• Guide to Singapore Financial Services License

The financial services industry has shifted and repositioned itself over the last few years. Spurred by the pandemic, the industry has seen a rise in digitalisation efforts to maintain the relationships they have between the company, employees, and customers. Business licenses are required for most business, and the financial services industry is no different.

What Are the Types of Financial Services Licenses in Singapore

Setting up a company offering financial services, especially in FinTech, in Singapore could be a smart move now. Ranked 2nd in biggest growth by industry in Singapore by the Ministry of Trade, the finance and insurance industry recorded a 5% growth in 2020.

To operate a financial service company, you will need to hold one of the two business licenses:

  • Capital Market Services (CMS) License
  • Financial Adviser’s (FA) License

Capital Market Services License

Those who conduct activities which are regulated by the Securities and Futures Act must apply for a Capital Markets Services License, unless exempted. These activities include:

  • Dealing in securities

  • Trading in futures contracts

  • Securities financing

  • Providing custodial services for securities
  • Leveraged foreign exchange trading
  • Advising on corporate finance matters
  • Fund management
  • Real estate investment trust management

The CMS License can only be applied by corporations. If an individual intends to act as a representative of the CMS License holder in conducting any of the above activities, the individual will need to acquire the related CMS Representative’s License, unless there is an exemption.

Financial Adviser’s License

Those who conduct activities which are regulated by the Financial Advisers Act must apply for a Financial Adviser’s License. These activities include:

  • Providing advice on investment products such as securities and unit trusts, futures contracts, life insurance policies including investment-linked life insurance policies), foreign exchange and leveraged foreign exchange contracts, and other structured products
  • Issuing reports on investment products

  • Making arrangements for life insurance products
  • Marketing collective investment schemes such as unit trusts

The Financial Services Act does not regulate the following areas:

  • Bank deposits – regulated under the Banking Act.
  • General insurance – arranged by intermediaries according to the Insurance Act and not considered to be an investment product.

  • Loans and mortgages – not regulated, also not investment activities.

Similar to the CMS license, only corporations can apply for the FA license and individuals acting as a representative of the FA license holder will need to acquire the FA Representative’s License, unless exempted.

Exempted Entities

There are some entities who do not apply for such licenses. The list includes the following:

Capital Market Service LicenseFinancial Adviser’s License
Banks, merchant banks, finance companies, and insurance companies – these entities are already regulated by the Monetary Authority of Singapore (MAS) under a separate legislationBanks, merchant banks, finance companies, and insurance companies – these entities are already regulated by the Monetary Authority of Singapore (MAS) under a separate legislation
Individuals who are acting on behalf of an exempt personIndividuals who are acting on behalf of an exempt person
Individuals who are acting on behalf of CMS license holders who are engaged in custodial services for securities or securities financingIndividuals who are Singaporean residents and act (directly or indirectly) as financial advisers who give advice on investment products excluding life insurance policies to no more than 30 accredited investors on any occasion. An accredited investor is an individual whose income over the preceding 12 months is either S$300,000 or whose net personal assets exceed S$2 million, a corporation with a net asset amount that exceeds S$10 million, or a trustee of a trust.
Individuals who are employees of banks or merchant banks and who are registered as associate persons of the Singapore Exchange Derivatives Trading Ltd.
Dylan
NOTE: Those who are exempted from holding a CMS or FA license are still required to comply with the same requirements on market practices and conduct as those who hold such a license. You may find more information on these requirements on the MAS website.

Eligibility Criteria for License Application

As with every business license, there is a set of eligibility criteria that you must fulfill before applying for them. The requirements for CMS and FA licenses are listed below.

