{"id":1062,"date":"2025-06-24T12:37:03","date_gmt":"2025-06-24T12:37:03","guid":{"rendered":"https:\/\/iqeq.com\/sg\/?p=1062"},"modified":"2025-06-27T11:32:33","modified_gmt":"2025-06-27T11:32:33","slug":"fund-manager-looking-to-set-up-in-singapore-understand-the-cms-licensing-process","status":"publish","type":"post","link":"https:\/\/iqeq.com\/sg\/insights\/fund-manager-looking-to-set-up-in-singapore-understand-the-cms-licensing-process\/","title":{"rendered":"Fund manager looking to set up in Singapore? Understand the CMS licensing process"},"content":{"rendered":"
\n

By Yishan Lee, Managing Director, Regulatory Compliance, Asia<\/em><\/p>\n

Singapore\u2019s reputation as Asia\u2019s premier financial hub continues to attract fund managers looking to establish operations in the region, but there are licensing requirements to consider.<\/strong><\/p>\n

Any company wishing to conduct fund management activity for third-party investors must apply to the Monetary Authority of Singapore (MAS) to obtain a capital markets services (CMS) licence, as set out under the Securities and Futures Act 2001 (SFA).<\/p>\n

Although the evolving regulatory landscape and heightened scrutiny from the MAS has made securing a CMS licence more complex, it\u2019s also an increasingly strategic move for firms positioning themselves in Asia\u2019s financial ecosystem.<\/p>\n

Decoding the licensing process: what is the MAS looking for?<\/h2>\n

In the wake of higher application volumes in recent years, the average duration for the MAS to process a licence application<\/a> has gradually increased from four months in 2020 to five months in 2022, then to 6.5 months in 2024. The main drivers for the increase in applications have been the launch of the popular variable capital company (VCC) investment vehicle, the availability of attractive fund tax incentive schemes, growing preference for Singapore as financial services headquarters in Asia, as well as one-off factors such as the repeal of the regulatory regime for registered fund management companies (RFMCs) in October 2023 that resulted in a surge in RFMC registrations before January 2024.<\/p>\n

To maximise the efficiency of the licensing process for your firm, it\u2019s important to understand the key components and what the MAS is looking for.<\/p>\n

1. Investment strategies and asset classes<\/h3>\n

The SFA mandates that fund managers should ensure that the asset portfolios they propose to manage\/advise primarily involve capital markets products (CMPs). This includes securities, units in a collective investment scheme, over-the-counter derivatives, and exchange-traded derivatives.<\/p>\n

For those targeting non-CMPs such as immovable assets or digital assets, applicants need to be prepared for potential licensing restrictions in advising or managing such asset classes.<\/p>\n

2. Technology-driven fund management<\/h3>\n

For technology-driven trading strategies such as quantitative trading and artificial intelligence, applicants are generally expected to house the intellectual property and technology critical to the investment strategies within their entity or the group (if it is a global player) as it is deemed integral to the applicant\u2019s business model.<\/p>\n

3. Oversight of conflicts of interest<\/h3>\n

As part of Singapore\u2019s strong stance against financial services misconduct to protect investors and maintain market confidence, there is increasingly rigorous scrutiny of the effective management and mitigation of any actual or potential conflicts of interest among key appointment holders and shareholders. This has translated into pre-approval licensing conditions such as ceasing or prohibition of external business interests where such conflicts are assessed not to be adequately mitigated.<\/p>\n

Applicants can refer to Appendix 5 of the updated Guidelines on Licensing and Conduct of Business for Fund Management Companies<\/a> that set out examples of conflicts of interest and good industry practices for mitigating them.<\/p>\n

4. Shareholding structure scrutiny<\/h3>\n

Independent fund managers must demonstrate anchored leadership in their shareholding structure, particularly among their CEOs and executive directors. Where applicants are not part of an established financial services group (in which one or more group entities are regulated, whether in Singapore or another jurisdiction), MAS raises concerns on passive shareholders who are not involved in the applicant\u2019s proposed business in any manner.<\/p>\n

5. Evolving pre-approval licensing requirements<\/h3>\n

Recent observations indicate more onerous pre-approval licensing conditions. These include prohibitions on certain investment strategies, instruments or products, which may restrict operational flexibility. Furthermore, any material changes \u2013 such as changes to key individuals or submitted information \u2013 during the application process will inevitably result in a considerably longer processing time.<\/p>\n

The role of service providers<\/h2>\n

According to the MAS\u2019 annual Licensing Report for Capital Markets Intermediaries<\/a>, there were a total of over 800 applications submitted throughout 2022-2024. MAS has highlighted that service providers play a key role in the licence application process and these applications tend to be more complete with fewer errors, leading to more successful outcomes and reduced processing time. The rate of such applications being approved is more than 10% higher with the use of service providers \u2013 54.6% without a service provider; 66.7% with one.<\/p>\n

We observed that applicants with clear business plans, which provide comprehensive information and have put forth key appointment holders with strong credentials and relevant experience for the proposed business model, have experienced shorter processing times (e.g. under four months) as well as fewer queries from the MAS.<\/p>\n

Strategies to expedite your licensing application<\/h2>\n