scheme. The Government will continue to review how monetisation of housing assets can best be facilitated to support the retirement needs of Singaporeans.”
“We have enhanced the collective understanding of IWT risks by sharing case studies and red flag indicators with banks, traders, and agents that apply for trade permits. This has helped them to better detect and report suspicious fund flows linked to IWT. While we have made a number of prosecutions for IWT over the years, there has been no indication that there are major IWT syndicates operating out of Singapore. In the investigations, we have also not found ML linked to IWT occurring in or connected to Singapore. Notwithstanding, we will continue to be vigilant to the threat posed by IWT and related ML.”
“Illegal wildlife trade (IWT) is a transnational crime. As IWT generates criminal proceeds for their perpetrators, the Financial Action Task Force (FATF) report that Mr Louis Ng refers to does focus on combatting money laundering (ML) linked to IWT. Singapore was in fact a member of the project team for the report and supports its recommendations. We contributed case studies to support the FATF deliberations. Our whole of government approach is consistent with the recommendations in the FATF report. Several agencies, including the Commercial Affairs Department, National Parks Board and the Monetary Authority of Singapore work together to combat ML linked to IWT. Let me elaborate. We have enacted laws and regulations that target IWT and associated ML. a. Under the Endangered Species (Import and Export) Act (ESA) and the Wildlife Act (WA), it is an offence to trade wildlife without the requisite permits. b. The laundering of proceeds for ESA and WA offences is an ML offence under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act. Singapore enforces these laws robustly. The relevant agencies regularly exchange information, typologies and intelligence, and coordinate on joint operations and training. They have also formed close working relationships with foreign counterparts. Through this close collaboration, Singapore has intercepted shipments and achieved several successful seizures of illegal wildlife cargo. These actions have disrupted criminal syndicates and prevented them from benefitting from the proceeds of IWT. Public-private partnerships also play an important role in our efforts to combat IWT and ML.”
“For unsecured credit, the application period for borrowers to convert their outstanding balances from revolving unsecured credit facilities to term loans on a lower interest rate has been extended to 30 June 2021.”
“If he instead converts his outstanding credit card debt of $25,000 into a term loan under the SFRP (Unsecured), he will pay about $510 in monthly instalments and fully repay his debt by the end of five years, paying approximately $5,400 in total interest cost. The interest paid is hence 80% less than what he would have paid by rolling his credit card balance. In designing SFRP (Unsecured), MAS and the industry took into account similar products in the market. These products are typically offered to customers with good payment records, and the range of interest rates is correspondingly competitive. The 8% cap on effective interest rate is already at the lower end of the range offered by banks. This relatively favourable rate is now being offered to borrowers under the SFRP (Unsecured) who are already past due on their payments. So, the terms are already very favourable. While the current payment deferments on property loans have helped ease the cashflow pressures faced by borrowers, they come with higher overall debt. Where they are able to, borrowers would find it in their interests to resume making full loan repayments when the current relief measure expires. Having said that, we recognise that some borrowers may continue to experience cashflow pressures into the beginning of 2021 due to impact of COVID-19. As such, MAS and the financial industry announced on 5 October 2020 an extension of support measures. Under the extended support measures, property loan borrowers who face repayment difficulties can apply to make reduced instalment payments pegged at 60% of their original monthly instalment, which will cover interest and principal payments.”
“As of end-August 2020, financial institutions (FIs) had received 38,900 applications to defer property loan repayments. They had approved over 90% of these applications. More than 26,000 of the approved applications were for individuals seeking to defer their residential property loans. This amounted to almost $20 billion of deferments. For personal unsecured credit, all eligible individuals can convert their outstanding balances from revolving unsecured credit facilities to term loans on a lower interest rate under the Special Financial Relief Programme (SFRP) (Unsecured). As of end-August 2020, the FIs granted more than 8,100 conversions. This amounted to more than $200 million of personal unsecured debt, or about $25,000 per individual on average. For life and health insurance, the FIs received 32,700 applications for premium deferments, and about 90% of them were approved as of end-August 2020. This amounted to more than $66 million of premiums. Similarly, about 90% of more than 1,300 applications for flexible instalment plans have been approved. The cost savings to borrowers who applied for SFRP (Unsecured) assistance will vary according to the situation of each borrower. They can be substantial. Take, for example, a borrower with outstanding unsecured credit card debt of $25,000, and is able to repay only the minimum credit card repayment of 3% outstanding every month, which works out to about $580 on average. By rolling over his credit card debt at a typical 26% per annum rate, at the end of five years he would have paid about $24,500 in interest cost and still have outstanding debt of about $14,500.”
“The COVID-19 pandemic has significantly disrupted incomes of many individual and business borrowers. The priority is to help them not to miss payments. That is why MAS has been working closely with the financial industry to implement relief measures since March 2020, to help borrowers defer and spread out their monthly repayments. Borrowers who take up the relief measures are able to avoid missing payments, and hence avoid hurting their credit standing. MAS has also advised financial institutions (FIs) to look beyond the borrower’s short-term cash flow problems when assessing their credit standing. They should take into account any relief measure that the FI and borrower have agreed to, and the borrower’s ability to make full repayment based on the revised loan terms. This will help many borrowers avert a credit downgrade. MAS therefore encourages borrowers who are concerned about any adverse credit records because they have missed payments as a result of COVID-19 to reach out to their lenders early to tap into the various relief schemes. MAS has recently announced a set of extended support measures to help borrowers on relief ease into making full repayments next year. If the borrowers can service their loans promptly under the revised terms, they will over time be able to restore their credit standing. Further, such loans would not be reported as restructured loans in their credit bureau records.”