License TypeEligibility
CMS License
  • Application must be for a corporation and its primary business activity must be one of the regulated activities specified in the Second Schedule to the Securities and Futures Act.
  • Evidence of a positive track record, management skills, and financial soundness over the preceding five years. This also applies to any parent company of major shareholders.
  • Have business plans and future projections in place.
  • Adequate internal compliance systems.
  • Ability to satisfy the minimum financial requirements which are listed in the Securities and Futures Act.
  • Personal status of the applicant as well as those of employees, officers, and substantial shareholders.
  • Approval from Monetary Authority of Singapore (MAS) to hire a CEO or Director who is a Singaporean resident.
  • At least two full-time employees in each of the regulated activities for which the corporation is seeking a license. Each of these employees will also need to hold a Representative’s License for the activities as required by the Securities and Futures Act.
  • If the applicant is applying for the license in order to deal in securities or trade in futures contracts, the applicant must have cumulative shareholders’ funds of S$200 million for securities dealing, and S$100 million for futures contract trading.
  • If the applicant is applying for the license in order to engage in fund management, the applicant must have at least S$1 billion worth of global funds under management.
  • If the applicant is applying for the license in order to engage in fund management or the advising on corporate finance matters of both, the Monetary Authority of Singapore (MAS) may decide to impose a license condition – one that specifies that the applicant has to purchase a Professional Indemnity Insurance policy and is in compliance with the basic requirements as stated by MAS.
  • If the applicant is applying for a license in order to engage in fund management or advising on corporate finance matters of both, the Monetary Authority of Singapore (MAS) may decide to impose a license condition – one that specifies that the applicant has to purchase a Professional Indemnity Insurance policy and is in compliance with the basic requirements as stated by MAS.
CMS Representative’s License
  • Application must be for an individual and be 21 years old or older.
  • Applicant must meet the minimum academic qualification and examination requirements as stated by MAS.
  • Applicant has to fulfill MAS’s criteria for being a fit and proper person
FA License
  • Application must be for a corporation with a physical presence in Singapore.
  • Applicant must satisfy the minimum financial requirements as stated in Regulation 15 of the Financial Advisers Regulation.
  • Have business plans and future projections in place.
  • Adequate internal compliance systems.
  • Personal status of the applicant as well as those of employees, officers, and substantial shareholders.
  • At least three years’ worth of experience in the financial advisory industry. Executive directors, including the CEO, must have at least five years of relevant working experience as well as the proper academic and professional qualifications.
  • The applicant must be in possession of an active professional indemnity insurance policy. The limit of the indemnity covered should be S$500,000 or more. The allowable deductible must not exceed 20% of the applicant’s net asset value at the end of the immediately preceding financial year.
FA’s Representative’s License
  • Application must be for an individual and be 21 years old or older.
  • Applicant must meet the minimum academic qualification and examination requirements as stated by MAS.
  • Applicant has to fulfill MAS’s criteria for being a fit and proper person

Procedure for Applying the Licenses

The procedure to apply for both CMS and FA licenses

  1. Complete all application forms and submit to MAS, along with supporting documents
  2. Payment of fee during application process
  3. Successful applicants will receive their CMS license or CMS Representative’s License and Annual License Fee Advice – the license is valid for 3 years.
ADVISE: The processing period for CMS license is usually 6 months – do plan and factor in time for appeal when doing your business planning. Appeals must be submitted within 1 month of rejection and may take up to 2 months.

Renewal of the license must be submitted at least 1 month before expiry.

Starting A Company in Singapore

Looking to start your financial service company in Singapore? Don’t be taken aback by the complex business license requirements, we’re here to help!

Reach out to us for a free consultation for your company incorporation, and other corporate services today!

whatsapp us
contact us

FAQs

Do I need a business license for every company?2021-08-30T13:19:22+08:00

Some industries do not require any business license. You may check out our Singapore Business License Guide (link to the business license guide) to learn more about the licensing requirements.

What is the Securities and Futures Act?2021-08-30T13:21:11+08:00

The Securities and Futures Act is an act created to regulate activities in the securities and derivatives industry. It also manages the institutions which operate within these industries. It was first enacted in 2001 and most recently revised in 2006. 

What is the Financial Adviser’s Act?2021-08-30T13:21:16+08:00

The Financial Advisers Act is an act created to regulate financial advisers across Singapore. It also regulates the actions of their representatives and supervisors. It was first enacted in 2001 and most recently revised in 2007. 

Share This Story, Choose Your Platform!

Just keep reading…

Join our PHP Community SG Forum - Expert Tips & Resources
Go to Top