The International Swaps and Derivatives Association (ISDA) and Futures Industry Association (FIA) jointly responded to a consultation from the Monetary Authority of Singapore (MAS) on proposed amendments to the capital framework for approved exchanges and approved clearing houses. The scope of the response is limited to the capital framework for approved clearing houses.
The associations welcome the introduction of a separate liquidity requirement and propose that MAS consider a more conservative minimum threshold of at least 12 months of operating expenses. The associations also agree with the proposed amendments to eligible capital components, which should only include equity instruments and exclude an approved clearing house’s skin in the game.
For the total risk requirement, the response suggests the alignment of the operational risk component with the liquidity risk requirement and the inclusion of some clarifications on the investment risk and general counterparty risk components.