MAS releases consultation paper on changes to hedge fund manager regime in Singapore

In 2009, the Monetary Authority of Singapore or MAS consulted with industry about potential changes to the system of registering hedge fund managers and advisors in Singapore.  Singapore had a registration system where a firm dealt with less than 30 funds and both its clients and the investors in those funds were accredited investors, essentially high net worth or institutional.

This contrasted with the Hong Kong system which really did not distinguish between a large fund manager and a smaller startup.  Both firms needed licensing from the Hong Kong SFC prior to commencing business.

The 2009 consultations lead to a concern that the MAS may make substantial changes to the existing system that would result in a large number of closures of managers in Singapore.  However up until yesterday nothing had ever been formally published by the MAS and frankly all that was available to market participants was speculation and some educated guesswork.

Yesterday the MAS published its consultation paper and an appendix.

The proposed changes would result in a three tier system consisting of a continuation of the notification system for managers managing or advising less than SGD250m (approx USD182m) where they only have professionals in their funds, a licensing system for firms above that amount who deal with professionals and a third category for firms who wish to deal with retail, ie non high net worth, non institutional investors.

Depending on which of the three categories firms fall into they will have specific additional compliance requirements under the new proposed rules.

Later today a representative from the MAS is speaking at a seminar in Singapore organised by Clifford Chance.  It will be interesting to see whether anything more is discussed about the new proposals.

The consultation paper also deals with some other prospective changes to the regulatory environment in Singapore relating to leveraged forex and an exemption that is currently in force that will be removed.

Timing wise the roll out of the changes, if they are effected, is likely to take a little while as legislative changes will need to be passed.  Our best guess at present is that this is a 2011 roll out but we are sure to learn more over the next few weeks.