The MAS will be empowered to prescribe non-conventional investment products, such as gold buy-back arrangements, as "debentures" to ensure that such products are accorded the same regulatory safeguards as investors in capital markets products.
Further, financial institutions should note that the Bill refines the definitions of accredited investors (AIs) and institutional investors (IIs):
3. Credibility and transparency of capital markets
To enhance the efficacy of the price discovery process, the MAS has announced that they will be implementing new requirements for market participants to disclose short-sell orders to the relevant exchange and report short positions above specified thresholds to the MAS. Aggregated short-sell orders and short positions will be published.
The MAS will also be introducing a new framework for financial benchmarks. MAS will have the power to designate key financial benchmarks and to regulate administrators of, and submitters who contribute information required to compute, such designated benchmarks.
Banks should note that they may now be directed by MAS to submit information required to compute the designated benchmarks to the benchmark administrators.
Criminal sanctions and civil penalties will also be introduced to deter manipulation of financial benchmarks.
4. Stronger enforcement regime against market misconduct
The Bill will clarify that the SFA prohibits disclosures where a material aspect of the statement is false or misleading and is likely to have an effect on the market price of the securities, securities-based derivatives contract or CIS unit, regardless of the significance of the price effect.
The Bill will introduce a statutory definition of "persons who commonly invest" to better reflect market participants who are accustomed to or likely to invest in securities. This will allow the courts to consider different classes of such persons when using the term as a reference point in assessing whether particular information is generally available and whether it is likely to have a material price impact by influencing the behavior of common investors.
The Bill standardises the maximum penalty that can be awarded in all civil penalty cases to the greater of (i) S$2 million, or (ii) 3 times the amount of benefits gained or losses avoided. This ensures that the civil penalty quantum that can be awarded is commensurate with the gravity of the misconduct, and is not unduly limited by the value of the benefit gained or loss avoided by the offender.
The MAS’ civil penalty claims will now have priority over private unsecured claims that accrue subsequent to the contravention of the SFA, in alignment with the priority that is accorded to government claims under section 10(1) of the Government Proceedings Act. This will strengthen the MAS’ ability to resist attempts to divert funds frozen by the MAS for satisfaction of civil penalties imposed under the SFA towards satisfaction of the contravening person’s private debts.
The amendments introduced by the Bill are aimed at ensuring that Singapore's capital market regulatory framework keeps pace with market developments and international standards. The MAS will likely issue further updates to clarify the various specific areas of reform.