REPUBLIC OF SINGAPORE
GOVERNMENT GAZETTE
ACTS SUPPLEMENT
Published by Authority

NO. 34]Friday, December 13 [2002

The following Act was passed by Parliament on 25th November 2002 and assented to by the President on 3rd December 2002:—
Payment and Settlement Systems (Finality and Netting) Act 2002

(No. 39 of 2002)


I assent.

S R NATHAN,
President.
3rd December 2002.
Date of Commencement: 9th December 2002
An Act to make provision for the protection of payment and settlement systems from disruptions that may lead to risks to the financial system and for purposes connected therewith, and to make related amendments to the Banking Act (Chapter 19 of the 1999 Revised Edition), the Monetary Authority of Singapore Act (Chapter 186 of the 1999 Revised Edition) and the Securities and Futures Act 2001 (Act 42 of 2001).
Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows:
PART I
PRELIMINARY
Short title and commencement
1.  This Act may be cited as the Payment and Settlement Systems (Finality and Netting) Act 2002 and shall come into operation on such date as the Minister may, by notification in the Gazette, appoint.
Interpretation
2.—(1)  In this Act, unless the context otherwise requires —

“Authority” means the Monetary Authority of Singapore established under the Monetary Authority of Singapore Act (Cap.186);

“book-entry Government securities” means any securities issued by the Government under any written law transferable by a book-entry on a register or otherwise;

“default arrangements” means the arrangements put in place by a designated system to limit systemic and other types of risk which arise in the event of a participant appearing to be unable, or likely to become unable, to meet its obligations in respect of a transfer order, including any arrangements for —
(a)netting; or
(b)the closing out of open positions;

“defaulter” means a person in respect of whom action has been taken by a designated system under its default arrangements;

“designated system” means a system that is designated by the Authority under section 3 to be a designated system for the purposes of this Act;

“disposition of property” includes a payment made into or out of an account of a participant;

“netting” means the conversion into one net claim or one net obligation of claims and obligations resulting from transfer orders which a participant either issues to, or receives from, one or more other participants with the result that only a net claim can be demanded or a net obligation be owed;

“operator”, in relation to a designated system, means the person specified in the order referred to in section 3(1) as the operator of the designated system;

“participant” means a party to an arrangement that establishes a system;

“relevant office holder” means —
(a)the Official Assignee exercising his powers under the Bankruptcy Act (Cap. 20);
(b)a person acting in relation to a company as its liquidator, receiver, receiver and manager, judicial manager or an equivalent officer; or
(c)a person acting in relation to an individual as his trustee in bankruptcy or interim receiver of his property or an equivalent officer;

“settlement institution”, in relation to a designated system, means a body corporate providing accounts for the participants of the designated system to hold funds and to settle transactions between participants in the designated system;

“system” means a system established for —
(a)the clearing or settlement of payment obligations; or
(b)the clearing, settlement or transfer of book-entry Government securities;
“transfer order” means —
(a)an instruction by a participant to place at the disposal of a recipient an amount of money by means of a book-entry on the accounts of a settlement institution for a designated system, or an instruction which, when settled, results in the assumption or discharge of a payment obligation as defined by the rules of a designated system; or
(b)an instruction by a participant to transfer book-entry Government securities.
(2)  A reference in this Act to the law of insolvency shall be construed as a reference to —
(a)the Bankruptcy Act (Cap.20);
(b)Parts VIIIA, IX and X of the Companies Act (Cap.50); and
(c)any other written law or rule of law whether of Singapore or a place outside Singapore which is concerned with or in any way related to the bankruptcy, winding up or insolvency of a person.
Designation of system
3.—(1)  The Authority may, by order published in the Gazette, designate a system to be a designated system for the purposes of this Act, subject to such terms and conditions as may be prescribed in the order.
(2)  Any order made under subsection (1) shall specify the operator of the designated system.
Revocation of designation
4.—(1)  The Authority may, by order published in the Gazette, revoke the designation of a designated system if —
(a)the Authority is satisfied that —
(i)the designated system has ceased to operate as a system;
(ii)the operator of the designated system has knowingly furnished information or documents to the Authority in connection with the designation of the system which is or are false or misleading in any material particular;
(iii)the operator or settlement institution of the designated system is in the course of being wound up or otherwise dissolved, whether in Singapore or elsewhere;
(iv)the operator or settlement institution of the designated system has entered into a compromise or scheme of arrangement with its creditors, whether in Singapore or elsewhere;
(v)a receiver, receiver and manager, judicial manager or an equivalent officer has been appointed, whether in Singapore or elsewhere, in relation to or in respect of any property of the operator or settlement institution of the designated system; or
(vi)any of the terms and conditions referred to in section 3(1) has been contravened; or
(b)the Authority considers that it is in the public interest to revoke the designation.
(2)  Subject to subsection (3), the Authority shall not revoke a designation without giving the operator of the designated system an opportunity to be heard.
(3)  The Authority may revoke a designation on any of the grounds described in subsection (1) (a) (iii), (iv) or (v) without giving the operator of the designated system an opportunity to be heard.
(4)  A revocation of a designation shall not operate so as to avoid or affect any transaction cleared or settled in the designated system prior to the revocation or preclude the application, in accordance with section 5, of this Act to any such transaction.
Application of this Act
5.  This Act shall apply to such transactions or class of transactions cleared or settled in a designated system, subject to such restrictions, as the Authority may by order published in the Gazette prescribe.