Singapore - New MAS initiatives to develop Singapore's capital market

The Monetary Authority of Singapore (MAS) today announced three initiatives that are aimed at further improving efficiency and liquidity in the Singapore dollar corporate debt market.

MAS Managing Director Mr Ravi Menon announced the initiatives at the Investment Management Association of Singapore's (IMAS) 13th annual conference held at the Raffles City Convention Centre.

Citing Singapore's capital market as a 'key component of the broader ecosystem that supports the asset management industry in Singapore', Mr Menon said that MAS has been making concerted efforts to 'broaden and deepen Singapore's debt capital market'.

First, MAS will provide swap liquidity to primary dealer banks handling Singapore dollar debt issuance for foreign corporates. Swap transactions will be supported at market-determined prices, which will ultimately enable swap market liquidity to build in the longer tenors.

This move is aimed at offshore entities that usually have no need for the Singapore dollar funds raised and mostly swap them into a foreign currency, usually US dollars.

Second, MAS will partner the industry to create a Singapore dollar corporate debt securities lending platform.

Key players will be able to borrow securities for market making from this platform, which will reduce the risk of market makers being squeezed in the event they are unable to short-cover the bonds they have sold. This platform gives greater assurance that banks will be able to deliver any given security.

"Improved market liquidity will mean that asset managers can be more certain of their ability to enter and exit their positions with minimal price slippage," said Mr Menon.

Lastly, MAS has initiated a price discovery platform. This allows market participants to contribute end-of-day prices for a universe of Singapore dollar corporate bonds.

This is targeted for completion by the second half of this year, and will significantly improve transparency in the corporate bond market and provide reliable mark-to-market prices for the industry and asset managers alike.

AsiaOne

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