Singapore's central bank has proposed requiring that OTC derivatives be cleared centrally by the end of 2012, and has requested comments from market experts on this plan.

The Monetary Authority of Singapore released a consultation paper on February 13, which proposes expanding the authority of the Securities and Futures Act so all OTC derivatives that are traded or booked in Singapore will be required to be centrally cleared and reported, according to Channel NewsAsia.

The proposed regulations are designed to lower systemic risk. Chia Woon Khien, head of local markets strategy and emerging Asia at the Royal Bank of Scotland, stated "this came about (during) the G20 summit in September 2009 after the Lehman crisis, where the finance ministers from the G20 group came together and proposed a central clearing system to minimize this counterparty risk when…one major party – like Lehman – collapsed and it caused a domino effect, caused a near collapse of the entire system," according to the media outlet.

The new laws for the financial instruments are also meant to provide regulators with more information on trading activity. Singapore's OTC derivatives market currently has a notional value of $9.8 trillion, Reuters reports.