20 December 2018
The Monetary Authority of Singapore (“MAS”) is seeking feedback on proposed amendments to the current exemption framework for business arrangements between financial institutions in Singapore and their foreign related corporations (“FRC Framework”).
The FRC Framework allows foreign related corporations (“FRCs”) to provide cross-border financial services to customers in Singapore, without being subject to licensing requirements. Currently, FRCs seek approval from MAS for approval of the cross-border financial service on a case-by-case basis.
MAS released its consultation paper titled “Proposed Revisions to the Exemption Framework for Cross-Border Business Arrangements of Capital Markets Intermediaries” on 4 December 2018 (“Consultation Paper”) in which it proposes to streamline the FRC Framework by moving from the current ex-ante approval approach to an ex-post notification approach (“Proposed Framework”).
Under the Proposed Framework, regulated entities will no longer be required to seek approval from MAS prior to commencing their cross-border business arrangements with their FRCs and may commence the conduct of regulated activities under these business arrangements so long as they comply with a set of boundary conditions and submit periodic reports. The regulated entities will be required to notify MAS within 14 days of the commencement of the arrangements and confirm to MAS their compliance with the boundary conditions.
Boundary conditions are currently included in the FRC Framework but the Proposed Framework seeks to refine these conditions to ensure their continuing practicality and effectiveness under the ex-post notification approach. The refined boundary conditions relate to notification requirements, regulatory status of the regulated entities, regulatory status of FRCs, permissible clientele under the arrangements, internal controls over the arrangements and annual reporting requirements.
The Proposed Framework also adjusts the scope of the FRC Framework by including and excluding certain groups from its remit - certain over-the-counter derivatives brokers and futures brokers will be included and foreign research houses and venture capital fund managers will be excluded
The consultation closes on 31 January 2019.
The following materials are available on the MAS website www.mas.gov.sg:
- Consultation Paper on Proposed Revisions to the Exemption Framework for Cross-Border Business Arrangements of Capital Markets Intermediaries
- Template for Response to Consultation Paper on FRC Framework