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Singapore seeks MRF, passporting schemes

The Monetary Authority of Singapore wants Singapore-domiciled funds to be available to investors in offshore markets, according to Lim Cheng Khai, an executive director for capital markets intermediaries at the MAS.
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“This can be through bilateral mutual recognition of such funds, as well as multilateral passporting across regions,” he said in a speech at the Investment Management Association of Singapore’s regulatory and legal roundup forum.

Lim expects that both fund managers and retail investors in Singapore will benefit from the widened access to other markets. However, he did not give details about the regulator’s initiatives in exploring these bilateral and multilateral passporting schemes.

Singapore is a participating market in the Asean CIS scheme, which connects the fund markets of Singapore, Malaysia and Thailand. Although the scheme was launched in August 2014, it has not gained much traction. Only six funds have been approved for retail sale by both home and host countries.

The MAS and China Securities Regulatory Commission also announced in November that they are exploring a mutual recognition of funds (MRF) scheme, which will be similar to the MRF programme between Hong Kong and China.

Lim said that these MRF and passporting schemes should complement the regulator’s Singapore Variable Capital Companies (S-VACC) initiative, which is a proposed corporate structure that aims to boost the Lion City’s standing as a regional fund centre by helping firms raise funds more easily while providing cost efficiencies.

“[The S-VACC] will complement existing structures and have features on par with fund structures in other leading fund jurisdictions,” Lim said. These features include the ability to use US GAAP accounting standards, an open-ended capital framework and an umbrella fund structure to house sub-funds.

At the moment, the regulator, together with other agencies, are tying down the operational details of the policy and the tax framework for the S-VACC. Other areas that they are working on include the legislative amendments and the development of a fund registration system.

In addition to exploring MRF and passporting schemes, the MAS also aims to further develop the mutual funds ecosystem in Singapore.

“We hope to strengthen the network of our local fund managers, administrators, custodians and other ancillary services providers.”


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