MAS consults on proposed changes to share financing requirements

13 February 2026

On 6 February 2026, the Monetary Authority of Singapore (“MAS”) published a consultation paper seeking comments on its proposal to increase the financing threshold for the subscription or purchase of shares for initial public offerings (“IPOs”), employee share option schemes, and rights issues from 80% to 90% of the subscription price or purchase price.

This proposal aims to support investor participation and market vibrancy while maintaining appropriate safeguards against excessive speculation, and aligns with existing risk management practices and requirements in other jurisdictions.

Background

Share financing refers to the provision of a credit facility, advance, or loan to a customer to facilitate the subscription for or purchase of shares (i) pursuant to an IPO; (ii) in exercise of an option under an employee share option scheme; or (iii) pursuant to a rights issue, where the financing is provided before the allotment of those shares to the customer. Share financing may be provided by banks, merchant banks, finance companies, insurers, and holders of capital markets services licences (“CMSL holders”) (collectively, financial institutions (“FIs”)).

Share financing is currently exempt from MAS’ unsecured credit rules, given that such financing remains unsecured only for the brief period between subscription and allotment of shares. However, as an overextension of such financing schemes can facilitate excessive speculation, this exemption is subject to safeguards. At present, share financing facilities for IPOs, employee share option schemes, and rights issues are subject to a requirement that the aggregate amount of loans granted to and obtained by the customer (including all discounts, rebates, and other benefits) for the subscription or purchase of those shares does not exceed 80% of the subscription price or purchase price of those shares.

CMSL holders providing such share financing are also subject to the same requirements.

These requirements are currently set out in regulation 24B(2)(a) of the Securities and Futures (Financial and Margin Requirements for Holders of Capital Markets Services Licences) Regulations, regulations 5(6)(b), 6(9)(h)(i), and 6(10)(a) of the Banking (Credit Card and Charge Card) Regulations 2013, and paragraph 7(1)(h)(i) of MAS Notices 635, 1109, 827, and 118.

Beyond ensuring compliance with the share financing requirement, all FIs are expected to establish, formalise, and implement robust credit risk management policies and processes when extending credit to customers. MAS expects FIs to institute appropriate pre-trade credit risk controls, including assessing customers’ creditworthiness in a holistic and prudent manner and setting appropriate limits based on their individual creditworthiness. FIs are also expected to consider their available financial resources in setting their risk policies and limits.

Proposed change to share financing requirement

MAS has conducted a review of the share financing requirements to assess their continued appropriateness in today’s market environment. Following this review, MAS proposes to increase the financing threshold from 80% to 90% of the subscription price or purchase price of shares for IPOs, employee share option schemes, and rights issues. Under the revised requirement, the aggregate amount of loans granted to and obtained by the customer (including all discounts, rebates, and other benefits) for the subscription or purchase of those shares shall not exceed 90% of the subscription price or purchase price of those shares.

Reference materials

The consultation paper is available on the MAS website www.mas.gov.sg.