“As Single Family Offices (SFOs) do not manage third party monies, they are not registered with or licensed by the Monetary Authority of Singapore (MAS). So MAS does not have hard data on the scale of their operations. There are about 200 SFOs in Singapore. The number has grown in recent years. Industry research1 estimates that each SFO typically manages assets in excess of US$100 million. So total assets under management by SFOs could be around US$20 billion. SFOs would usually employ small teams of trusted advisors and investment professionals, and there could be several hundred in the industry. Beyond direct employment, they generate indirect employment in Singapore through their engagement of external finance, tax and legal professionals for advice on wealth planning and operational matters.”
“Later this year, MAS will launch a Green and Sustainability-Linked Loan Grant Scheme which will be open to SMEs and other corporates4. This grant will defray the cost of obtaining independent external reviews to demonstrate that sustainability targets are material, and to verify that the loan proceeds will be channeled to green and sustainable activities. As green and sustainable finance activities grow in Singapore, the anchoring of relevant capabilities here will help to bring such loans into the mainstream while encouraging more SMEs to adopt green and sustainability financing.”
“Green and sustainable financing flows are growing strongly in Singapore. From 2019 till the first half of this year, approximately SGD 4.8 billion of green and sustainability bonds were issued in Singapore. Singapore corporates also borrowed SGD 10.2 billion through green and sustainability-linked loans1 in the same period. While green and sustainable financing has nearly tripled from 2018 volumes2, we are still at an early stage of this journey, as is the case internationally. The green share of total loan and bond transactions3 in Singapore remains modest at less than 5%, reflecting the significant opportunity for growth. MAS does not have data on SMEs' take-up of green and sustainability-linked loans. But we do know that Singapore-based banks have been stepping up on such lending. Notable examples include a SGD 27 million ten-year sustainability-linked loan structured by DBS to Chew’s Agriculture in 2019; and a SGD 14 million green loan from UOB to LYS Energy Group, a home-grown independent solar power producer, earlier this year. We are taking further steps to promote green and sustainability-linked loans to SMEs. One possible solution is to develop lending frameworks that provide simplified processes and set out clear standardised criteria for borrowers. With these frameworks, there would be no need to engage external reviewers to develop, verify and maintain customised green finance frameworks for each borrower. HSBC’s Green Loan Framework for SMEs, which was launched in Singapore in March 2020, is a promising start and MAS will encourage more lenders to develop such frameworks. MAS will also help borrowers defray the cost of customised green and sustainability-linked loans.”
“But the initiatives are necessary, to enhance commodity financing standards and practices, and strengthen Singapore's resilience, relevance and competitiveness as a global commodities trading hub.”
“The fraud cases in the commodities trading sector have been attributed to weak disclosure practices and internal controls among a minority of trading companies. However, we do not take this lightly. To prevent such fraudulent activities and restore confidence, there needs to be a strengthening of standards and practices of transparency and governance in the commodities trading sector, more robust credit risk assessment, as well as a move away from paper-based processes as they are more susceptible to risk of fraud. These are the follow-up actions that banks, the Monetary Authority of Singapore (MAS) and other government agencies are undertaking. The Association of Banks in Singapore (ABS), with the support of MAS, Enterprise Singapore (ESG) and Accounting and Corporate Regulatory Authority (ACRA), is developing a code of best practices to enhance commodity financing standards in Singapore. The banks are currently consulting the trading companies, who themselves have an interest in higher standards being practised amongst all players in the industry. The code should be finalised in Q4 2020. Importantly, MAS is also partnering the industry and other government agencies to digitalise trade financing, and replace the current paper-based systems with electronic documents and data flows. This will better ensure authenticity of documents, and allow banks to obtain data directly from Singapore Customs to perform risk assessment. As we take progressive steps to improve the system, trading companies are facing more rigorous credit assessments and tighter financing conditions. They will be able to access the bank financing that they need, commensurate with their creditworthiness.”
“I would like to assure this House that Singapore agencies are vigilant against money laundering risks, and MAS is working closely with financial institutions to continually strengthen our safeguards against these risks.”
“The Financial Action Task Force (FATF) has assessed that Singapore’s regulatory framework for combating money laundering is fully aligned with international standards, and that MAS supervision of the financial sector is robust. For financial institutions at higher risk of being exposed to money laundering, MAS takes a more intrusive approach. MAS directs the financial institutions to take remedial actions, and ensures they report on their implementation of the measures. As I just mentioned, when financial institutions are in breach of our anti-money laundering requirements, MAS will take firm enforcement actions. These include financial penalties, prohibition orders, public reprimands, and revocation of licenses. MAS has published enforcement actions in connection with serious cases, to send a strong deterrent signal. MAS and CAD are continually improving their methods of detection. This includes deploying technologies such as network analytics to uncover well-concealed criminal networks with complicated layers of entities and persons. They have also established partnerships with key financial institutions in Singapore to share information on common and emerging criminal typologies. Building trusted relationships with the private sector further enables case-specific intelligence to be shared among the relevant financial institutions. Further, we leverage international cooperation in combating such crime. Singapore has been playing an active role at the FATF to shape international anti-money laundering standards. We have built strong working relationships with all the leading foreign jurisdictions, enabling proactive sharing of intelligence, joint investigations, and supervisory cooperation.”
“The Members' questions arose from the leaked reports of the US Financial Crimes Enforcement Network, or FinCEN. Let me explain what these leaked reports are about. Suspicious Transaction Reports (STRs) are filed by financial institutions if they have reason to suspect that a financial transaction could be related to a crime. The reasons for suspicion may be due to an adverse media story on the customer, or the customer not providing a good explanation for an unusually large transaction. FinCEN receives a large number of STRs on an ongoing basis – 2.75 million in 2019. The leaked reports mentioned in the media articles were filed with FinCEN by banks in the US, involving transactions with banks in almost every country in the world. To be clear, STRs are not in themselves evidence of money laundering. In fact, most STRs are eventually not found to be connected to criminal activities or money laundering. Notwithstanding, MAS is reviewing the information on the leaked STRs to determine if our banks had appropriately detected suspicious transactions, taken timely action to mitigate the risk, and made the necessary filings to the Commercial Affairs Department. If any bank is found to have weaknesses in anti-money laundering controls, MAS will direct it to rectify them promptly. If there has been a breach of Singapore’s anti-money laundering requirements, MAS will take enforcement action. Mr Desmond Choo also asked a broader question on how Singapore is combating money laundering and other financial crimes. I note that Ms Foo Mee Har has also raised a similar question for a later Sitting.”
