MAS Proposes Simplifying Regulatory Framework and Abolishing RFMC System

The Monetary Authority of Singapore (MAS) has proposed simplifying the regulatory framework for fund management companies by abolishing the existing Registered Fund Management Companies (RFMC) system. Under these proposals, fund management companies currently operating under the RFMC system would be allowed to apply for a license as Licensed Fund Management Companies (LFMC) after submitting their applications. MAS announced these proposals on Tuesday, October 24, and has invited public feedback on the suggestions.

According to MAS, the RFMC system was introduced in 2012 following the abolition of the Exempt Fund Manager (EFM) regime to facilitate the transition of EFMs to a fully regulated framework. At that time, EFMs had the option to apply for either RFMC or LFMC status. The application criteria and operational requirements for RFMC were similar to those for LFMC, which serves only accredited or institutional investors, commonly referred to as A/I LFMC. However, RFMC faced lower requirements in terms of regulatory reporting frequency and detail, given their limited asset management scale and client base.

MAS noted that since 2012, the business models and risk profiles of RFMC and A/I LFMC have become increasingly similar, blurring the regulatory distinctions between the two. Many RFMCs have upgraded to A/I LFMC as their businesses grew, and most newcomers seeking to engage in fund management activities in Singapore prefer applying for A/I LFMC status over RFMC.

Regarding the proposal to abolish the RFMC system, MAS stated that existing RFMCs can continue their operations as usual during the transition period. The proposed transition arrangements include:

1. RFMCs must submit applications within a specified timeframe, detailing the assets they manage and confirming their ability to comply with A/I LFMC regulatory requirements. MAS will respond to RFMC applications within one month.

2. Upon transitioning from RFMC to A/I LFMC, companies will be subject to a cap of SGD 250 million on assets under management (AUM). After the transition, if they plan to expand their AUM, they can apply to MAS to raise this limit.

3. RFMCs applying for A/I LFMC status will not be required to pay any application fees.

Before the abolition of the RFMC system, MAS will conduct briefing sessions for RFMCs to address any uncertainties regarding the transition arrangements.