Singapore To Review Hedge Funds Regulation
Monday, April 26, 2010

The Monetary Authority of Singapore (MAS) – the jurisdiction’s central bank – has said in a statement that it is to review its rules for the fund management industry. The review will include hedge funds, fund managers, and investment managers.

A public consultation on the review will be launched within the next two weeks, the MAS stated in an email to Bloomberg.

The review will include a re-examination of how investment and alternative fund managers interact with their investors and stakeholders. The MAS emphasized, however, that it remains committed to efforts to develop Singapore as a key alternative investment and fund management hub.

The MAS believes the review “is essential for the long-term and sustainable growth” of the industry.

The city state’s hedge fund industry is the second largest in Asia. Growth in the sector has been promoted through tax breaks and incentives offered to foreign companies setting up business there, as well as light or, in some cases, no regulation – particularly for hedge funds with 30 or fewer professional investors that qualify under MAS guidelines. Those regulations that are in place for such hedge funds relate to money-laundering and local rules relating to securities and futures trading, which require hedge funds to be sure of their clients’ financial awareness.

According to Melvyn Teo, director at the BNP Paribas Hedge Fund Centre at Singapore Management University, who was quoted in Bloomberg, the MAS is “aware of the need to find the right balance. It will make Singapore less appealing to really small, young hedge funds, but the industry is maturing at the moment. We might still be quite attractive to more established larger ones.”

The announcement follows a report in the Financial Times in September 2009 that the MAS was consulting with the hedge fund industry in Singapore on reviewing the regulatory regime, after the US and Europe raised concerns over regulation of the sector following the financial crisis.