“Banks have significant concerns in such cases, due to the difficulty of confirming the source of the customers’ funds or the legitimacy of transactions. MAS has been working with the banks to allow accounts to be opened for such individuals with enhanced due diligence and account restrictions. MAS is working with banks on further ways to enhance financial inclusion, while ensuring that risks are adequately managed. It is collaborating with the Ministry of Education, to ensure that all Singaporean children have bank accounts.”
“It is estimated that over 98% of adult Singapore residents have bank accounts. In the recent Solidarity Payment payout, 98.7% of Singaporeans who received the payments had the amounts credited into their bank accounts. As for the remaining recipients, surveys showed that many also had bank accounts but preferred to collect the payouts in cash. Notwithstanding this high level of banking access, to ensure that Singaporeans have access to affordable and convenient basic banking services, the three local banks, Citibank, HSBC, Maybank and Standard Chartered Bank already offer Basic Banking Accounts (BBAs) since 2002. Typically, such accounts come with ATM/debit card, internet banking and electronic payment services, and can be maintained at very low or even no cost. For instance, DBS/POSB does not set any initial deposit or minimum account balance and waives the $2 maintenance fee if the individual chooses to receive eStatements. The local banks also waive fall-below fees for specific customer segments such as children, the elderly and recipients of public assistance. However, some Singaporeans remain unbanked. This may be due to low awareness of the availability of BBAs, or by choice. The Monetary Authority of Singapore (MAS) has made clear its expectation that banks should provide accounts to individuals who want them. In some cases, where specific safeguards may be required to mitigate money laundering or terrorism financing risks, banks may offer accounts with more limited functionalities. There is a small number of individuals who have committed serious crimes related to sanctions imposed by the United Nations1 who may not be able to open bank accounts.”
“Instead, MAS expects financial institutions to assess their exposures to these industries, mitigate risks, work with each higher-risk customer to improve its environmental risk profile, and ensure there is senior level oversight on these issues. This approach strikes a better balance between supporting sustainable development, and recognising that many of these industries still play a role in the broader economic and social development needs of the region. MAS is engaging the banks on how they intend to implement the Guidelines. We are collaborating with fellow regulators to develop climate risk measurement methodologies and metrics. We will also continue to promote the best practices among banks on environmental risk analysis and management.”
“The Monetary Authority of Singapore's (MAS) objective is to ensure that financial institutions manage their climate-related risks well, and support our economy's transition to a sustainable and low carbon future. To do so, MAS is issuing new supervisory guidance that incorporates best practices on environmental risk management developed by global regulators, including at the Network for Greening the Financial System. MAS' proposed Guidelines on Environmental Risk Management1, which has undergone public consultation, will be finalised in Q4 2020. It will set out clear expectations for banks to implement environmentally responsible financing policies and practices, and includes: (a) Boards and senior management should maintain effective oversight of banks' management of environmental risk and address material environmental risk in their risk appetite framework; (b) For sectors that pose higher environmental risk, develop sector-specific policies, setting out banks' expectations on customers, taking into account relevant sustainability standards and certification schemes. Banks should also engage these customers to support their transition towards sustainable business practices over time; and (c) Disclose their approaches to managing environmental risk, and the impact of environmental risk on their financial performance, including quantitative metrics such as exposures to sectors with higher environmental risk. This will enable investors to better assess the banks' environmental risk exposures. Our approach is therefore not to outrightly disallow financial institutions from serving industries that are subject to climate-related risks at this stage.”
“Small and medium enterprises (SMEs) in Singapore are served by a variety of lending institutions and platforms in our financial sector. The three local banks, finance companies and, more recently, crowdfunding platforms, play an active role lending to SMEs and the smaller local enterprises with annual turnover below $10 million. Mr Wee asked specifically about Qualifying Full Banks (QFBs). Five of the nine QFBs1 currently grant loans to SMEs and local enterprises with annual turnover below $10 million. The remaining QFBs serve other segments of the Singapore market, providing services such as retail banking, wealth management, Renminbi services, securities services, and credit and trade finance for larger corporates. The Government has provided a 90% risk-share on the loans granted under Enterprise Singapore's (ESG) Temporary Bridging Loan Programme, which has increased the availability of credit to SMEs. More than 80% of these loans were taken up by local enterprises with annual turnover below $10 million.”
“Project Ubin is a collaborative industry effort led by the Monetary Authority of Singapore, to explore the use of blockchain technology to clear and settle payments and securities more efficiently. The project will help us better understand the technology and its potential benefits. To date, more than 40 financial institutions, FinTechs and technology firms have participated in the project. The findings, technical documentation, and source codes have been published openly, to to encourage commercial applications. One example is JPM-Coin by J.P. Morgan, which was largely developed out of Singapore, by the same team that worked on Project Ubin. Some industry players have also expressed interest in leveraging the project learnings to develop a live commercial offering for multi-currency payments. In due course when the commercial endeavor materialises, the parties will make their announcements and share more about their roll-out plans.”
