The Monetary Authority of Singapore (MAS) has initiated a public consultation process as it seeks to revamp the regulatory framework governing fund managers.
The proposal aims to disband the existing Registered Fund Management Companies (RFMCs) regime, providing an opportunity for current RFMCs to transition to Licensed Fund Management Companies (LFMCs) upon submission of an application.
Introduced in 2012, the RFMC regime replaced the previous Exempt Fund Managers (EFMs) system, marking a move towards enhanced regulatory oversight and higher standards of conduct within the fund management industry.
The introduction of the RFMC regime facilitated a smoother transition for EFMs into a fully regulated framework. Compared to LFMCs catering exclusively to accredited or institutional investors (A/I LFMCs), RFMCs have been subject to lighter regulatory reporting requirements, despite having similar admission criteria and business conduct expectations.
Over the past decade, the business models and risk profiles of RFMCs and A/I LFMCs have increasingly aligned, rendering the distinction between the two less relevant.
A significant number of RFMCs have transitioned to become A/I LFMCs as their operations expanded, and the majority of new entrants in the fund management sector in Singapore now opt for A/I LFMC status.
As part of the transitional arrangements, existing RFMCs will be allowed to continue their operations uninterrupted. MAS has proposed a simplified application process for those wishing to convert to A/I LFMCs, with commitments to expedite responses within a month and waive application fees.
However, a S$250 million cap on managed assets will be maintained, though firms can request an uplift from MAS if they plan to expand their managed assets.
MAS has assured RFMCs of a comprehensive briefing to clarify any uncertainties regarding the transition process. Stakeholders and interested parties are encouraged to share their feedback on the proposal, with the public consultation period remaining open until 31 December 2023.