Friday, February 6, 2015

Amended Rules on Risk Based Capital Adequacy Requirements for Holders of Capital Markets Services Licenses

In July 2013, the Monetary Authority of Singapore introduced a new regime regarding capital requirements for Capital Markets Services licence holders. 

Independent Asset Managers (‘IAM’) that are Licensed Fund Management Companies (‘LFMC’) must in general maintain:
  • A Base Capital of SGD 250,000; and
  •  Financial Resources exceeding 120% of their Total Risk Requirement.          
The Financial Resources are basically the available shareholders’ equity. In most cases, the Total Risk Requirement amounts to:
  • SGD 100,000 for IAMs with an Annual Gross Income of SGD 2 million or below; or
  • 5% of the IAM’s Annual Gross Income up to SGD 10 million plus 2% of its Annual Gross Income above SGD 10 million.

Conditions however apply and a full calculation must be made.

Each quarter, the LFMC must submit a statement of assets and liabilities in Form 1 and a statement of Financial Resources and Total Risk Requirement in Form 2 within two weeks after the end of each quarter. At the end of each financial year, more comprehensive filings are required.

Registered Fund Management Companies (‘RFMC’) are not affected by this regulation.

While LFMCs should have already implemented the new Base Capital requirement in October 2013, LFMCs must maintain sufficient Financial Resources by 3 April 2015 at the latest.

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