“With the accelerated pace of digitalisation due to COVID-19, MAS is also working actively with other government agencies and the industry to drive further progress on electronic payments and digital banking. In addition, MAS will work with the financial services and FinTech sectors to adopt digital solutions that will strengthen operational resilience, improve productivity, better manage risks, as well as engage customers. Achieving a high degree of digitalisation will be a key source of competitive advantage for our financial sector in the future. Safeguarding the environment and managing climate-related risks is an increasingly important issue both globally and in Singapore. MAS set out our vision for Singapore to be a leading global centre for green finance last November. We have made good progress and will continue to press on with all three pillars of our Green Finance Action Plan, to strengthen the financial sector’s resilience to environmental risks, develop green finance markets and solutions, and harness technology and innovation to promote green finance. The financial sector plays a critical role in supporting Singapore through the downturn as well as its recovery. MAS' priorities are to ensure monetary and financial stability, support individuals and businesses to tide through the crisis, and position the financial sector for recovery and future growth. MAS is working closely with the financial services and FinTech sectors to achieve these aims and help Singapore emerge stronger from the crisis.”
“In April 2020, MAS launched a $125 million support package, which included enhanced subsidies for training and manpower costs in the financial services and FinTech sectors. The package will enable structured talent development programmes for more than 900 Singaporeans among those newly hired by FIs over the next three years. FIs have also committed to hire significant numbers under the various SGUnited Jobs & Skills programmes. Close to 60 FIs have offered close to 1,300 SGUnited traineeships to fresh graduates. To prepare local mid-career workers for new or transformed roles, MAS is working closely with the Institute of Banking and Finance and Workforce Singapore to train and redeploy workers into financial institutions. For example, more than 200 attachments have been offered by 18 FIs this year under the Technology in Finance Immersion Programme, in growth areas such as artificial intelligence, cloud computing, cybersecurity, and data analytics. Following five years of investments in digital transformation and innovation by financial sector players, Singapore is now widely regarded as one of the top FinTech hubs globally. An estimated 1,000 FinTech firms are based here. MAS recently announced a $250 million enhanced Financial Sector Technology and Innovation Scheme, or FSTI 2.0, to accelerate technology and innovation-driven growth in the sector. The Singapore FinTech Festival and Singapore Week of Innovation and Technology later this year will deliver the world's first week-long round-the-clock, hybrid digital and physical event for attendees across the world, and will bring together the global innovation community despite the current travel constraints.”
“To ensure that financial institutions stay resilient financially and operationally, MAS has provided a number of regulatory reliefs that do not compromise prudential standards, and will continue to supervise the industry closely. MAS and the financial industry introduced a comprehensive package of measures that have provided relief to individuals and businesses in meeting their loan and insurance commitments, and helped ensure continued access to bank credit and insurance coverage. As the measures provided temporary relief and come with longer term costs, they need to be gradually withdrawn. MAS is working closely with the industry to ensure a well-paced exit that minimises sharp cliff effects for borrowers, while safeguarding financial stability. The financial sector remains integral to Singapore's recovery from the COVID-19 crisis and longer term growth. MAS will work with the industry to ensure that the financial sector is well-equipped with the skills and capabilities to emerge stronger from the crisis, and advance Singapore as a global financial centre. The financial sector is on track to meeting its targets for both growth and job creation that were set out in our 5-year Industry Transformation Map for 2016 – 2020. MAS takes a comprehensive approach, working closely with tripartite partners to support the reskilling and upskilling of the local workforce, and create jobs and traineeship opportunities in the financial sector for fresh graduates and mid-career workers. We are also working with major financial institutions (FIs) to ensure a solid Singaporean core in their workforces, complemented by diverse and high quality manpower. These efforts include developing a strong pipeline of Singaporeans for senior responsibilities in the sector.”
“The Singapore economy is going through its most severe downturn since independence. The Monetary Authority of Singapore (MAS) seeks to anchor economic and financial stability, and support businesses and individuals in riding out the COVID-19 crisis. MAS is also positioning the financial sector to emerge stronger, so that it can continue to support the economy and provide more good jobs for Singaporeans. MAS has adopted an accommodative monetary stance, to complement the Government's significant fiscal policy measures in mitigating the economic impact of the COVID-19 Circuit Breaker and broad-based decline in global demand. MAS eased monetary policy in April this year to prevent a broadening of disinflationary pressures that would be destabilising for the economy. Through its money market operations, MAS has and will continue to ensure the smooth functioning of funding markets in Singapore, so that there is no disruption to banks' ability to continue to extend credit to the economy. Sustaining the safety and soundness of our financial sector is critical for supporting the economy through the downturn as well as its recovery. Banks and insurance companies generally entered the crisis with financially strong balance sheets. MAS' stress tests found them to be resilient in a deep downturn. Singapore's financial sector has also demonstrated strong operational resilience and has been able to continue to serve customers through the different phases of the COVID-19 pandemic. This has reflected years of investments in digitalisation, sound business continuity planning and agile adjustments to work processes.”
“In regulating the sale of investment products, Monetary Authority of Singapore's (MAS) objective is to empower investors to make informed investment decisions which are compatible with their investment objectives, risk appetite, and financial situation. Our approach has worked well so far, and is a common approach adopted by many advanced jurisdictions. Hence, for complex investment products which the average retail investor may not understand, MAS requires financial institutions (FIs) to implement various safeguards, including: First, assessing a customer's investment knowledge and experience before selling the product to the customer; Second, explaining to the customer the general features and risks associated with investing in such products; or Third, advising the customer on the suitability of the product. Convertible bonds are currently classified as non-complex as the product is well-established in the market, and the terms and features can be understood by most retail investors. It is sold as a bond, and stays as a bond, unless the investor or the issuer decides to convert it to equity. However, in recent years, issuers have introduced non-conventional convertible bonds with features that retail investors may not be familiar with. For example, certain bonds may not have a fixed maturity date or may be converted to equity upon the occurrence of certain trigger events which are beyond the investor's control. MAS is therefore reviewing the classification of these products and other hybrid securities. MAS expects to issue a public consultation paper by the end of the year.”
