Wed, Jan 20, 2016
On 15 January 2016, the Money Authority of Singapore (MAS) updated its “Guidelines on Licensing, Registration and Conduct of Business for Fund Management Companies” and “FAQs on the Licensing and Registration of Fund Management Companies”.
There are two notable updates:
An A/I LFMC that wants to manage funds offered to retail investors either in Singapore or overseas should request that MAS review its license condition on clientele.
To manage funds offered to retail investors in Singapore, the firm should satisfy the MAS’ usual admission criteria for a retail manager and be able and willing to commit resources to handle retail funds. MAS will also consider the quality of governance and controls implemented by the A/I LFMC, as well as the adequacy of its compliance and audit arrangements.
Where an A/I LFMC wishes to manage funds, which are authorized by a foreign regulator to be offered to retail investors overseas, the A/I LFMC can approach MAS to review the clientele restrictions on its license. Before requesting MAS for the review, the A/I LFMC should ensure that it has obtained the requisite approval from the foreign regulator who is aware of the A/I LFMC’s clientele restriction in Singapore. MAS will consider the ability of the A/I LFMC to adequately serve the needs of its existing accredited and institutional investors. Each case will be considered on its own merits.
The MAS set out 2 scenarios when an A/I LFMC can be involved with retail funds without asking MAS to review the clientele restrictions on its license:
Scenario A – The A/I LFMC may perform the role of a sub-manager or adviser to another regulated fund manager which meets the definition of an accredited or institutional investor, and is authorized or licensed to manage investment funds for retail investors in the jurisdiction where the funds are offered. The regulated fund manager and the fund offer can be in Singapore or overseas.
Scenario B – An A/I LFMC may also be the investment manager, sub-manager or adviser to a fund which another pension fund or fund-of-funds invests in. This other pension fund or fund-of-funds is managed by another fund manager, has to meet the definition of an accredited or institutional investor itself, and may have retail investors. The manager of the pension fund or the fund-of-funds, and the fund offer may be in Singapore or overseas.
Fund managers that seek licensing or registration in Singapore may wish to know what MAS considers as a good quality submission for a license or registration. This would expedite their application.
Greater clarity on when A/I LFMCs can be involved with offers of retail funds in Singapore or overseas will help A/I LFMCs ensure compliance in their clientele restrictions.
In both licensing and registration and in seeking a review to manage retail funds in Singapore, the MAS has indicated that it is focusing more on controls, compliance and audit arrangements. Fund managers may wish to take their cue accordingly and review the adequacy of their systems.
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