BACKGROUND

On 10 December 2024, the Monetary Authority of Singapore (MAS) released an update to the Guidelines on the Licensing and Conduct of Business for Fund Management Companies. These guidelines not only specify the eligibility criteria and application procedures for FMCs but also place greater emphasis on ongoing business conduct requirements for FMCs, addressing key areas such as custody arrangements, valuation and reporting standards, and conflict of interest mitigation strategies.

UPDATES

This update introduces enhanced guidelines for FMCs to mitigate actual or potential conflicts of interest. These measures emphasize the importance of proactively preventing circumstances that could lead to conflicts, and, where appropriate, disclosing any conflicts of interest and their implications to its customers.

FMCs must establish a robust mechanism for identifying and managing conflicts of interest on an ongoing basis, ensuring that any actions taken are in the best interests of their customers. FMCs should also develop a comprehensive and effective policy for managing conflicts of interest, which is independently reviewed and approved by an appropriate authority, such as senior management, the board of directors, or relevant committees. This independent review ensures a high level of governance and oversight.

Moreover, FMCs are required to document their conflict assessments and the measures taken to mitigate them, making this information available to MAS upon request. This documentation not only promotes transparency but also reinforces the accountability of FMCs in managing potential conflicts of interest. By introducing these updates, MAS is further strengthening the framework for ethical conduct and investor protection within the fund management industry.

The Guidelines also outlined some examples of potential conflicts of interest and suggests best practices for mitigating them (see below).

Sample of examples shown in Appendix 5. Refer to the guidelines for more.

WHAT’S NEXT?

Given ongoing updates to regulatory guidelines, managements of FIs should:

1. Stay vigilant and regularly monitor MAS announcements for future revisions and updates to the relevant documents to ensure compliance.
2. Continuously assess and refine internal mechanisms for identifying and mitigating conflicts of interest, in line with the guidelines.
3. Ensure that all conflict assessments and mitigation measures are thoroughly documented and readily available to MAS upon request.

And more…

HOW CAN WE HELP?

Contact Capital Governance today to discuss how we can provide sustainability reporting and disclosure solutions for you. Find out more here.