“Due to COVID-19, many elective surgeries were put on hold since February this year. The Ministry of Health has announced that from 2 June, medical procedures for patients with higher needs will resume, while the less urgent elective medical procedures may continue to be deferred. The postponement of elective surgeries should not result in any loss of health insurance coverage for policyholders. All Singapore Citizens and Permanent Residents are covered under MediShield Life for the lifetime of the policyholder, and will not be affected by the deferment of the surgeries. As for those who have taken on additional health coverage. These include Integrated Shield Plans (IPs), other types of individual medical expense plans, and employer-based group medical expense policies. These policies are typically renewed every year, either by the individual or the employer, which means that coverage under these policies will also not be affected by the deferment of surgeries. However, there may be some instances where the policyholder does not, or is unable to, renew a private health policy, and hence coverage is affected by the postponement of the elective surgery. The Monetary Authority of Singapore (MAS) has informed insurers of its expectations that they treat customers fairly and consider these claims favourably if the postponement of these procedures was solely due to COVID-19. Policyholders are advised to approach their insurers to discuss the circumstances of their claims. If that fails, they can appeal through their Members of Parliament or directly to MAS.”
“MAS will calibrate the minimum qualifying loan amount to better meet the needs of SMEs.”
“The MAS' Green Bond Grant Scheme was launched three years ago to catalyse the green bond market in Singapore. To-date, more than SGD 6.5 billion of green bonds have been issued in Singapore. Over the years, we monitored the take-up of the grant, reviewed and refined the scheme. In February 2019, MAS lowered the minimum issuance size from SGD 200 million to SGD 20 million to support more issuers, including medium-sized enterprises. MAS also expanded the scope of the scheme to include social and sustainability bonds and renamed it the Sustainable Bond Grant Scheme. Even with changes to the scheme, issuers of green bonds are still required to have in place a green bond framework based on internationally accepted principles – governing the use of proceeds, the evaluation and selection of projects, and reporting on the allocation of proceeds to eligible projects. Issuers are also required to obtain independent external reviews1 to assure investors that their frameworks are robust and not subject to "greenwashing", where unsubstantiated or false claims on the environmental contribution of one's products, services or business activities are made. To further reduce greenwashing risks, more work needs to be done globally to develop common standards and definitions, as well as to enhance disclosure and reporting. Beyond green bonds, having access to a wider range of sustainability financing options would facilitate SMEs' adoption of sustainable business practices. MAS is thus looking into developing a grant scheme for green and sustainability-linked loans, which could potentially be more relevant to SMEs as the loan proceeds can be used for general corporate purposes so long as borrowers meet relevant sustainability metrics.”
“Third, MAS will be issuing up to five digital bank licences by the middle of this year. They can potentially provide greater funding access for underserved smaller enterprises, as well as low-cost investment solutions and convenient new banking experiences for consumers. Standards in managing and using data are critical in all of this. Digital banks and other digital financial services are likely to use far more data in their operations than traditional financial services. MAS, therefore, worked with the financial industry to develop principles to guide the responsible use of artificial intelligence and data analytics in financial services, in a way that promotes fairness, ethics, accountability and transparency in the use of data by financial institutions.”
“The Monetary Authority of Singapore (MAS) has been closely monitoring these trends and continually updating its regulatory policies to promote digital financial services, while guarding against risks. Let me cite a few specific areas where our policies have been evolving. First, e-payments. We have been driving e-payments because it enhances consumer convenience and business efficiency. Today, more than three out of four Singaporeans between 20 and 75 years old have registered for PayNow, and an estimated 60% of active businesses have registered with PayNow Corporate. The total monthly transaction value is S$1.6 billion compared to S$1 billion six months ago, so adoption and growth are strong. But cybersecurity is a concern in e-payment. MAS has issued guidelines for e-payment user protection and technology risk management by financial institutions. Financial institutions have to ensure that they implement robust cybersecurity measures. Parliament also enacted the Payment Services Act, so that we have fit-for-purpose regulations that set cyber hygiene standards for different payment service licensees. For consumers, MoneySENSE is also stepping up education to users to practise good cyber hygiene, such as setting strong passwords and keeping them secure, and being vigilant against phishing and other scams. Second, we are also promoting other digital financial services, such as investment advisory and insurance offerings. Consumers can benefit from a wider choice of more customised products that match their risk profiles, investment goals and life needs. At the same time, MAS has provided more clarity to the industry on the areas that warrant greater oversight, to provide better safeguard for consumers.”
“Singaporeans' understanding of basic financial concepts is good, has been improving, and can certainly improve further to help them better plan for their future. A Financial Planning Attitudes Survey commissioned by MoneySENSE in 2017 showed that about nine in 10 Singapore residents understood that an investment with a higher return often comes with higher risk. This is significantly higher than the six in 10 in a similar survey conducted in 2013. However, only about one in five feels that they are knowledgeable about investing. Some Singaporeans also have misconceptions about when to start planning for their finances. One in five feels that they would only need to do financial planning when they are looking to retire; and half of young working adults aged between 17 and 29 have not started thinking about financial planning because they think it is still too early to do so. That is why we must continue our work through MoneySENSE, to raise the level of financial literacy amongst Singaporeans, to help them make prudent decisions relating to their savings, investments, insurance, house purchase, retirement planning, and not to fall for scams. MoneySENSE takes a multi-pronged approach, reaching out to Singaporeans at different stages of their lives. As for the impact of digital finance on businesses and individuals, it is generally positive, because it brings about greater convenience, more accessibility and, in some instances, lower pricing, to banking and financial services. However, it can also mean that consumers are more exposed to products with higher risk, and which require them to have a higher level of financial literacy.”
“We will continue to work with the media to highlight these risks and to raise public awareness of potential scams. International regulatory standards in the area of crypto products are still evolving. MAS is watching these developments closely and is participating actively in international regulatory discussions on how the risks posed by crypto products are best addressed.”
