Published Date: 22 March 2023

“Strengthening Supervision Through Collaborative Partnerships” – Opening Address by Mr Tan Keng Heng, Executive Director, Monetary Authority of Singapore, at the Investment Management Association of Singapore’s 9th Regulatory/ Legal Roundup Forum on 22 March 2023

Ms Fann Teh, IMAS Regulatory Committee Chair,

Panel Speakers,

Members of IMAS,

Ladies and Gentlemen


A very good afternoon to all of you.

Thank you for inviting me to IMAS’ Regulatory Forum once again. I am delighted to join you today – with the forum returning as an in-person event after two years of virtual meetings.

The external operating environment for asset managers has remained increasingly complex.

  • The risk of a global stagflation and recession looms over our near-term horizon, which is a cause for concern for the global economy.
  • Geopolitical tensions have destabilised global supply chains, sending ripple effects across multiple sectors such as energy, commodities and agriculture.
  • The impending climate crisis and other existential challenges of the global commons are also poised to profoundly impact investor portfolios.

The confluence of new risks and existing fragilities has triggered a fundamental reset of macroeconomic policy, with far-reaching implications for various asset classes and investment management.

  • Global equities retreated from their historical highs in 2021, with the MSCI World Index and S&P 500 down by as much as 20% last yearBased on year-to-date returns of the MSCI World Index and S&P 500 as of December 2022.
  • Fixed income, which is typically considered a safe haven investment, suffered as well, with global bonds surrendering approximately 31% in 2022Elroy Dimson, Paul Marsh, and Mike Staunton, Credit Suisse Global Investment Returns Yearbook 2023 (February 2023).

An investment landscape that is fraught with vulnerabilities and uncertainties will pose significant difficulties for asset managers and investors alike to manage risk and achieve long-term value.

  • The search for yield and value has become ever more challenging amidst lower returns and higher risks, with recent events in the US and Europe providing yet another stern reminder.
  • The recurring bouts of market volatility and changing investor preferences may also have significant knock-on effects on fund flows and liquidity.

To deliver good and fair outcomes to investors while staying vigilant against undue market stresses, higher premiums will be placed on asset managers with sound risk management and strong compliance.

  • Previously, I had spoken on the importance of sound liquidity, environmental and operational risk resilience, as well as strong Board and senior management oversight and governance.

Today, I will focus my remarks on our supervisory agenda in fostering a thriving and well-regarded asset management sector as part of the shared responsibility between:

  • One, the industry that comprises managers like yourself;
  • Two, the service providers – notably the auditors in particular – that support the industry; and
  • Three, MAS in our role as the financial sector regulator.


Firstly, the industry has the collective responsibility to uphold good practices and promote the right behaviours that engender value and trust in the investment ecosystem.

  • Exercising effective risk management and complying with rules and regulations at all times rest with the asset manager whose staff should possess sufficient knowledge and expertise, including an adept understanding of all applicable regulations.
  • MAS expects asset managers to always act in the best interest of investors and conduct their operations with high standards of governance.
  • Asset managers should also be responsive to evolving trends and hold themselves and their peers accountable for risks associated with their business activities.

To foster good governance and practices, MAS has been clarifying our regulatory expectations and sharing best practices with the industry.

  • A key element of our outreach is the annual industry engagement townhalls that MAS has been hosting since 2018, including the most recent one in October 2022 when we shared our perspectives on a broad range of topics, from artificial intelligence and machine learning to sustainable finance, cybersecurity and business continuity management.
  • We have also issued a series of information papers that provided additional guidance on specific areas of focus.
    • For example, we published the Environmental Risk Management information paper last year to highlight good practices and areas where further work is needed.
    • We also issued sector-specific guidance, such as on strengthening AML/CFT practices for external asset managers in August 2022, and business conduct practices of venture capital fund managers in January this year.
  • I would highly recommend these sector-specific guidance to IMAS members too as they contain supervisory expectations and observations that are also applicable to the rest of the industry at large.

On this note, I should add that IMAS has been an active advocate of strong industry standards and practices, complementing MAS’ efforts through various initiatives such as:

  • The thematic industry guidelines that IMAS has been publishing for several years now, sharing useful guiding principles and best practices across a gamut of topics; as well as
  • The recent revisions to the Code of Ethics and Standards of Professional Conduct in 2022, which seek to further uplift the standards of conduct and governance across the industry.

Moving forward, MAS will continue to engage the industry proactively to provide more regulatory clarity and supervisory guidance on sound practices that you should adopt.

  • We are looking forward to another fruitful exchange of views at our upcoming industry engagement townhalls later this year, and we would welcome feedback on the key topics of interest for the industry.
  • We will also be sharing more good practices to help asset managers to strengthen your risk management and compliance capabilities, including:
    • Observations on the industry’s liquidity risk management practices, which will incorporate recent guidance from the Financial Stability Board and IOSCO on issues such as structural liquidity mismatch and the use of anti-dilution tools like swing pricing; as well as
    • Insights from our upcoming inspections on asset valuation and investment due diligence that are scheduled for the second half of this year.

In light of industry feedback, MAS is also working to redesign the way that information is organised and presented to the industry. For example:

  • We are simplifying our website and enhancing our compliance toolkits to help you find and understand MAS’ requirements more easily.
  • We have consolidated common queries from the industry into frequently asked questions, which will be regularly updated, so that you can directly access them on our website at your own discretion.
  • We will also be expanding our industry guidance further by including more supervisory topics and also key considerations for various regulatory applications.

