MAS to repeal RFMC regime

The MAS has issued its response to the Consultation Paper on Repeal of Regulatory Regime for Registered Fund Management Companies. Announced on the 28th March, it comes as no surprise that a decision has been made to relinquish the “light touch” regime. If you’re an RFMC looking to continue operating after the official repeal date on 1st August 2024, it’s imperative to be clear what you need to do to prepare.

Registered fund management companies (RFMCs) are required to submit an application to the MAS to operate as a Capital Markets Services Licence holder (CMSL) in respect of Fund Management activities (A/I LFMC).

What important details should I be aware of?

  • 1st August 2024 – from this date, RFMCs will cease to exist.
  • Form 1AR application – RFMCs intending to operate as A/I LFMCs after 31st July need to submit Form 1AR between 1st April 2024 and 30th June 2024, and provide the MAS with supporting documents upon request.
  • Application outcome – RFMCs will be notified of the outcome within a month of submission of Form 1AR, and by no later than 31st July.
  • Appointed representatives – an RFMC’s exempt representatives will automatically be registered as Appointed Representatives on the same date that the CMSL is issued. When determining which individuals are Representatives, the MAS will use the information that RFMCs have disclosed in Form 23A notifications. RFMCs should therefore ensure all representative details provided to MAS are accurate before submitting Form 1AR.
  • Criteria for successful applicants include:
  1. managed assets attributable to third-party investors in the six months immediately preceding the submission of Form 1AR. This requirement does not apply for firms registered for six months or less as at the submission date
  2. submitted Form 1AR within the deadline
  3. satisfactorily furnishes supporting documents to MAS, if requested.
  • Continuity of operations – During the application, RFMCs should continue to operate as usual and comply with all relevant regulatory requirements until notified of the application outcome.
  • AUM threshold – The cap in assets under management (AUM) of S$250m shall remain by default. Firms that wish to exceed the AUM threshold will need to apply to the MAS separately to lift the threshold. The regulator will publish a form and provide further details on this process in due course.
  • Existing RFMC applications – The MAS will continue to review RFMC applications submitted prior to the RFMC submission deadline of 1st January 2024. Successful applicants will be asked to submit Form 1AR, following which they will be licensed as A/I LFMCs with the AUM cap applied by default.

What happens if your application is unsuccessful?

Firms that haven’t conducted fund management activity for a continuous period of 6 months will cease to be registered as RFMCs and therefore will be denied a CMSL. The decision will be final and no appeals will be entertained.

RFMCs that don’t obtain CMS licences before the repeal date will no longer have a valid regulatory status to carry out fund management from 1st August 2024 onwards and therefore should ensure an orderly winding down of their business operations.

How can I prepare to become a LFMC

Whilst the application requirements for A/I LFMCs aren’t entirely dissimilar to those RFMCs are subject to, there will be work to do to bridge the gaps. For example, A/I LFMCs are subject to the risk-based capital requirements and additional notification and reporting requirements.

The MAS expects newly transitioned A/I LFMCs to familiarise themselves with the relevant rules and regulations.

How can I find out more about the repeal?

The MAS will host a virtual briefing on 16th April 2024 for all existing RFMCs and other industry stakeholders. According to the regulator, the session is intended to provide guidance and address any questions around the repeal and transition process for existing RFMCs. Interested parties may register for the briefing via this link.

We can help

As you prepare to be a CMSL holder, we can work with you to:

  • respond to queries or document requests from the MAS regarding your Form 1AR application
  • update your Compliance Framework so that it meets the MAS’ expectations of A/I LFMCs
  • provide training to your Directors and Representatives on regulatory and compliance requirements applicable to A/I LFMCs
  • prepare for the new risk-based capital requirements.