“Our basic consideration for crypto-derivative products is that they are not suitable for most retail investors because they do not have intrinsic value and are subject to sharp price swings driven by speculation. Hence, the Monetary Authority of Singapore (MAS) took a calibrated step to regulate crypto-derivative products that are listed and traded only on Approved Exchanges, which are subject to regulatory requirements and supervisory oversight. But we do not extend the regulation of crypto-derivative products beyond Approved Exchanges. This would confer misplaced confidence in these highly volatile products, and lead to a wider offering of such products to retail investors. Our approach has worked so far as trading in crypto products in Singapore remains limited and only a small number of retail investors are involved. Notwithstanding, MAS has issued circulars to all financial institutions to comply with additional measures if they offer crypto products to retail investors. These include requirements for warnings tailored to the risk of transacting in crypto products in informational materials provided to investors, restrictions on advertisement, and additional margins to be collected from retail investors to mitigate the risk of large losses from trading in volatile and leveraged products. Investors should, however, be aware that these measures do not apply to entities which are not regulated by MAS. Many trading platforms operate online and are situated overseas. These are outside of MAS' regulatory oversight. Investors that trade on these platforms need to exercise caution and understand the risk of such products. MAS has also issued advisories to warn members of the public of the risks of investing in crypto products.”
“The key measures are: First, increase the number of market makers and liquidity providers to enhance market liquidity, and admit new Mainboard issue managers and Catalist sponsors3. Second, develop cross-border partnerships and expand SGX's global footprint. SGX has partnered Tel Aviv Stock Exchange and Nasdaq to boost capital raising opportunities for technology companies. These partnerships have generated a healthy pipeline of companies looking to secondary listing on SGX. Third, SGX has introduced the Dual Class Share structure to enhance Singapore's value proposition as a listing destination for new high-growth technology companies. Fourth, work with private market platforms to build the IPO pipeline. Such platforms can provide growth companies access to a wide network of investors for financing needs just prior to IPO. Finally, step up investor outreach efforts to generate investment ideas and interest. The Monetary Authority of Singapore (MAS) supports SGX's efforts. It has launched the S$75 million Grant for Equity Market Singapore (GEMS) in February last year. MAS will co-fund the listing expenses of companies in high-growth and technology sectors as well as provide grants to widen the research coverage of SGX-listed stocks, especially of small and mid-cap companies. Since the grant's inception, MAS has approved seven listing grant applications. Research houses tapping on GEMS have committed to hiring close to 50 fresh graduates and experienced research analysts over the next three years.”
“Mr Ang Wei Neng's question is about the prospects and strategies of SGX. We are in a leading position in the trading of Asian equity and commodity derivatives, foreign exchange and fixed income. In cash equities, SGX remains one of the most international exchanges globally with overseas companies making up 43% of total market capitalisation. SGX is also the largest and most international Real Estate Investment Trusts (REITs) market in Asia ex-Japan, with REITs from the United States (US) and Europe listed on its mainboard. However, Singapore's cash equities market has not grown as fast as the derivatives and REITs markets. Wider trends play a big part. Globally, Initial Public Offerings (IPOs) fell 20% to a three-year low, and the number of IPOs in Asia hit a five-year low1. This is because companies are staying private for longer2, as they have alternative sources to fund growth and expansion. At the same time, more companies are delisting from public equity markets. In the US, for instance, for the first time since 2006-2007, the value of listed companies going private in 2018 exceeded the value of private companies going public, causing a net outflow from the US public markets. Specific to Mr Ang Wei Neng's questions, from 2009-2019, 279 new companies listed on SGX, of which 60% are Singapore companies. However, over the same period, we saw 302 delistings of both Singapore and foreign companies. Unfortunately, there are no ready statistics available to Mr Ang Wei Neng's specific question on the number of Singapore companies listed overseas. SGX is taking a number of initiatives to encourage more equity listings. There is no silver bullet solution, and SGX will need to undertake a multi-prong approach over a period of time to reinvigorate the local equity market.”
“To promote the responsible use of AI and data analytics, MAS has co-developed with the financial industry a set of principles to promote fairness, ethics, accountability and transparency in the provision of financial products and services (FEAT Principles). Through these FEAT Principles, MAS is working with financial firms to strengthen internal governance around data management and use. MAS expects financial firms to put in place robust data and model governance frameworks and processes that support transparency and auditability, so that data-driven or AI models can be explained, understood and monitored, and be subject to regular reviews and validation. Financial firms are also expected to ensure that the use of AI and data analytics continues to be aligned with their corporate ethical standards and codes of conduct. We are closely monitoring these developments in technology and business models. MAS will continue to proactively refine and adapt its regulatory and supervisory approach in a way that promotes innovation while safeguarding public confidence in our financial sector.”
“The Monetary Authority of Singapore's (MAS') regulations and guidelines pertaining to banks seek to ensure that they make sound lending decisions, which support resilient and sustainable financing of our economy and the markets that they serve abroad. Big data analytics, machine learning and artificial intelligence (AI) are opening up new avenues for lenders to improve their risk management, as well as improve outcomes for customers across a range of business activities. The availability of unconventional data sources, such as customers' near real-time cash flows, transaction and payments data patterns, could potentially lead to better insights on customer preferences, behaviour and credit worthiness. Such insights could benefit customers themselves, by allowing banks to provide better tailored and useful services. For example, they could lead to more differentiated pricing benefiting customers with strong credit standing, or greater availability of credit to previously underserved segments of the market. But the core principles of credit risk management that underpin MAS' regulations remain relevant. Proper governance and oversight, robust risk models and methodologies, independent credit assessments and reviews are some of these fundamental supervisory requirements. However, new lending practices that rely heavily on unconventional data sources or AI do come with specific risks that banks have to address. The use of inaccurate or non-representative data could result in wrong lending decisions or pricing and unintentional biases. AI algorithms that determine lending decisions may also be harder to validate for accuracy relative to more established lending processes.”
