Guide to Singapore Financial Services License

The Monetary Authority of Singapore (MAS) governs the financial services industry in Singapore. It is a government-run body that has created certain laws to regulate financial services across the country such as the Securities and Futures Act as well as the Financial Advisers Act. These laws are combined to form a single modular licensing model and an integrated regulatory framework that provides industry participants with a sound and transparent set of rules. This framework was created to ensure that standards across all institutions providing fund management services would remain uniform with consistent requirements while at the same time affording the financial services industry the flexibility of accommodating high-level innovation among its participants.

Licenses for the Running of a Financial Services Business in Singapore

Due to the fact that the Securities and Futures Act and the Financial Services Act form a unified licensing model, a financial intermediary only needs to hold a single license. The license to be selected is the one which is more suitable for the intermediary’s activities. The licenses available are the Capital Markets Services License and Financial Advisers License. These licenses allow the intermediary to conduct property fund management, asset and portfolio management, investment advisory services, securities dealing and futures trading, and provision of advice on corporate finance measures. Only intermediaries who are eligible for certain exemptions do not require a license.

Foreigners and foreign companies are required to have a local individual or company to serve a representative. This representative will hold the license on behalf of the foreigner or foreign company.

Capital Markets Services License

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

• 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

Those engaged in any of these activities must obtain the Capital Markets Services License (CMS License) unless there is a specific exemption which applies. Only a corporation can be granted the CMS License. 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.

Entities Exempted from Holding a Capital Market Services License

The following entities are exempted from holding a CMS License:

• Banks, merchant banks, finance companies, and insurance companies are all exempt from requiring a CMS License; these entities are already regulated by the Monetary Authority of Singapore (MAS) under separate legislation
• Individuals who are acting on the behalf on an exempt person (i.e., a person who is exempt from holding a CMS License)
• Individuals who are acting on behalf of CMS License holders who are engaged in custodial services for securities or securities financing
• Individuals who are employees of banks or merchant banks and who are registered as associate persons of the Singapore Exchange Derivatives Trading Ltd.

The goal of the Securities and Futures Act is to ensure uniform standards among all industry participants that are engaged in the same types of activities. Therefore, those who are exempted from holding a CMS License are still required to be in compliance with the same requirements on market practices and conduct as those who hold such a license. These requirements include criteria on minimum academic qualifications and examination standards, moral character, and compliance with the requirements on market practices and conduct. Further information on these requirements exists on the Monetary Authority of Singapore’s (MAS) website.

Eligibility Criteria for Application for a Capital Markets Services License

Those applying for a Capital Markets Services License must fulfill the following eligibility criteria:

• 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.
• Business plans and future projections.
• 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.

Eligibility Criteria for Application for a Capital Markets Services Representative’s License

The following are the criteria to be fulfilled by those who are planning apply for a Capital Markets Services 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

How to Apply for a CMS License or CMS Representative’s License

To apply for either of these licenses, an applicant must complete the application forms and submit them to the Monetary Authority of Singapore (MAS). The forms are to be accompanied by all supporting documents. A non-refundable application fee must be paid during the application process. Successful applications will usually be processed within six months. If successful, the applicant will receive a CMS License or CMS Representative’s License as well as an Annual License Fee Advice document that specifies the exact amount of license fees payable. The license is valid for up to three years; license fees are to be paid on an annual basis. Renewal applications have to be submitted at least a month before the license’s expiry date. Those who have been rejected may file an appeal within one month of the rejection. The review process may take up to two months.

Financial Advisers License

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

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

Those engaged in any of these activities must obtain the Financial Advisers License (FA License) unless there is a specific exemption which applies. Only a corporation can be granted the FA License. If an individual intends to act as a representative of the FA License holder in conducting any of the above activities, the individual will need to acquire the related FA Representative’s License, unless there is an exemption.

Entities Exempted from Holding a Financial Advisers License

The following entities are exempted from holding an FA License:

• Banks, merchant banks, finance companies, insurance companies, insurance brokers and holders of a CML License are all exempt from requiring an FA License. These entities are already regulated by the Monetary Authority of Singapore (MAS) under separate legislation.
• Individuals who are acting on the behalf on an exempt person, i.e. a person who is exempt from holding a FA License.
• Individuals 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.

The goal of the Financial Advisers Act is to ensure uniform standards among all industry participants that are engaged in the same types of activities. Therefore, those who are exempted from holding a FA License are still required to be in compliance with the same requirements on market practices and conduct as those who hold such a license. These requirements include criteria on minimum academic qualifications and examination standards, moral character, and compliance with the requirements on market practices and conduct. Further information on these requirements exists on the Monetary Authority of Singapore’s (MAS) website.

Eligibility Criteria for Application for a Financial Advisers License

Those applying for a Capital Markets Services License must fulfill the following eligibility criteria:

• 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.
• Business plans and future projections.
• 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.

Eligibility Criteria for Application for a Financial Advisers Representative’s License

The following are the criteria to be fulfilled by those who are planning apply for Financial Advisers 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

How to Apply for an FA License or FA Representative’s License

To apply for either of these licenses, an applicant must complete the application forms and submit them to the Monetary Authority of Singapore (MAS). The forms are to be accompanied by all supporting documents. A non-refundable application fee must be paid during the application process. Successful applications will usually be processed within six months. If successful, the applicant will receive a FA License or FA Representative’s License as well as an Annual License Fee Advice document that specifies the exact amount of license fees payable. The license is valid for up to three years; license fees are to be paid on an annual basis. Renewal applications have to be submitted at least a month before the license’s expiry date. Those who have been rejected may file an appeal within one month of the rejection. The review process may take up to two months.