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The Monetary Authority of Singapore (MAS) has announced that the regulatory regime for Registered Fund Management Companies (RFMCs) will be repealed on 1 August 2024. To continue operating, existing RFMCs must transition to become Licensed Fund Management Companies (LFMCs) restricted to serving qualified investors, namely accredited investors and institutional investors (A/I LFMCs), under the Capital Markets Services (CMS) framework by 30 June 2024.
Effective from 1 August, 2024, these updates are aimed at enhancing regulatory standards and risk management practices. They have significantly impacted the fund setup landscape in Singapore. This article examines the key changes and their influence on fund management trends in the city-state.
The updated MAS guidelines have led to several noticeable trends in the CMS framework in Singapore:
MAS has stated that simplifying the regulatory regime and unifying the requirements for all fund managers will promote the long-term sustainable growth of the fund management industry. MAS will continue to work with the fund management industry to assist existing RFMCs in the transition, while also welcoming responsible new companies to actively participate in the transition process.
To continue fund management activities after the repeal of the RFMC regime, existing RFMCs must apply for and obtain a CMS fund management license from MAS between 1 April and 30 June 2024. MAS will respond to all applications within one month of submission. Successful applicants will receive their CMS licenses by the end of July 2024. Those who fail to submit their applications before the repeal will have to cease fund management activities.
For fund management companies transitioning from RFMC to A/I LFMC, MAS will continue to limit their AUM to no more than S$250 million but will no longer restrict the number of investors. They will also comply with all A/I LFMC reporting requirements and must apply for MAS approval in advance when changing shareholders and key personnel.
The recent changes to the RFMC licensing framework by MAS, effective from August 1, 2024, represent a significant step towards strengthening Singapore’s regulatory environment for fund management companies. While these updates pose challenges, such as increased compliance costs and the short transition notice and operational adjustments, they also enhance investor protection and confidence in the Singapore fund management industry.
As a result, fund formation in Singapore is trending towards larger, resource-rich firms, increased transparency, and the rise of specialized funds, thereby contributing to a more robust and dynamic asset management landscape. We anticipate more boutique fund managers collaborating with well-established licensed fund managers to leverage their extensive resources, compliance, and risk management expertise. This partnership will enable managers to shift their focus from operational and regulatory compliance tasks to creating value through investments and fundraising.
At Trustmoore, we support our clients through this transition by providing tailored solutions that address those critical needs. By leveraging on our experience and wide partnership network, Trustmoore will act as your partner through and beyond this transition process.
As a boutique fund and corporate administrator, we provide our clients with the confidence and support needed to thrive in this evolving regulatory landscape. Our client-first approach ensures that we always prioritise our clients and their requirements.
For more detailed information on the latest guidelines, please refer to the MAS Guidelines on Licensing, Registration, and Conduct of Business for Fund Managers.
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