Monetary Authority of Singapore
SECURITIES AND FUTURES ACT
(ACT 42 OF 2001)
GUIDELINES ON CRITERIA FOR THE GRANT OF A
CAPITAL MARKETS SERVICES LICENCE AND
REPRESENTATIVE’S LICENCE
Guidelines on Criteria for the Grant of a Capital Markets Services Licence
and Representative’s Licence
1
Guideline No : SFA 04-G01
Issue Date : 1 October 2002 (Last revised on 15 June 2004)
GUIDELINES ON CRITERIA FOR THE GRANT OF A CAPITAL
MARKETS SERVICES LICENCE AND REPRESENTATIVE’S
LICENCE
1 Purpose of these Guidelines
1.1 These Guidelines are issued pursuant to Section 321 of the Securities
and Futures Act (Act 42 of 2001) [“SFA”].
1.2 The Guidelines set out the licensing requirements under the SFA and
the licensing admission criteria for persons applying for a Capital Markets
Services [“CMS”] licence or a representative’s licence.
1.3 These Guidelines should be read in conjunction with the provisions of
the SFA and the Securities and Futures (Financial and Margin Requirements
for Holders of Capital Markets Services Licences) Regulations 2002.
2 Who needs to hold a CMS licence
2.1 A company that carries on a business in any regulated activity in
Singapore would need to hold a CMS licence under the SFA. Individuals
who are employed by or acting for the company to carry out the regulated
activity [other than sub-paragraphs (f) and (g) below] are required to hold a
representative’s licence under the SFA.
2.2 The regulated activities are specified in the 2nd schedule of the SFA as
follows:
a) Dealing in securities;
b) Trading in futures contracts;
c) Leveraged foreign exchange trading;
d) Advising on corporate finance;
e) Fund management;
f) Securities financing;
Guidelines on Criteria for the Grant of a Capital Markets Services Licence
and Representative’s Licence
2
g) Providing custodial services for securities.
2.3 The definitions of the regulated activities are provided in the 2nd
Schedule to the SFA.
3 Criteria for CMS licence
3.1 A CMS licence will only be granted to a corporation1. A company
applying for a CMS licence is required to establish a physical office in
Singapore and to employ at least 2 full time representatives.
3.2 The applicant should also satisfy the base capital requirements for its
proposed regulated activities, as set out in the Securities and Futures
(Financial and Margin Requirements for Holders of Capital Markets
Services Licences) Regulations 2002. The base capital requirement
[“BCR”] for each regulated activity is as follows:
Regulated Activity BCR (S$)
Dealing in securities
(SGX-ST clearing members)
5 million
Dealing in securities
(SGX-ST non-clearing
members)
1 million
Dealing in securities
(non-members)
1 million
Dealing in securities
(introducing brokers*)
500,000
Dealing in securities
(restricted brokers**)
250,000
Trading in futures contracts
(SGX-DT clearing members)
5 million
Trading in futures contracts
(SGX-DT non-clearing
members)
1 million
Trading in futures contracts
(non-members)
1 million
1 Refers to any body corporate incorporated in Singapore or outside Singapore.
Guidelines on Criteria for the Grant of a Capital Markets Services Licence
and Representative’s Licence
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Trading in futures contracts
(introducing brokers*)
500,000
Trading in futures contracts
(restricted brokers**)
250,000
Leveraged foreign exchange
trading
1 million
Advising on corporate finance 250,000
Fund management (including
management of collective
investment schemes)
1 million
Fund management (excluding
management of collective
investment schemes)
500,000
Fund management for
accredited investors
250,000
Securities financing 1 million
Providing custodial services for
securities
1 million
*Refers to a corporation which deals in securities or trades in future
contracts which (i) does not carry customers’ positions, margins or
accounts in its own books; and (ii) undertakes the business of soliciting
or accepting orders for the purchase or sale of any securities or futures
contract or deals or trades only with accredited investor(s).
**Refers to a corporation which deals in securities or trades in future
contracts which (i) does not carry customers’ positions, margins or
accounts in its own books; (ii) only carries on the business of soliciting
or accepting orders for the purchase or sale of any securities or futures
contract or deals or trades only with accredited investor(s); and (iii)
does not accept money or assets from a customer as a margin for, or to
guarantee or secure, the futures contracts of that customer.