“Till date, SGX's initiatives, such as the SGX Equities Fund Flow Tracker and MyGateway newsletter, have reached over 270,000 individual retail investors in Singapore and over 1,000 international institutional investors. Finally, MAS is also supporting capital raising on SGX through various grant initiatives. MAS launched the S$75 million Grant for Equity Market Singapore (GEMS) in February this year, where we co-fund the listing expenses of companies in high-growth and technology sectors. We will also provide grants to widen the research coverage of SGX-listed stocks, especially of small and mid-cap companies. Since the grant inception, MAS has approved seven listing grant applications. Research houses tapping on GEMS have committed to hiring close to 50 fresh graduates and experienced research analysts over the next three years. So, to repeat what I mentioned earlier, we are working on our shortfalls in the cash equity market while, at the same time, fortifying our existing strengths, such as in equity derivatives.”
“SGX, MAS and the industry have been working on several initiatives to enhance the attractiveness of Singapore as a listing and trading venue for equities. First, to grow a pipeline of Initial Public Offerings (IPOs), SGX has attracted market makers and liquidity providers to enhance market liquidity and admitted new Mainboard issue managers and Catalist sponsors2. These initiatives will take time to bear fruit. Second, to attract new overseas issuers and investors, SGX has been actively seeking cross-border partnerships and expanding its global footprint. SGX has partnered Tel Aviv Stock Exchange and NASDAQ to boost capital raising opportunities for technology companies. The partnerships have generated a healthy pipeline3 of companies looking to secondary list on SGX. Third, SGX has introduced the Dual Class Share (DCS) structure4. This enhances Singapore’s value proposition as a listing destination for new high-growth technology companies. With this additional listing structure, SGX is cultivating a budding pipeline of technology companies that have expressed keenness to tap on this structure for listing on SGX. Fourth, SGX has started working with private market platforms to build the IPO pipeline. Such platforms can provide growth companies access to a wide network of investors for financing needs just prior to IPO. An example is Capbridge, which has transacted $900 million of private placements and pre-IPO rounds in 2018 and currently has 45 deals in the pipeline. Fifth, SGX has stepped up its investor outreach efforts in recent years to generate investment ideas and interest.”
“My reply will focus on the first part of Mr Ong Teng Koon's question, on plans to reinvigorate the local equity and equity derivatives markets. I have addressed the second part of Mr Ong's question on helping Singaporeans stay relevant amidst technology advances earlier, in my response to Mr Cedric Foo's question. Let me first summarise where Singapore stands in the competition. We have a leading position as an Asian equity derivatives trading centre, just as we currently do for fixed income and foreign exchange trading. However, Singapore's cash equity market has some structural shortfalls. Singapore Exchange (SGX), the Monetary Authority of Singapore (MAS) and the industry are working to fortify our existing strengths as a financial hub and putting particular effort into plugging the shortfalls in cash equities. Let me start very briefly with the equity derivatives market. We are a leading derivatives trading centre in Asia. Singapore-based exchanges offer a wide array of Asian and global derivatives products, including equity, foreign exchange and commodities derivatives1, and with good liquidity in each segment. The compound annual growth rate of trading volumes over the last three years grew by more than 12%. We are working continuously to grow this derivatives ecosystem by broadening the suite of products, attracting more brokers, market makers and liquidity providers, and attracting investors to Singapore. However, Singapore's cash equity market does not enjoy the same regional leadership position. While SGX is well regarded as a listing destination for Real Estate Investment Trusts and the healthcare and consumer sectors, it has challenges in other segments.”
“As Singapore grows its role as an international financial centre, more regional and global leadership positions are opening up here. We want to help more Singaporeans equip themselves to compete for and take on these leadership roles. MAS has supported financial institutions efforts to groom younger Singaporean talents through structured management associate programmes, send promising Singaporeans for overseas postings, and deepen the finance leadership capabilities of senior Singaporean professionals. About 700 Singaporeans have been supported under these programmes from 2016 to 2018, and many have progressed to take on larger roles within their firms.”
“Second, building technology skills for the financial services sector. The Technology in Finance Immersion Programme (TFIP) was launched in April this year to train local professionals in specific technology areas, such as cloud computing, data analytics, full stack development and cybersecurity, through structured training and attachments with participating financial institutions. The inaugural phase for TFIP saw overwhelming demand for the more than 80 positions across banking, asset management and capital markets. We will expand the programme to include more employers and job openings. Third, growing our talent pool and deepening specialist skillsets. We are leveraging work-learn pathways, which integrate classroom learning with structured on-the-job training, to prepare tertiary students for financial services sector jobs. For example, the Applied Wealth Management track in the Nanyang Technological University's Bachelor of Business programme saw many of the inaugural batch of 33 students being offered jobs after they completed their first 10-week internship with the Development Bank of Singapore. We look forward to more such partnerships. MAS and IBF are also working with the industry to establish competency standards in key job families to guide the design of training programmes for our local workforce. We also subsidise the training programmes heavily to make them accessible to workers. Over the past three years, an average of 21,000 individuals have benefited each year from these training subsidies. In addition, we have awarded about 440 scholarships and awards over the past three years to support training in specialist skills. Fourth, developing the local leadership pipeline.”
