MAS Regulations and Licences

Global capital markets participants are broadly classified into three groups — buy-side, sell-side, and financial intermediaries. While sell-side firms focus on issuing and selling securities, buy-side firms invest in them for fund management purposes. This article explores the buy-side segment, including hedge funds, private equity, and venture capital.

Singapore is rapidly emerging as one of Asia’s leading hedge fund hubs, rivaling Hong Kong. With government incentives, a favourable regulatory environment, and the introduction of the Variable Capital Company (VCC) structure, Singapore has attracted global fund managers seeking efficiency and stability. As more hedge funds set up locally, total assets under management have surged, solidifying Singapore’s position as a premier destination for fund management in Asia.

Singapore’s strong trade network and the signing of RCEP have deepened regional integration and boosted investor confidence. The hedge fund industry benefits from these developments, attracting significant inflows from global investors. Fund managers operating in Singapore are required to hold a Capital Markets Services (CMS) licence under MAS regulations.

The Monetary Authority of Singapore (MAS) regulates all payment service providers under the Payment Services Act (PSA). This unified licensing framework covers key activities such as e-money issuance, money transfer, and digital payment token services, ensuring safe and compliant operations within Singapore’s growing FinTech ecosystem.

The RFMC regime has been officially repealed by MAS, with all fund managers now transitioning to the A/I LFMC framework. The change streamlines regulatory oversight and supports Singapore’s growth as a trusted global fund management centre.

Singapore’s well-developed infrastructure, political stability and sustainable economic growth are factors attracting inflows of foreign direct investment. This eventually results in a higher demand for capital market services (CMS). Singapore’s financial institutions (FIs) need to hold a CMS licence to conduct regulated business activities under the Securities and Futures Act (SFA).

The rise of digitalisation in the financial sector has transformed how financial institutions operate — but it also heightens exposure to cyber threats. Following major global incidents such as the SolarWinds hack, the Monetary Authority of Singapore (MAS) revised its Technology Risk Management Guidelines in January 2021 to ensure stronger safeguards across the industry. Financial institutions must now assess technology risks, evaluate third-party vendors, and implement robust frameworks to protect client data and maintain system integrity.

Singapore’s strategic location, pro-business environment, and favourable tax incentives have made it a leading hub for fund managers. The introduction of the Variable Capital Company (VCC) structure in 2020 offers flexibility, tax efficiency, and scalability for fund managers. Supported by MAS initiatives such as the VCC Grant Scheme, the number of VCCs continues to grow, attracting offshore funds and family offices. As regulations evolve, Singapore’s position as a global financial centre is set to strengthen further.

The Monetary Authority of Singapore (MAS), as Singapore’s central bank and financial regulator, oversees the licensing and supervision of financial institutions (FIs) under five main sectors — Banking, Capital Markets, Financial Advisory, Insurance, and Payments.