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Investment Banking × Risk — Singapore · published 2026-05-28 · methodology v2.1

Scope and exclusions of Annex 4D in MAS Notice 637

What the RLB Specialist Panel found

1. Scope and exclusions of Annex 4D in MAS Notice 637

  • Question (paraphrased to protect IP): What does Annex 4D of the consolidated MAS Notice 637 cover, and what category of items does it explicitly exclude from its scope?
  • Source regulation: MAS Notice 637 — Capital Adequacy Requirements for Banks (Consolidated) (Regulator portal: https://www.mas.gov.sg)
  • What AI assistants typically say: The AI described Annex 4D as setting out credit conversion factors for off-balance sheet items within the leverage ratio framework, then included a self-qualifying caveat acknowledging that search results suggested the annex may instead belong to the standardised approach credit risk framework — without resolving the contradiction or correcting the primary answer.
  • What the regulator actually says: No regulator excerpt was available for binding at the time of testing; the correct scope of Annex 4D should be verified directly against the current consolidated MAS Notice 637 text on the MAS portal.
  • Why the AI went wrong: The AI appears to have inferred the annex's placement from general knowledge of leverage ratio frameworks rather than retrieving the actual regulatory text, then surfaced its own uncertainty as an afterthought rather than a correction — producing a response that was both likely incorrect and internally contradictory.
  • Cited source(s):
Impact for this audience

If a Risk team member asks an AI tool about Annex 4D and receives the leveraged-ratio framing without noticing the buried caveat, that characterisation could enter an internal policy or training material governing how off-balance sheet items are treated for capital purposes. A misclassification of the governing framework — credit risk standardised approach versus leverage ratio — would affect RWA calculations, capital ratio outputs, and the regulatory reporting derived from them. MAS has supervisory authority over capital adequacy standards and the power to require remediation of deficient internal frameworks; a firm whose capital policies rest on a misidentified annex faces both remediation cost and the risk of additional supervisory scrutiny during the next review cycle.

References — raw findings (per AI model)
This finding also affects
Next finding → Finding 2. Content of Annex 6C in MAS Notice 637
Cite this finding

Each finding has a stable Citation ID (RLB-F-… for aggregated case-study findings, RLB-H-… for raw per-model hallucinations) — like a DOI, the ID always resolves to the canonical finding even if URLs change.

Plain text 
RegLeg Specialist Panel (2026). "Scope and exclusions of Annex 4D in MAS Notice 637 — Investment Banking × Risk — Singapore." Citation ID: . RegLegBrief AI Hallucination Research, published 2026-05-28. https://reglegbrief.com/audiences/sectors/sg/investment_banking/risk/finding/q-NOTICE-637-CAPITAL-ADEQUACY-BANKS-2025-v1-017/
APA 7th edition 
RegLeg Specialist Panel. (2026). Scope and exclusions of Annex 4D in MAS Notice 637 [Hallucination finding ]. RegLegBrief AI Hallucination Research. https://reglegbrief.com/audiences/sectors/sg/investment_banking/risk/finding/q-NOTICE-637-CAPITAL-ADEQUACY-BANKS-2025-v1-017/
Bluebook / OSCOLA (US + UK legal) 
RegLeg Specialist Panel, Scope and exclusions of Annex 4D in MAS Notice 637 [], RegLegBrief AI Hallucination Research (May 28, 2026), https://reglegbrief.com/audiences/sectors/sg/investment_banking/risk/finding/q-NOTICE-637-CAPITAL-ADEQUACY-BANKS-2025-v1-017/.
BibTeX 
@misc{reglegbrief_,
  author    = {RegLeg Specialist Panel},
  title     = {Scope and exclusions of Annex 4D in MAS Notice 637},
  year      = {2026},
  publisher = {RegLegBrief AI Hallucination Research},
  note      = {Hallucination finding Citation ID: },
  url       = {https://reglegbrief.com/audiences/sectors/sg/investment_banking/risk/finding/q-NOTICE-637-CAPITAL-ADEQUACY-BANKS-2025-v1-017/}
}
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