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The latest application data from MAS shows that while there have been more applications from Capital Markets Intermediaries in recent years, the proportion which are successful has gone down. The regulator has recommended using specialist advisors to support applications.
Every year the MAS publishes the profile of Capital Markets Intermediaries – or CMIs – admitted and the application trends that were observed during the year.
The MAS reported that over the past three years there was a 30% rise in the number of applicants, from 225 in 2019 to 293 in 2021, of which substantially all sought to obtain Fund Management licences. The MAS also highlighted an increase of unsuccessful applications from 13% in 2019 to 30% in 2021.
The MAS observed that more applicants are engaging services providers such as specialist compliance service firms to support the applications and found that applications assisted by service providers were more complete and had fewer errors. In turn, this reduces the time taken to process the applications.
The MAS also reported an increase in processing times due to the high volume of applications. Applications for Capital Markets Services Licences (CMSLs) were taking on average 3.8 months (3.6 months in 2020) and Registered Fund Management Companies (RFMCs) were taking 4.3 months (4.2 months in 2020).
The MAS also cited some of reasons for unsuccessful applications:
- The inability to demonstrate genuine long term commitment to conducting the regulated activity applied for.
- A lack of any meaningful track record and unclear intentions of passive shareholders. For example, only seeking a license to obtain regulatory credibility to benefit other business ventures.
- Absence of a mechanism to anchor management teams which are distinct and separate from the shareholders.
- Applicants were unable to meet MAS’s admission criteria or did not provide full disclosure of adverse records
- Did not provide credible business plans and / or made frequent changes to the plans.
MAS also highlighted the importance of aligning the interest of management teams with the company. For example, MAS observed that management teams without adequate shareholding control of the company might direct the company’s activities without undue influence from stakeholders with differing interests.
The MAS will be looking at ways to anchor management teams to the business. For example, where shareholders are not part of the group, potentially requiring the CEO and executive directors to own a controlling stake.
We can help
We are specialists in helping fund managers get licensed. We make sure that the application is complete, fit-for-purpose, and meets the MAS’s expectations. We can raise any potential red flags and also be on hand to answer any questions you or the MAS might have to reduce processing time.