I hope these measures that I have just shared will further help the industry in enhancing your operational efficiency and effectiveness as you adapt to new risks and challenges ahead.


Next, internal and external auditors play a crucial role in maintaining market confidence that asset managers meet the high standards expected of them.

  • MAS expects asset managers to subject their business activities to adequate internal audit as well as an annual independent audit.
  • Auditors have an important responsibility to provide checks and balances on asset managers’ regulatory compliance as well as an independent assessment on the appropriateness of their policies and processes in place.
  • An independent and effective audit provides a vital incentive for asset managers to conduct their business operations in a responsible, transparent and fair manner.

MAS will take appropriate actions if the audit assurance to the industry fails to meet the standard required under our regulations.

  • We have conducted roundtable sessions with audit firms in recent years to highlight regulatory developments and issues of common interest to the auditors.
  • In instances where the quality of audit was found to be wanting on occasions, we have reminded the audit firms to exercise greater care in performing their assurance function.

A growing focus for MAS going forward is to further strengthen our collaboration with auditors, so that they can work more effectively with the industry to identify key risks and control gaps that you may not be aware of.

  • We are exploring ways to engage a wider spectrum of auditors, including the smaller and mid-sized audit firms serving the industry.
  • This is aimed at helping auditors of asset management companies to be more apprised of the common issues and key risk areas facing the industry.
  • In turn, the auditing sector will be better placed to help the industry to level up given that audit quality is central to the assurance provided on the adequacy of your policies and processes.

In addition, we are looking to augment our onsite supervision by partnering certain external auditors under an Agreed Upon Procedures (AUP) engagement to cover key risk areas in the industry.

  • As mentioned earlier, MAS will publish and share key findings and good practices observed in the course of our supervision, which will include those arising from the AUP engagement.
  • More importantly, as part of the engagement, we will work closely with the selected auditors to set out the key work steps, discuss the fieldwork conducted and clarify audit issues that may arise.
  • In doing so, our aim is to guide and help the selected auditors as well as the broader auditing sector over time to gain a better understanding of our supervisory expectations, which can be applied to their own audit engagements with you in the future.

I believe that these initiatives will benefit the industry and we welcome your feedback on how MAS can further work with your auditors and you to uplift industry standards and practices.


Lastly, MAS will not hesitate to hold the industry accountable for the proper conduct of your business to achieve good outcomes for your investors.

  • In line with the “agency” model of the industry to invest and manage clients’ assets on their behalf, a core part of our risk-based supervision focuses on your risk management and business conduct practices.
  • MAS further seeks to deter misconduct through firm actions against errant behaviour given that it would not be viable nor sensible to strive to safeguard against all transgressions.
  • With poor governance and culture being a key root cause of market misconduct, we have also raised awareness on the importance of individual accountability and conduct to the industry.

With over 1100 licensed and registered asset managers managing over S$5 trillion of assets todayMAS Asset Management Survey 2021, our supervisory approach has to be more data-driven as well as more outcome-driven than ever before. Let me share briefly what this will entail in the foreseeable future.

Data-driven Assessment

As some of you may know, we have been applying data analytics to help us flag unusual trends or outliers within the industry and direct our supervisory attention to key risk areas and entities such as:

  • In identifying funds where redemptions are expected to persist or whose proceeds are unlikely to be fully paid within the redemption period; and
  • In sieving out adverse data points from your financial statements and audit reports through the use of text analytics.

Looking ahead, MAS will continue to work towards integrating data analytics and monitoring tools more deeply into our ongoing surveillance and supervision.

  • A key initiative is the upcoming fund data collection that will provide MAS with a deeper understanding of individual retail funds managed in Singapore.
    • The pilot move to collect more granular fund data yielded positive results, thanks in no small part to your close cooperation and useful feedback, particularly from the retail asset managers.
    • We will be sharing with you further implementation details when the initiative is fully rolled out later this year.
  • In addition, we are looking to enhance our market scanning competencies, including the use of social media feeds to uncover emerging issues that may not be observable from conventional regulatory data.

Outcome-driven Engagement

To further safeguard investor interests where it matters, MAS will also be stepping up our supervisory engagements to focus on more serious and egregious regulatory breaches.

  • Our supervisory actions will prioritise more significant failures, such as those involving dishonesty, gross conflicts of interest and poor risk management, as these may pose greater investor harm when left unchecked.
  • Having said that, MAS will be equally ready to take to task recalcitrant managers who repeatedly fail to comply with regulatory requirements and conduct standards expected of them, as such behaviour can similarly erode trust in the rest of the industry.
  • As MAS targets our supervisory actions more rigorously at where it would have the most impact, we will also look to signal more strongly and share more widely the range of misconduct and lapses that would not be tolerated in Singapore.

Fundamentally, these ongoing efforts to be more data- and outcome-driven are guided by our risk-focused supervisory approach, which has always sought to give greater business latitude to those of you who are generally well-managed rather than to apply a one-size-fits-all treatment across the industry.


Having outlined where our supervisory focus will point to in the next couple of years, let me close by emphasising that supervision is not a zero-sum game.

  • There is so much more that can be achieved when different stakeholders including the industry, your service providers such as the auditors, and the regulators like MAS come together constructively and collaborate openly to learn from and rely on one another.
  • All of us share a common goal to do so in a manner that will uphold the standing and integrity of the investment ecosystem in Singapore while allowing the asset management sector to innovate and position itself to better seize growth opportunities in the future.

On that note, I wish you all a fruitful and engaging discussion this afternoon.

Thank you.