The RFMC Repeal has become official on 1 August 2024. What should newly-minted A/I LFMCs do to meet MAS expectations?

3 Minutes

BACKGROUND

The Monetary Authority of Singapore has repealed the Registered Fund Management Company regime on 1 August 2024.

MAS has stated Repeal of Regulatory Regime for Registered Fund Management Companies (Response to Feedback Received, P015 – 2023 – 28 March 2024), that upon being issued a Capital Markets Services License in Fund Management (for Accredited /Institutional Investors) (A/I LFMCs), the regulatory requirements for A/I LFMCs will take immediate effect.

MAS GUIDANCE

MAS has further guided that various resources are available on MAS’ website that provide guidance on A/I LFMC regulatory requirements include:

  1. Compliance Toolkit for Approvals, Notifications and Other Regulatory Submissions to MAS for Fund Managers;
  2. Guidelines on Licensing, Registration and Conduct of Business for Fund Management Companies; and
  3. FAQs on the Licensing and Registration of Fund Management Companies.

KEY CONSIDERATIONS FOR A/I LFMC MANAGEMENTS

Many RFMCs have been managing their risk and compliance function as, at best, the “necessary-evil” function. At worst, RFMCs have taken a des minimis approach in this critical part of their business organization.

As regulatory scope as well as enforcement is ramping up, new A/I LFMCs ignore the upgrading of their risk and compliance function at great risk to their license.

  • Upgrade your risk culture

For a start, newly-minted A/I LFMCs from the old RFMC regime need to reset their culture on risk and compliance to place this function just behind front-line operations.

  • Review the full credentials of Outsourced Compliance

It is time to re-assess the resources that are in place. Many RFMCs have relied on various external firms to support their compliance function. It may well be the case that ex-RFMC outsourced compliance support actually lack the institutional credentials to work with A/I LFMCs, and will no longer be aligned with an A/I LFMC organization, from the perspective of MAS.

  • At least 16 immediate areas to upgrade

There are at least 16 immediate areas for new A/I LFMCs to focus on.

  • Making the case to lift the S$250 Million AUM cap

AILFMCs which are managing close to S$250 Million, or aspires to do so, will need to make the case with MAS, for the AUM cap to be lifted. This will involve all of the above immediate tasks, and possibly more.

HOW CAN WE HELP?

We are an institutional advisory practice with broad and in-depth experience in advising on Capital Markets Services Licensees in Fund Management in Singapore, and various other areas of financial regulations.

We have ready-made RFMC to A/I LFMCs risk and compliance upgrading plans for fast and cost-efficient implementation. Find out more here. 

Contact us to discuss how we can advise you to promptly install the right A/I LFMC advisory support.