SINGAPORE Law and Practice Contributed by: Kenneth Pereire and Lin YingXin, KGP Legal LLC
Firms that operate as dealers function as market makers, providing bid and ask quote on securities, and profit from their spread. Dealers participating in high-frequency trading and algorithmic trading are also regulated under the SFA and may require a CMS licence, emphasising market integrity and fair-trading practices. Both entities must adhere to MAS regulations, ensur - ing compliance with risk management, reporting and supervisory requirements. While there are regulatory similarities, funds and dealers have distinct roles and objectives within Singapore’s financial framework. 7.4 Regulation of Programmers and Programming Programmers and software developers of trading algorithms are highly recommended to apply the MAS Technology Risk Management Guidelines’ secure coding and application security standards during the development and creation of trading algorithms and other electronic trading tools. These standards emphasise practices such as: • secure programming; While these guidelines are primarily applicable to financial institutions regulated by MAS, and not directly to the programmers and developers, they are essential in ensuring that the technology used by financial institutions complies with regulatory expec - tations. The guidelines help mitigate the risks of secu - rity breaches, which could affect market integrity, cus - tomer data protection and overall financial stability. Additionally, the development and deployment of trading algorithms are indirectly regulated under the broader legal framework governing financial activities in Singapore. The SFA, along with MAS regulations on high-frequency and algorithmic trading, require that firms using these algorithms implement robust risk controls and monitoring systems. As a result, while • cryptography; • authentication; • input validation; • output encoding; and • access controls.
programmers themselves are not directly regulated, the algorithms and tools they create must meet strict operational, legal and security standards, which are enforced by MAS on the firms deploying these tech - nologies. Therefore, programmers play a crucial role in ensur - ing that their algorithms adhere to these risk man - agement, compliance and security standards to help financial institutions meet regulatory requirements and maintain market integrity. Singapore’s prominence in the insurtech domain stems from dynamic start-ups and services culti - vated within regulatory sandboxes. In underwriting, firms harness cutting-edge technologies such as big data, machine learning, AI and IoT to revolutionise decision-making processes. This tech-centric para - digm optimises risk assessment and enhances pric - ing precision, ultimately streamlining efficiency. This transformation facilitates a specialised underwriting pipeline, introducing tailored offerings and enabling dynamic premium adjustments. The emergence of usage-based insurance models further directs atten - tion to individual lifestyles and risk factors, departing from traditional metrics like age and location. Despite the absence of specific insurtech legislation, life insurance entities operate under the IA. Broader regulatory obligations extend to data privacy, big data usage and AI ethics. Compliance with the PDPA is imperative, mandating participant consent, purpose- specific data usage, and timely deletion when reten - tion serves no functional purpose. 8. Insurtech 8.1 Underwriting Processes 8.2 Treatment of Different Types of Insurance In Singapore, the regulatory treatment of different types of insurance is overseen by the MAS. MAS applies specific regulations and guidelines tailored to each category of insurer to ensure compliance with industry standards and the overall stability of the insurance market.
740 CHAMBERS.COM
Powered by FlippingBook