The Monetary Authority of Singapore is reviewing the regulatory regime for financial intermediaries conducting fund management activities and the exemption regime for financial intermediaries engaged in leveraged foreign exchange trading. A consultation paper has been issued to seek comments from the public on proposed enhancements and changes to the regulatory regime.
The proposals under the consultation paper represent an evolution of the existing regulatory regime for the fund management industry. Fund Management Companies [“FMCs”] whose activities are limited in scale and impact may continue to operate under a notification regime and be subjected to certain conditions. This is similar to the existing framework for exempt fund managers. FMCs who serve retail investors and/or manage or advise on a larger portfolio of assets will have to be licensed. MAS also intends to require all FMCs to meet business conduct as well as capital requirements.
Under the proposed business conduct requirements, FMCs will need to maintain customers’ monies and assets with independent custodians, ensuring segregation of duties between the functions of fund management and fund administration. FMCs will also need to have compliance arrangements which are commensurate with the size and scale of the FMCs’ business. These requirements aim to enhance safeguards against theft or misappropriation of customers’ monies.