Posted inRegulationNews

MAS explains AM supervisory changes

The regulator now has teams assigned to supervise asset management sub-sectors, such as traditional, alternative or real estate, according to Lim Cheng Khai, executive director at the Monetary Authority of Singapore (MAS).

The number of fund management firms in the Lion City has increased to at least 800 in 2018 from 715 in 2017, Lim said at a speech during the Investment Management of Singapore’s regulatory/legal roundup forum last week.

The MAS continues to see a “healthy pipeline of new applicants” and expects that the growth trajectory to continue moving forward, amid increasing wealth pools in Asia from the growing middle class and pension reforms, he said.

In terms of AUM, assets in the Lion City grew 19% to S$3.3trn ($2.43trn) in 2017, he added.

“With new entrants and business models, MAS’ supervision needs to be responsive to new or emerging risks. New rules and regulatory developments elsewhere will impact fund managers here and shape the way they operate.

“All these demand that MAS regularly review and enhance our supervisory toolkit to cope with the expanding breadth and depth of our asset management industry and monitor fund managers’ conduct and compliance with evolving rules and regulations,” Lim said.

Sub-sector teams

One of the changes in the supervisory structure has been supervision teams focusing on specific sub-sectors in the industry, according to Lim.  Managers with similar strategies are grouped under the same team of supervisors. Some examples of sub-sectors are traditional, alternative and real estate.

Lim believes that the structure, which has been in place since 2017, has enabled the regulator to hold “deeper and more meaningful” conversations with fund managers in the respective sub-sectors.

“It has also strengthened our ability to compare practices across managers with same or similar strategies and identify trends or developments that could affect similar clusters of managers,” he said.

At the same time, the regulator set up a dedicated authorisation unit that reviews and processes applications for new fund management licences and regulations, according to Lim.

With the new unit, the average fund management application is processed in three months, according to Lim.

Risk assessment

The regulator has also complemented its risk-based assessment of individual fund managers with top-down identification of risk themes at the sector or industry level.

Previously, the regulator’s risk-based assessment only focused on larger financial institutions and those with retail reach.

“[But] given the growing number of fund managers operating in Singapore, we need to be alert to potential risks or conduct issues that may not have a widespread impact if they had taken place in one or two small managers, but can cause significant investor harm if they occur across a large number of managers.”

Part of the Mark Allen Group.