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MARKET STRUCTURE |
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LIQUIDITY |
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FUNDING |
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HEDGING |
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LEGISLATION |
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TAXATION |
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MARKET STRUCTURE |
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GENERAL INFORMATION |
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1. |
Why Does The Singapore Government Issue Singapore Government Securities (SGS)? |
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The Singapore Government operates on a balanced budget and does not need to borrow funds through the issuance of government bonds to finance its expenditure. Therefore, the main objectives of issuing SGS are to: |
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Provide a liquid investment alternative with little or no risk of default for individual and |
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institutional investors; |
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Establish a liquid government bond market, which serves as a benchmark for the |
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corporate debt securities market; and |
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Encourage the development of skills relating to fixed income financial services |
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available in Singapore. |
| (More information on SGS Issuance) |
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2. |
What Is The Credit Rating Of The Singapore Government? |
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The long-term local and foreign currency debt ratings of the Singapore Government accorded by the various international credit rating agencies are listed below: |
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Moody's |
S&P |
FITCH |
R&I |
| Local Currency |
Aaa |
AAA |
AAA |
AAA |
| Foreign Currency |
Aaa |
AAA |
AAA |
AAA |
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3. |
What Are The Benchmark Securities? How Often Are They Issued? |
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Benchmark SGS are 3-month and 1-year Treasury bills, and 2-, 5-, 7- 10- and 15-year bonds. The 3-month Treasury bills are issued weekly whilst the 1-year Treasury bill, 2-, 5-, 7-, 10-, and 15-year bonds are issued according to a pre-announced issuance calendar published at the beginning of the calendar year.
(More information on SGS in Brief) |
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4. |
Are SGS Strippable? |
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Separate trading of principal and interests of SGS is currently not available. However, MAS has begun to align the coupon payment dates of all new SGS bond issues to facilitate the stripping of SGS in future. |
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5. |
Who Are The Primary Dealers (PDs) Of The SGS Market? |
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The SGS Primary Dealers are appointed to play a role as specialist intermediaries in the SGS and S$ money markets. Primary Dealers are obliged to provide liquidity in the SGS market by quoting prices on all SGS issues under all market conditions. Click here for a list of the Primary Dealers and their contact information.
(More information on Key Participants)
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AUCTIONS |
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6. |
How Are SGS Issued? |
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The MAS issues SGS on behalf of the Singapore Government. SGS are sold at auctions, using a multiple-price format1 for T-bill auctions and a uniform-price format2 for bond auctions. For both types of auctions, investors may submit either a competitive bid or a non-competitive bid. Applications should be made through the PDs. Bids are made in terms of percentage yield. Non-competitive bids of up to S$1,000,000 per applicant for T-bills and S$2,000,000 per applicant for bonds are allowed and all non-competitive bids will be satisfied first. The balance of the amount to be issued is then awarded to those who have submitted competitive bids. |
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In a multiple-price SGS auction, successful competitive bids are allotted at the yield indicated in the applications. Non-competitive bids are allotted at the average yield of the successful competitive tenders. |
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In a uniform-price SGS auction, successful competitive bidders and all non-competitive bidders are allotted the securities at a uniform yield, which is the highest accepted yield (also referred to as cut-off yield) of successful competitive bids submitted at the auction. |
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7. |
Who Can Submit Bids At Auctions? |
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Only PDs are allowed to submit bids at SGS auctions. However, investors can also participate in SGS auctions by submitting their bids through any one of the PDs by filling in application forms that are available from them.
(More information on Auctions) |
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8. |
Are New SGS Issues Announced In Advance? |
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At the beginning of the year, MAS will publish on its website an auction calendar specifying the dates on which SGS auctions will be held. Generally, MAS issues T-bills and bonds on a regular basis. The 3-month T-bills are issued weekly whilst the 1-year T-bills, 2-, 5-, 7-, 10- and 15-year bonds are issued according to the pre-announced issuance calendar. |
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9. |
How Are Auction Results Made Available To The Public? |
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Notices and results of bond auction are published both on the SGS website and in the major newspapers. Results of past auctions can also be found in the Data section. |
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10. |
How Can Investors Purchase SGS At Auctions And In The Secondary Market? |
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To participate in the SGS market, an investor will first have to open a SGS trading account with any of the participating banks (Primary or Secondary Dealers) in the SGS market. As SGS are scripless, purchases and sales of SGS are reflected as book entries in the investor's SGS account with the bank. To participate at primary auctions, an investor will need to submit bids through the PDs (or via Secondary Dealers who will then submit bids to the PDs), as only PDs are allowed to bid at SGS auctions.
