25 October, 2018
Providers of digital fund management services may qualify for licenses even if they do not meet existing criteria, according to new guidance form the Monetary Authority of Singapore (MAS). The guidance also allows for exemptions from some information collection obligations.
Last week, MAS issued new guidelines on digital advisory services. The newly released guidelines on digital advisory services, also known as robo-advisers, aim to facilitate the provision of such services in Singapore.
MAS said the new guidelines will improve clarity on how existing rules apply in the context of digital advisory services.
Under the guidelines digital advisors offering fund management services to retail investors may be eligible for licensing even if they do not meet the Securities and Futures Act (SFA) corporate track record requirements, provided they meet other specified safeguards, such as a board or senior management member with relevant experience in fund management and technology, or if they offer only portfolios with noncomplex collective investment schemes.
The new rules say that digital advisors may be exempted from collecting the full suite of information on the financial circumstances of a client that the Financial Advisers Act (FAA) would otherwise require, such as income and financial commitments, if they put measures in place to identify and turn down potential investors who are unsuitable for the investment products being offered.
Digital advisers will be able to pass their clients’ trade orders to brokerage firms for execution without having to apply for another capital markets service licence to act as a financial advisers under the SFA, under the guidelines.
MAS has also introduced the Payment Services Bill, which is expected to pass in 2019 to provide a framework for a growing number of fintech companies in Singapore. While cyber security and anti-money laundering standards remain concerns of the MAS, under the Payment Services Bill the applicable rules governing individual fintech firms may differ depending on the scale of their operations.
The bill will require mobile wallet operators to ring-fence e-wallet funds, and these operators will not be allowed to make loans from the deposits made by users. Those with an average daily e-money float of more than S$5 million would also have to secure those funds in full. The intent of such regulations is to prevent fintech firms with large deposits from acting as unregulated shadow banks.
For further information, please contact:
Yvonne Dunn, Partner, Pinsent Masons
yvonne.dunn@pinsentmasons.com
