With alternative investment fund managers being subjected to increased regulations both in the United States and Europe, Asian jurisdictions such as Singapore with lesser regulatory oversight have – over the years and in particular more recently – become attractive locations for alternative investment fund managers’ operations.
In Singapore, however, this about to change in early 2012 as the Monetary Authority of Singapore (the “MAS”) is planning to “align its regulatory framework with international best practices”.
Under the current regime, Exempt Fund Managers running fund management companies in Singapore have fallen outside the scope of stricter regulatory oversight. On 27 September 2011 the MAS issued a consultation paper detailing the proposed changes to the regulations due in early 2012.
These changes include increased compliance and registration requirements, under which both old and new fund managers operating in Singapore would have to register as Registered Fund Management Companies (“FMC”).
Once the new regulations have been implemented, all FMCs will be required to have a risk management framework in place which will be scaled to the size of the manager’s operations. The purpose of the risk management framework is to identify, manage, and monitor risks in order to effectively safeguard investors’ assets.
Furthermore, the MAS is extending the requirement for an independent annual audit to all the FMCs that have previously been exempted from such audit requirements. As part of this annual audit, auditors are required to provide a compliance report to the MAS. This compliance report will include information regarding the FMC’s assets under management, minimum base capital requirement, key business conduct rules and implementation of a risk management framework. This is to assure MAS that the registered FMCs are adhering to the new rules and regulations.
The MAS is also committed to streamlining the process by which the new fund managers can be registered as FMCs. In addition, the FMCs are only allowed to begin providing their services to investors once they have been listed on the MAS website, which will also serve as a source of information for the investors seeking to invest into funds managed from Singapore.
To help our clients in this changing regulatory environment, Laven Partners is expanding in Asia from early 2012, with a presence due to be established in both Singapore and Hong Kong.
Jerome de Lavenere Lussan, CEO of Laven Partners says: “These proposed regulatory changes bringing Singaporean fund managers under tighter supervision are a natural development of the regulatory trends that we have already experienced in the US and Europe.
Throughout this autumn we have been travelling around Asia, meeting with managers, service providers and regulators alike, and from these discussions it is clear that the Asian market is undergoing some major changes.
At Laven Partners, we feel that our unique experience in asset management operations – from compliance to fund structuring – will meet an obvious demand for outsourced, expert services which are practical and highly regarded internationally. By combining both local and international expertise, we can already provide complete and commercial solutions that are both cost-effective and tailor-made for the needs of our clients in Asia.”
