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CCCS Clears Singapore Clearing House Association’s Bye-Laws Governing Use Of FAST –

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On 8 December 2022, the Competition and Consumer Commission of
Singapore (“CCCS“) issued a decision
pursuant to an application by the Singapore Clearing House
Association (“SCHA“), holding that a
proposed Rule 27.23 of SCHA’s Bye-Laws and its accompanying
guidelines (collectively, the “Proposed
“) concerning the admission and use of Fast and
Secure Transactions (“FAST”) by nonfinancial institutions
will not infringe section 34 of Singapore’s Competition Act
2004 (“Competition Act”). In particular, CCCS examined
the scope of exclusion under Paragraph 7 of the Third Schedule of
the Competition Act (“Paragraph 7
“) and concluded that the Proposed Rule
falls within the scope of Paragraph 7 Exclusion and therefore, will
not infringe section 34 of the Competition Act.

This decision provides guidance on CCCS’ approach to the
Paragraph 7 Exclusion. We briefly discuss this decision and its
significance in this Update.

Key Facts of the Application

SCHA is in charge of establishing, managing and administering
clearing services and facilities for cheques and debit and credit
items of its members, as well as electronic funds transfer by its
members. It also develops the bye-laws, regulations and conditions
in connection with these services and facilities. SCHA established
the Singapore Automated Clearing House
(“ACH“) which administers FAST, an
electronic funds transfer system that facilitates the almost
instantaneous transfer of Singapore Dollar funds between
participating banks in Singapore.

The Proposed Rule governs the admission and use of FAST by
non-financial institutions (“NFIs“) by
restricting FAST Users from allowing their e-wallet users to cash
out funds in their e-wallets through FAST, when the funds are
sourced from unsecured credit card facilities issued in Singapore
(“Restricted Funds“).

The subject of the Application was whether the Proposed Rule
will infringe section 34 of the Competition Act. Section 34
prohibits decisions by associations of undertakings which have as
their object or effect the restriction of competition within
Singapore (“Section 34 Prohibition“).
However, there are exclusions to the Section 34 Prohibition, which
are set out under the Third Schedule of the Competition Act.

The Section 34 Prohibition is subject to exclusions set out
under the Third Schedule of the Competition Act. The Paragraph 7
Exclusion provides that the section 34 prohibition does not apply
to any agreement or conduct that relates to:

  1. the clearing and exchanging of articles undertaken by ACH
    established under the Banking (Clearing House) Regulations; or

  2. to any activity of SCHA in relation to its activities regarding
    ACH (“Paragraph 7(b)“).

In the Application, SCHA submitted that the Paragraph 7
Exclusion did not apply to the Proposed Rule as the policy intent
of the exclusion was to cover the clearing and exchanging of
articles undertaking by ACH, and not NFI’s use of FAST. The
CCCS disagreed, and applied a purposive interpretation of the
Paragraph 7 Exclusion to conclude that the phrase
“[SCHA’s] activities regarding ACH” under Paragraph
7(b) is broad enough to include the Proposed Rule because
parliament’s intention was for the exclusion to broadly cover
SCHA activities regarding ACH including access to systems operated
by FAST, use of the systems, and any associated conditions, fees,
responsibilities or liabilities. As such, the Section 34
Prohibition does not apply to the Proposed Rule, and SCHA can
therefore implement the Proposed Rule without risk of

Our Comments

This is the first time that CCCS has considered the application
of the Paragraph 7 Exclusion, and it is noteworthy that a broad
reading of the exemption has been adopted that covers any activity
of SCHA in relation to its activities regarding ACH. While the
decision clearly explains that it applies to rules governing access
and use of FAST, it is noteworthy that ACH also operates the
Singapore Dollar Cheque Clearing System, the United States Dollar
Cheque Clearing System and the Interbank GIRO System. To the extent
that SCHA has responsibility for making bye-laws, regulations and
conditions in connection with these other services and facilities,
the Paragraph 7 Exclusion could potentially also extend to such

Separately, this case is a reminder that exemptions to the
Section 34 Prohibition exist and can be helpful to rely on
especially when businesses in the same industry intend to cooperate
on certain ventures or set certain industry standards. Apart from
the Paragraph 7 Exclusion that applies to clearing houses, other
exclusions exist e.g. if the undertaking is entrusted with the
operation of services of general economic interest, if the
agreement is made in order to comply with a legal requirement, if
it falls within certain specified activities such as the supply of
bus or rail services.

In the event of uncertainty as to whether the exemption applies,
businesses can always apply to CCCS for a guidance or decision for
greater clarity. Notification of an agreement provides immunity
from financial penalties from date of the notification to a date as
may be specified by CCCS following its determination of the

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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