MAS issued Revised Guidelines on licensing, registration and conduct of business for Fund Management Companies on 29 Nov 2023.
Introduction
a) Person who would not qualify for fund management licence or registration.
b) External Involvements of Key Individuals.
c) What constitutes Fund Management Activities.
d) Minimum staffing and competency requirements of representatives.
Summary of new requirements for LFMCs, VCFMs & RFMCs amendment:
a) Person who would not qualify for fund management licence or registration:
In addition to the previous guidelines, the MAS has set up more conditions for the person who would not be
considered qualified for a fund management license or registration:
– It includes cases where an FMC executes trades purely based on customers’ instructions;
– Sets up fund structures that merely serve as a conduit for the offer of funds managed by other fund managers;
– Ultimately invests in assets that are not capital markets products (Non-CMPs). Persons investing in nonCMPs on behalf of accredited or institutional investors may consider if they are able to rely on licensing
exemptions in the Second Schedule to the SF(LCB)R.
b) External Involvements of Key Individuals: CEOs and executive directors are expected to focus on the
management of the FMC’s business and may be required to divest outside business interests, if they are
unable to adequately mitigate the conflicts of interest (whether actual or perceived), or reputational risks
posed to the FMC.
c) What constitutes Fund Management Activities: An FMC shall conduct substantive fund management activity for all its segregated mandates and funds. Examples of when an FMC would not be deemed to be conducting substantive fund management activity. The FMC should be able to demonstrate that it is conducting substantive fund management activity in respect of all its segregated mandates/funds, by retaining appropriate documentation.
d) Minimum staffing and competency requirements of representatives: Representatives are individuals who perform regulated fund management activities such as portfolio construction and allocation, investment decision making, deal sourcing/origination, trade execution, research and advisory, business development and marketing or client servicing. Whether these individuals work full-time for the FMC, are employed by the FMC, or work for another organisation connected to or associated with the FMC, they would still need to be nominated as representatives of the FMC.
Those in charge of or involved in middle or back-office responsibilities like risk management, compliance, operations, and finance, as well as those accountable for effective internal control and appropriate duty segregation, shouldn’t be selected as representatives of the FMC.
FMCs should carry out substantive fund management activity in Singapore and have their representatives based in Singapore. Should there be exceptional reasons for an FMC to base a representative overseas, the FMC must have adequate compliance oversight over the overseas representative. FMCs should not have a disproportionate number of their representatives based overseas.
Note: Periodic Returns and Notification & approvals annexure should be refer from compliance toolkit published on the MAS website.
How Alpha Compliance can help?
Obtaining licences for LFMCs, VCFMs, and RFMCs in Singapore is a specialty of Alpha Compliance’s expert team members. Before applying to MAS, we provide guidance on the establishment of fund management businesses and the necessary structure to meet MAS requirements.
Commencing with the very initial application and continuing after approval, we offer support that includes ongoing compliance, internal auditing as needed. For more information about our services or to arrange a consultation, please get in touch with us.
Difference in Old & Amended Guidelines are presented here in tabular form:
| Old Guidelines | Amended Guidelines |
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"3.3.3 sets up fund structures that merely serve as a conduit for the offer of funds managed by other fund managers;
3.3.5 ultimately invests in assets that are not capital markets products4 (non-CMPs). Persons investing in non-CMPs on behalf of accredited or institutional investors may consider if they are able to rely on licensing exemptions in the Second Schedule to the SF(LCB)R."
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3.9 External Involvements of Key Individuals – CEOs and executive directors are expected to focus on the management of the FMC’s business and may be required to divest outside business interests, if they are unable to adequately mitigate the conflicts of interest (whether actual or perceived), or reputational risks posed to the FMC.
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4.7 Fund Management Activities – An FMC shall conduct substantive fund management activity for all its segregated mandates and funds. Examples of when an FMC would not be deemed to be conducting substantive fund management activity, are set out in paragraphs 3.3 to 3.4 above. The FMC should be able to demonstrate that it is conducting substantive fund management activity in respect of all its segregated mandates/funds, by retaining appropriate documentation.
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Appendix 1 |
Number of full-time representatives residing in Singapore: |
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Appendix 4 Notification and approvals |
Please refer to the compliance toolkit published on the MAS website. |
