Regulations for Fund Management Companies

Is a fund management company allowed to manage customer’s assets and monies held at accounts opened with foreign brokers that are not regulated in Singapore?

According to MAS (FAQs)

last revised on 12 October 2021

FMCs are not allowed to market, recommend or staple the services of foreign brokers that are not licensed or regulated in Singapore to the FMCs’ fund management services. While these foreign brokers may be regulated by other financial regulators outside Singapore, they are not subject to MAS' regulatory purview, and investors who transact with them will not have recourse to the protection provided under our law. FMCs would also run the risk of abetting foreign brokers who do not hold the appropriate licence in Singapore to provide brokerage services to investors in Singapore, in breach of the extra-territorial provision in the SFA.

At the same time, it is not MAS’ intention to prohibit an FMC from on-boarding accredited or institutional investors who had already opened accounts with foreign brokers, prior to being a customer of the FMC, and link such pre-existing foreign broking accounts to its fund management service. In such cases, MAS expects the FMC to demonstrate (for example, by way of maintaining appropriate documentation) that the customer already had an existing account with the foreign broker, and that the foreign broker account was not opened shortly prior to the establishment of the relationship with the FMC, especially at the suggestion or influence of the FMC, against the spirit of this expectation.