SINGAPORE – Singapore’s central bank is moving to make the process allowing retail investors to access a wider range of funds faster, and encourage new product innovation while ensuring that appropriate safeguards are in place.
The Monetary Authority of Singapore (MAS) on July 9 said it is seeking feedback on proposed amendments to the regulatory framework that establishes the compliance, safeguarding and redemption requirements for those operating investment funds that are offered to the retail public.
This comes amid rising investor sophistication and growing momentum in the local stock market, prompting interest from the industry to offer new retail fund product types that cater to a broader range of investment objectives.
However, some of these new funds may not always fit under MAS’ Code on Collective Investment Schemes (CIS Code).
MAS is therefore proposing to introduce greater flexibility within the code, allowing it to adjust existing investment requirements and accommodate a wider range of new fund product types for retail offer through a more streamlined process, while also ensuring the appropriate safeguards are in place.
To do so, the central bank is proposing a new appendix to the CIS Code to differentiate between any new and innovative fund types that have been authorised, and traditional funds, which include well-established equity funds or bond funds that are subject to diversification requirements.
Under the proposed Alternative Funds Appendix, quick and useful disclosures such as the requirements specific to each type of new fund will be put in place to address their unique risks.
New fund products will also be required to adhere to enhanced disclosures, ensuring investors have the necessary information to make informed investment decisions, MAS said.
The central bank added it has so far received market interest to offer two new fund types to retail investors: futures-based single-commodity funds, and a wider array of single-country government bond funds.
MAS added that the core requirements under the CIS Code will continue to apply to any new funds and their fund managers, including asset safeguarding and liquidity standards, and ensuring that fund products are suitable for their target investors.
MAS said it could take about three months to determine the necessary safeguards required for new fund types. However, once the safeguards are established, funds of the same type will take just three weeks to be authorised if they fulfil the same requirements.
The July 9 proposal forms part of efforts by MAS and the Singapore Exchange to support a more dynamic financial products ecosystem in Singapore, while upholding safeguards for investors.
It also builds on developments involving the streamlining of MAS’ complex products framework and enhancements to the mandatory product highlights sheet announced in May.
