Singapore Fund Management Industry Continues to see Strong Growth
Singapore, 06 July 2000...The fund management industry continues to see significant growth over the last year. , Mr Lim Hng Kiang, Second Minister for Finance announced that total assets under management in Singapore grew by 63% to register S$242.6 billion at end-1999. Besides new fund managers who have set up operations in Singapore, existing fund managers have also been scaling up their operations to take advantage of the opportunities that have arisen from the region's rapid recovery.
The number of asset management companies in Singapore has also increased over the past year. In MAS' latest Survey of the Singapore Asset Management Industry, there was a total of 191 asset management companies as at end-1999, up from 161 in 1998. Existing asset management companies have also deepened their roots in Singapore. Mr Lim further revealed that the number of large bracket players managing discretionary assets of over S$5 billion has increased from 3 at end-1998 to 11 at end-1999. More details of the "1999 Survey of the Singapore Asset Management Industry" will be released shortly.
Mr Lim also stated that MAS has already earmarked S$4.1 billion of funds for outplacement with external fund managers. MAS had announced plans in November 1998 to place out S$10 billion worth of funds to external fund managers over 3 years. This was on top of the S$25 billion that GIC had already set aside for outplacement with external fund managers. The funds were meant to serve as seed money to encourage players to grow their operations in Singapore. Mr Lim further disclosed that MAS will continue to shortlist managers for the remaining S$5.9 billion of funds, and expects the full S$10bn to be fully placed out by the first quarter of 2001.
MAS proposes to introduce a new modular licensing framework, under which securities and futures brokers, underwriters and fund managers will only need to obtain a single licence to provide a range of financial activities in the securities and futures market. Currently, if they wish to conduct all such activities through a single entity, they would need to hold separate licences under the Securities Industry (SI) Act and the Futures Trading (FT) Act.
"The proposed licensing framework will incorporate existing regulated activities and various elements of securities activities into a single licensing regime, making it easier for market intermediaries to conduct business. Singapore's high supervisory standards will be maintained," said Mr Lim.
Under the proposed modular licensing framework for securities and futures, institutions holding a licence would have to apply to MAS for approval if they intend to expand into new activities. This is a simpler administrative procedure compared to the present framework where the institutions would have to submit a formal application for an additional licence to conduct the new activities. However, they would still be required to meet the prudential requirements for these new activities. The proposed modular licensing framework will therefore lessen the administrative burden and provide greater flexibility to accommodate changes in the business models of industry players.
In addition, MAS will provide full exemption from licensing for other financial institutions already regulated by MAS, in respect of their securities and futures businesses. Currently, banks are already accorded full licensing exemption under the SI Act and FT Act (with the exception of the futures broker's licence). Other institutions such as merchant banks and insurance companies are exempted from licensing only in respect of certain activities. Under the proposed licensing framework, all such institutions, including finance companies, will no longer need to hold any licence in respect of any securities and futures businesses that they are permitted to conduct. However, to ensure a level playing field for all market participants in the industry, all these exempted financial institutions, including banks, will be subject to similar requirements as that imposed on licensed market intermediaries.
Approved Fund Managers (AFMs) under the Tax Exemption Scheme for Fund Management, currently exempted from licensing will also have to hold a licence under the new licensing framework. "Bringing the AFMs within the licensing regime will assure maintenance of Singapore's high regulatory standards and simultaneously allow for greater cooperation with overseas securities regulators" said Mr Lim.
MAS will be circulating a consultation paper with a detailed outline of the proposed modular licensing framework later this month. The proposed modular licensing framework, together with other changes to merge the SI and FT Acts will be incorporated into the impending Omnibus Securities and Futures Bill.
3 The new Omnibus Act will merge and streamline the Securities Industry Act and Futures Trading Act into one statute. Provisions currently contained in the Companies Act will also be transferred to the new Omnibus Act.