Singapore's government has taken a pragmatic path to establishing itself as a central Asian asset management center. Singapore is well placed to take advantage of this industry's tremendous opportunity. Following extensive public consultations, Singapore's industry regulator, the Monetary Authority of Singapore (MAS), has recently enhanced the regulatory system for Fund Management Companies (FMC) in response to growing investor concerns. Given Singapore's rising presence in the regional fund management sector, it is seen as a timely measure.
FMCs must be Singapore-incorporated and provide a permanent physical office in Singapore.
An FMC should guarantee that its core staff meets the minimum competency standards. It should fulfill MAS that its owners, directors, members, and workers and the FMC itself are proper and fit, as per the MAS Guidelines on Fit and Proper Criteria.
FMCs should provide at least two executives with a minimum of five years of related experience in the financial services sector, whether administrative or supervisory experience. This condition will not be met if there are no nominee directors. A Retail LFMC's CEO should have at least ten years of related experience instead of 5 years for RFMCs and A/I LFMCs.
The base capital criteria set out in SF(FMR)R must be met at all times by an FMC. This base capital, which varies from S$250,000 to about S$1,000,000, must be retained continuingly with ample additional capital buffer.
All FMCs must ensure they have appropriate compliant arrangements in place that are proportional to their operations' size, scope, and sophistication. Both compliance and legislative issues are ultimately the responsibility of an RFMC's CEO and directors. A compliance individual is expected for Registered FMCs, but they do not have to be committed or autonomous. These responsibilities should be handled by the CEO or even the senior staff.
The risk management role should be overseen by the FMC's Board of Directors and senior management, and it should be delegated to professional personnel and kept apart from portfolio management.
Internal audits of FMCs must be conducted thoroughly. An internal audit feature inside the FMC, an internal audit group from the FMC's head office, or even a third-party supplier can perform the internal audit. An FMC must comply with the annual audit criteria and MAS, which order the FMC to appoint a new auditor if the current auditor is deemed unsuitable, given the size, scope, and sophistication of the FMC's operations.
An FMC must comply with the annual audit criteria and MAS, which order the FMC to appoint a new auditor if the current auditor is deemed unsuitable, given the size, scope, and sophistication of the FMC's operations.
FMCs are actively advised to keep their Professional Indemnity Insurance policies up to date. PII can also be required as a requirement of licensing if MAS considers it necessary. The FMC's and its holding companies' track records, the regulatory regime in which the holding company operates, and the interest shown by the holding firm and the FMC's shareholders both play a role in deciding the FMC's license acceptance.