Background 

In December 2025, the Monetary Authority of Singapore (“MAS”) issued a Consultation Paper proposing updates to the Guidelines on Liquidity Risk Management Practices for Fund Management Companies (“LRM Guidelines”) and the Code on Collective Investment Schemes (“CIS Code”). The consultation follows heightened global market volatility since 2018 and aligns Singapore’s regulatory framework with recent IOSCO and Financial Stability Board recommendations on LRM. MAS also proposes to update the CIS Code to strengthen portfolio liquidity in money market funds (“MMFs”) by introducing expectations on eligible deposits that are placed with financial institutions. 

Key Observations 

Clarification of scope and applicability 
MAS proposes to remove exchange-traded funds (“ETFs”) from the scope of the LRM Guidelines, recognising their distinct structural features and separate IOSCO guidance applicable to ETFs. 

Alignment between asset liquidity and redemption terms 
FMCs managing open-ended CIS are expected to ensure consistency between the liquidity of underlying assets and redemption arrangements, both at the product design stage and on an ongoing basis. Frequent redemptions should not be offered for funds with a significant allocation to illiquid assets, and appropriate disclosures such as lock-ups, notice periods, or longer settlement cycles should be provided. 

Mandatory adoption of anti-dilution tools (“ADTs”) 
MAS expects FMCs to adopt a diversified liquidity management toolkit. Open-ended CIS that invest mainly in less liquid assets must implement at least one ADT, such as swing pricing or anti-dilution levies, rather than relying solely on suspension or redemption gates. 

ADTs operate by adjusting the fund’s dealing price or imposing charges so that transacting investors bear the liquidity costs associated with their subscriptions or redemptions, thereby reducing dilution of remaining investors. 

Imposition of liquidity costs on transacting investors 
The consultation clarifies that both explicit transaction costs and implicit costs, including bid-ask spreads and market impact, should be incorporated into redemption and subscription pricing. This is intended to mitigate investor dilution and ensure fair treatment of remaining investors, particularly during periods of market stress. 

Enhanced governance, disclosures, and holistic risk assessment 
FMCs are expected to clearly define governance arrangements around the design and activation of liquidity management tools, enhance investor disclosures on liquidity risks and dealing arrangements, and take a holistic view of liquidity risks, including those arising from margin and collateral calls where leverage or derivatives are used. 

Additional guidance for money market funds (“MMFs”) 
MAS proposes to clarify that “eligible deposits” held by MMFs should be repayable on demand or withdrawable at any time, with due consideration given to penalties or costs associated with early withdrawals. 

What’s Next 

MAS has proposed a six-month implementation period following the publication of the final revised guidelines which may occur around the end of 2026.  

FMCs should begin preparing by reviewing existing liquidity risk management frameworks, assessing the suitability of redemption terms, implementing appropriate ADTs where required, and enhancing governance, stress testing, and disclosures.  

Comments on the consultation paper are due by 28 February 2026. 

How Can We Help? 

Independent review of liquidity risk management frameworks against the proposed MAS requirements. 

• Assessment of alignment between asset liquidity and redemption terms. 

• Support in the design and implementation of anti-dilution tools. 

• Enhancement of governance structures and liquidity stress testing practices. 

• Review of investor disclosures to support regulatory readiness ahead of implementation. 

Contact Us Now if you would like to discuss how we can support your compliance readiness. Find out more here