“Building a strong pipeline of local talent is a key priority for the Monetary Authority of Singapore (MAS), and critical to our desire to develop a world-class workforce for the financial services sector. The financial services Industry Transformation Map (ITM) sets out our strategies in some detail to achieve this. MAS has been working closely with our tripartite partners, including financial institutions, the labour movement and Government agencies to implement these strategies. As a result of our efforts, from 2016 to 2018, the financial services and fintech sectors saw a net increase of about 4,900 jobs on average each year, which is, in fact, above the ITM target of 4,000 per annum. This year, despite the slowdown in the economy, hiring in the sector remains healthy. Let me outline MAS' key strategies to build a strong pipeline of local talent in financial services. First, reskilling and redeploying local professionals into functions where jobs are growing. MAS, the Institute of Banking and Finance (IBF), and the financial industry are working together to prepare our workforce with the skills for these jobs. Financial institutions have committed to reskill about 4,100 professionals under the Professional Conversion Programme in the next two years, and to redeploy them in new or enhanced jobs. The tripartite partners are also supporting Singaporeans with resources on training and career services to cater to their aspirations. For example, in the equities market, the National Trades Union Congress, the Employment and Employability Institute (e2i), MAS, IBF and the Society of Remisiers have organised workshops for remisiers on future skills, jobs in demand, and career profiling assessments. We have seen good turnouts and received positive feedback.”
“There is, hence, an effective regulatory and supervisory framework to supervise digital advisers, but MAS continues to review and improve the system.”
“Financial advisory services are regulated under the Financial Advisers Act (FAA). Under the Act, digital advisers conducting similar regulated activities as brick-and-mortar entities are subject to the same rules. In addition, the Monetary Authority of Singapore (MAS) has issued guidelines to clarify how relevant FAA regulations should be applied to digital advisers. For example, under the FAA, financial advisers must have a reasonable basis for product recommendations to customers. In the digital world where advice is generated by algorithms, digital advisers must put in place methodologies to test and monitor the performance of algorithms. Digital advisers must also be staffed by persons who have the competency and expertise to develop, review and test the methodology of the algorithms. Where appropriate, MAS will also require digital advisers to undergo a post-authorisation audit covering the governance and control of their algorithms. Another example is the guidelines on outsourcing. Digital advisers may outsource the development and maintenance of their algorithm-based tools or backend activities, but they remain responsible for the risks of these outsourced activities and have to observe MAS' guidelines on Outsourcing and Technology Risk Management (TRM). The TRM guidelines set out information technology risk management principles and best practices to strengthen their cyber resilience and guard against cyberattacks. MAS also supervises financial institutions, including digital advisers, by conducting offsite reviews and onsite inspections. We assess the robustness and effectiveness of systems to mitigate market conduct, technology and cybersecurity risks, and require financial institutions to rectify any weaknesses discovered.”
“It nevertheless requires conflicts of interest to be effectively addressed and is fully in line with international standards and appropriate to our context and needs. Singapore is in good standing with the EU. We have EC recognition on a broad range of other financial services, including for over-the-counter derivatives trading venues and central counterparties. In July 2019, we were one of the first two jurisdictions to obtain EC equivalence for financial benchmarks regulation. MAS will continue to closely engage our EU counterparts in reviewing our rules to ensure that financial institutions in Singapore continue to have access to the EU market in various financial services.”
“Some media reports might have given the impression that the European Commission (EC) is reducing its market access to financial institutions in Singapore. This is not true. There continues to be no impediment for financial services provided out of Singapore to customers in the European Union (EU). There has also been no impact on investors' confidence in Singapore. Let me explain. The EC's decision covers only Credit Rating Agencies (CRAs) and does not extend to any other financial services. Further, the EC recognises CRAs in a third country through two approaches. First, deeming the third country's CRA rules as equivalent to EC rules. This is called the equivalence decision. Second, an endorsement approach, where the CRAs in the third country rely on their related entities in the EU to endorse their ratings. CRAs in Singapore have been using the endorsement approach, and the EC has confirmed that it will continue to recognise Singapore-based CRAs using this approach. Having said that, equivalence is the highest form of market integration, which CRAs in Singapore, like those in several other jurisdictions, no longer enjoy. The reason has to do with the different approaches taken by major regulators internationally. On how the Monetary Authority of Singapore's (MAS') regulations on CRAs compare to those in the EU, MAS' CRA regulatory regime is based on, and consistent with, standards promulgated by the International Organisation of Securities Commissions (IOSCO), which is the global standard setting body. The EC has assessed MAS' CRA regulatory regime to be less prescriptive than EU rules in certain areas, such as in defining specific situations in which a conflict of interest for the CRA arises. MAS takes a more principles-based approach.”
“The International Monetary Fund (IMF), in its recent assessment of Singapore's financial system under its Financial Sector Assessment Programme, reaffirmed Singapore's financial sector oversight to be "among the best globally". Specifically, it concluded that the Monetary Authority of Singapore's (MAS') supervision of payment systems, namely, MAS Electronic Payment System (MEPS+), Fast And Secure Transfers (FAST), General Interbank Recurring Order (GIRO), Singapore Dollar Cheque Clearing, and the Network for Electronic Transfers (NETS) Electronic Funds Transfer at Point of Sale (EFTPOS), was in line with international standards and appropriate and effective. Notwithstanding, in anticipation of evolving systemic risks in the payments landscape, the IMF had recommended that MAS increase its resources for the supervision of payment systems. MAS' thinking is the same as the IMF's on this matter. MAS has, indeed, been allocating additional resources for supervision of payment activities and implementing enhancements to its supervisory programme. These include leveraging data analytics capabilities and applying appropriate standards to retail payment systems in line with their changing systemic importance. MAS will continue to watch developments in the payments landscape and ensure its capabilities and supervisory approaches are appropriate.”
“MAS takes a more principles-based approach. It nevertheless requires conflicts of interest to be effectively addressed and is fully in line with international standards and appropriate to our context and needs. Singapore is in good standing with the EU. We have EC recognition on a broad range of other financial services, including for over-the-counter derivatives trading venues and central counterparties. In July 2019, we were one of the first two jurisdictions to obtain EC equivalence for financial benchmarks regulation. MAS will continue to closely engage our EU counterparts in reviewing our rules to ensure that financial institutions in Singapore continue to have access to the EU market in various financial services.”