(More information on Market Characteristics) |
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TRADING |
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11. |
How Are SGS Traded In The Secondary Market? |
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SGS are traded over-the-counter between 9:15 to 16:30, with a break from 11:30 to 14:00. |
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12. |
Are There Any Electronic Bond Trading Platforms Trading SGS In Singapore? |
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Electronic bond trading platforms are still in the developmental stage. |
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SETTLEMENT |
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13. |
How Are SGS Transactions Settled? |
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SGS transactions are settled T+1 on a delivery-versus-payment (DVP) basis.
(More information on SGS in Brief) |
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14. |
Are there any provisions for fails? |
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Yes, there are provisions for failed trades. These provisions can be found under Rules and Market Practices of the Singapore Government Securities Market. |
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15. |
Where Are The SGS Kept? |
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As SGS are scripless, ownership of SGS is reflected as a book entry in the investor's account with the bank. Therefore, investors must open SGS accounts with any participating bank, either a Primary or Secondary Dealer, of the SGS market to facilitate the safekeeping and debiting/crediting of SGS. The banks maintain SGS book-entry accounts with MAS where their SGS holdings are custodised. |
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LIQUIDITY |
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16. |
How Active Is Trading In The SGS Market? |
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Trading volume in the SGS market has grown significantly over the years. From about S$390 million in 1997, the average daily trading volume had increased five-folds to S$2.62 billion in 2003.
(More information on Data and SGS Market in Review) |
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17. |
Are SGS Prices And Trading Volumes Available Daily? |
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Daily closing prices and monthly trading volumes are published in the Data section. |
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FUNDING |
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18. |
Can Investors Obtain S$ Fund To Finance Their SGS Investments? |
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Financial institutions in Singapore are free to extend S$ loans to residents and non-residents for use in Singapore and investment in S$ financial markets. There are also no restrictions for both foreign and local investors to transact asset swaps. |
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HEDGING |
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19. |
What Are The Available Avenues For Hedging Interest Rate Risks? |
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The Singapore interest rate swap, interest rate futures and bond futures markets provide avenues for investors to hedge their interest rate exposures.
(More information on Funding and Hedging) |
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20. |
Is An Established SGS Repo Market Available For Investors To Cover Their Short Positions? |
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The SGS repo market is fairly active, with trading volume having risen nine-fold between 1997 and 2003. The daily average trading volume in 2003 was S$2.5 billion. Primary Dealers are committed to quote continuous 2-way prices for repos under all conditions. |
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21. |
How Can Foreign Investors Hedge Their Exchange Rate Risk Arising From Their SGS Investments? |
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S$ is a freely traded currency. Singapore has a developed foreign exchange market, which enables investors to hedge currency risks through S$ currency options, forwards, and other instruments. |
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LEGISLATION |
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22. |
Who Oversees The Development Of And Ensures Order In The SGS Market? |
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The Monetary Authority of Singapore (MAS) issues SGS on behalf of the Singapore Government, and is responsible for the development of the SGS market. In addition, market players are expected to follow a certain set of rules and practices when trading in the SGS market. These guidelines can be found under Rules and Market Practices of the Singapore Government Securities Market. |
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23. |
Is The PSA/ISMA Global Master Repurchase Agreement Adopted In Singapore? |
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The key SGS market players have adopted this agreement as the standard legal documentation for the SGS repo market. All PDs have also executed the agreement with MAS. Other market players are highly encouraged to adopt the agreement in dealing with each other in SGS repo transactions. |
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TAXATION |
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24. |
How Are Gains And Interest Income From SGS Taxed? |
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There is no capital gains tax in Singapore. Interest income earned on qualifying debt securities, i.e. SGS issued between 27 Feb 99 and 27 Feb 08, by financial institutions and corporations are taxed at a concessionary rate of 10%. Interest income earned on other debt securities by financial institutions and corporations are withheld and taxed at the corporate tax rate of 22%. Non-residents, who do not have permanent establishments in Singapore, are automatically exempted from paying taxes on their interest income. Income earned by financial institutions in Singapore from trading SGS is taxed at a concessionary rate of 10%. |
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OTHERS |
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25. |
Can Non-Residents Buy SGS? |
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There are no restrictions on non-residents purchasing SGS. |
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