Singapore Makes Changes to Hedge Fund Licensing

The Monetary Authority of Singapore has introduced new rules for fund managers operating in Asia’s financial hub. The much awaited

The Monetary Authority of Singapore has introduced new rules for fund managers operating in Asia’s financial hub. The much awaited amendments to licensing for hedge fund managers are to be implemented this month after managing director Mr Ravi Menon announced the changes in the regulators annual report – press conference.

The central bank kept the doors wide open for hedge fund managers to set up base in Singapore as Dodd Frank, the Tobin tax and other intricate hurdles in US and Europe were making life difficult for managers. In 2010, the MAS allowed smaller hedge funds with AUM of SGD250 million to operate without a fund managers licenses.

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The new rules will mean that managers, below and above the SGD$250 million (US $200 million) threshold, will have to face some changes. Mr Menon said “All fund management companies will have to meet the enhanced competency, business conduct, and capital requirements by August 2012. Those with assets under management greater than SGD250m will have to be licensed, while those below this threshold may operate under the ‘Registered Fund Management Company’ regime, which will replace the existing ‘Exempt Fund Manager’ regime.” As a result, fund managers will need to liaise with the MAS regarding their new status and implement enhanced compliance controls and processes accordingly.”

The new changes could make doing business in Singapore costly and drive managers to Hong Kong. Singapore and Hong Kong have been in an ongoing ‘cat and mouse’ struggle to conquer their position as Asia financial capital.

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Singapore’s hedge-fund industry grew to $43 billion at the end of 2009, from about $10 billion in 2005, according to the central bank. There were 320 hedge-fund managers in the city- state last year, compared with fewer than 20 before 2001, according to the MAS.

The number of hedge funds overseen by managers licensed by the Securities and Futures Commission in Hong Kong grew to 542, nearly five times the 2004 number, according to a September report from the regulator. Total assets managed by the industry stood at $55.3 billion as of March 31, 2009, representing six times the level in 2004.

Sherpa Funds a Singapore based FX hedge fund trades in G10 FX, giving investors an annual average return of 15%.

Singapore is one of the fastest growing markets for margin trading, Forex Magnates research team has written a detailed overview of the state of FX in Singapore, available in the Q1 quarterly report. The country reports cover useful information for brokers and service providers looking to develop their own sales and marketing strategy.

SICAV’s and UCITS can invest a portion of their portfolio in CFD’s.

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