According to a consultation paper published on Tuesday, MAS states that the current single-tier “recognized market operators” (RMO) regulatory framework is not able to meet demand for new business models based on such emerging technologies. To address the issue, the authority proposes to introduce a three-tier structure in an attempt to ease market access for small-scale exchange platforms.
“MAS has observed the emergence of new business models in trading platforms, including trading facilities that make use of blockchain technology, or platforms that allow peer-to-peer trading without the involvement of intermediaries,” the MAS writes in the paper, adding:
“As the current RMO regime has been in place since 2002, it is timely to review to the regulatory framework for market operators to ensure that it continues to meet the demands of the changing landscape.”
In particular, tier 3 of the proposed framework applies to market operators that are significantly smaller than established exchanges and is intended allow them to implement blockchain and P2P technology and roll out services in a supervised environment.
“This new tier is designed to facilitate new entrants that develop solutions for wholesale market participants, or market operators that have reached the end of their sandbox tenure and are commercially viable, but whose businesses are not able to meet the requirements of the existing RMO regime,” MAS explained.
Currently, the authority supervises the exchange market under two categories: approved exchanges (AE) and the recognized market operators (RMOs). The former applies to “systemically-important” platforms that are available to retail investors such as Singapore’s stock exchange.
The RMO framework, on the other hand, allows regulation of other exchanges such as those for commodities and derivatives trading, which would fall under the new proposal’s tier 2, if the proposal is enacted.
Interested parties such as financial institutions now have until June 22 to provide MAS with feedback on the proposal.