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Box Story 5

Review of Regulatory Regime for Fund Management Companies

In line with global regulatory developments, MAS has embarked on a review of the regulatory regime for fund management companies. In April 2010, MAS issued a policy consultation paper on proposals to formalise industry best practices and enhance regulatory oversight of the fund management industry. This enhancement of the regulatory regime represents an evolution of the existing framework. MAS maintains a calibrated approach towards the regulation of fund management companies, based on the scale and impact of their businesses and the sophistication of their client base.

Fund management companies whose activities are limited in scale and impact will be allowed to operate under a notification regime, in which registration with MAS is necessary prior to the commencement of business, subject to certain conditions and restrictions. Fund management companies managing or advising on a larger portfolio of assets, or catering to retail investors will have to be licensed. MAS also proposes to subject all fund management companies, regardless of size of operations, to business conduct rules. These will include the need to maintain customers' monies and assets with an independent custodian, and ensure adequate segregation of front and back office functions.

The proposals are also intended to formalise MAS' expectations on the compliance arrangements and the minimum expertise required of individuals who operate a fund management company. Overall, the proposals aim to raise the quality and standards of fund management companies while taking into consideration business-related concerns such as the ease of setting up and timeto- market requirements, with a view to promoting the long-term sustainable growth of the fund management industry in Singapore.

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