MAS Proposals regarding licensing for exempt managers

Here is the link to The MAS consultation paper that deals with the possibility or requiring exempt fund managers to register and license representatives.

The proposal in our view is a step backwards for Singapore. One of the great advantages that Singapore currently has over Hong Kong in relation to asset management is the relatively light regulatory hurdle that has to be overcome to start up an asset management business that will only deal with a limited number of professional investors.

The proposals do not remove this advantage but they chip away at it.

The Hong Kong system is overdue for reform and it is in the best interests of the SFC to adopt a system where only corporations and responsible officers are licensed and the licensing of representatives is dropped.

Hong Kong should in fact adopt the Singapore proposals set out in the consultation paper. That would be a step forward for Hong Kong.

There is currently nothing to suggest that the Singapore system is broken. The MAS states in the paper that a good reason for the change is to level the playing field between traditional asset managers, who hold CMS licenses, and smaller firms who are exempt. We respectfully suggest that the two different types of firms do not compete for customers and there is no need for them to occupy the same playing field.

Retail investors dealing with a CMS license holder should be entitled to know that those people working for it meet minimum standards of probity and competence. Professional investors dealing with exempt fund managers have the resources and the motivation to make these determinations themselves. They do not need a regulator to help them.