In a consultation paper published on Tuesday, the MAS said there were ‘legal uncertainties’ about developing a cross-border framework, particularly when it comes to passing legislation to ensure resolution measures are effective.
However, it said it was aware of ongoing work by the Financial Stability Board (FSB) – an international financial monitoring body serving the G20 jurisdictions – which intends to finalise further guidance on key elements of the framework by the end of the year.
The MAS said it would use the results of FSB’s work to refine its own approach.
“Given the cross-border nature of the financial institutions operating in Singapore, MAS agrees that our resolution framework should enable a cooperative solution to be reached with foreign resolution authorities,” said Singapore’s financial regulator.
Protecting financial stability
The main objective of the framework is to protect the financial stability of both the home and host jurisdictions in which the financial institution is based.
The MAS said “transparent and expedited” cooperation between authorities would also help facilitate an “orderly resolution” to any problems facing cross-border institutions.
Where there has been a lack of effective international cooperation and information sharing, the regime would allow authorities to take “discretionary national action if necessary to achieve domestic stability”.
This could include giving local authorities the power to transfer a business or shares of a financial institution, or to restructure or require issuance of shares.
However, the MAS emphasised that it would not support any foreign resolution action if the action had a widespread adverse effect on Singapore’s financial system, discriminated against creditors resident in Singapore, or was not in the public interest.
The consultation paper follows an announcement from the MAS earlier this month which said foreign regulators now have the ability to investigate the Singapore-based subsidiaries of multi-national advisory firms.