Guidelines on Criteria for the Grant of a Capital Markets Services Licence
and Representative’s Licence
4
3.3 Where more than one BCR is applicable, the amount of BCR required
shall be the highest of the applicable BCRs.
3.4 In addition, the applicant will have to satisfy the following
requirements:
a) be a reputable entity that has established track record in the proposed
activity to be conducted in Singapore or in a related field, at least
over the past 5 years;
b) have the relevant competence and expertise to carry out the
proposed activity;
c) satisfy the Monetary Authority of Singapore [“MAS”] that it would
discharge its duties efficiently, honestly and fairly;
d) have good ranking in their home country; and
e) is subject to proper supervision by a recognized home regulatory
authority.
3.5 Applicants applying to provide fund management (other than boutique
fund management as stated in para 3.7) should have global funds under
management of at least S$1 billion.
3.6 Applicants applying to deal in securities or trade in futures contracts
should have minimum group shareholders’ funds of S$500 million and
S$100 million, respectively.
3.7 Licence Requirements for a Boutique Fund Management
A corporation may apply for a CMS licence to provide boutique fund
management if they meet the following requirements:
Requirements
Funds Under Management
(Discretionary/
Non-Discretionary)
Must have at least S$100 million of
funds under management. This could
be funds under management in
Singapore or elsewhere.
Shareholding Must be majority-owned by local
fund management professionals or
local entities. Foreign BFMs will be
considered on a case-by-case basis.
Guidelines on Criteria for the Grant of a Capital Markets Services Licence
and Representative’s Licence
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Track Record Minimum 3-year corporate track
record in the fund management
business.
Management Expertise At least 2 fund managers, at least one
of whom must be a shareholder. The
shareholder must have at least a 10-
year acceptable track record in fund
management or in a closely related
area, with at least 3 years of
experience in fund management itself.
In addition, at least one other fund
manager must have at least 5 years of
experience in fund management or in
related areas. The fund managers
must also have acceptable academic
qualifications such as a degree or
professional qualification including
as a Chartered Financial Analyst.
Professional Indemnity
Insurance
1-3% of funds under management, as
determined by MAS.
Investment Management
Association of Singapore
[“IMAS”]
Must be a member of IMAS
Clientele Restricted to the following investors:
- Individuals whose total net
personal assets exceed S$1 million
or its equivalent in foreign
currencies or whose income in the
preceding 12 months is not less
than S$200,000 or its equivalent in
foreign currencies; and
- Corporations whose total net
assets exceed S$5 million in value
or its equivalent in foreign
currencies as determined by the last
audited balance sheet of the
corporation.
Guidelines on Criteria for the Grant of a Capital Markets Services Licence
and Representative’s Licence
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3.8 Licence Requirements for Start-up Boutique Fund Management
A corporation which does not possess corporate track record as required
under the boutique fund management scheme may apply for a CMS licence
to provide start-up boutique fund management if they meet the following
requirements, in addition to the requirements stated in para 3.7:
Requirements
Key Officers2 Must be resident in Singapore, and
any replacement of Key Officers
within the first three years will be
subject to MAS approval.
Clientele Restricted to 100 qualified investors3
for the first three years of operations.
These additional requirements may be lifted after 3 years.
3.9 Representatives of start-up boutique fund managers are not exempted
from the requirement to pass Module 3 (Rules and Regulations of Fund
Management) of the CMFAS examination even though their clientele is
restricted to qualified investors during the first three years of operation.
2 Refers to the fund managers holding the requisite individual track record under the
"Management Expertise" requirement.
3 As defined under section 5(3) of the Second Schedule to the SFR.
Guidelines on Criteria for the Grant of a Capital Markets Services Licence
and Representative’s Licence
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4 Criteria for Representative’s Licence
A representative’s licence will only be granted to an individual who is
at least 21 years old. The applicant must possess at least 4 credits in the GCE
“O” level Examination (or its equivalent), and satisfy the examination
requirements as prescribed in MAS Notice No: SFA 04-N03. In addition,
the MAS will take into account the following information on the applicant:
a) financial status and solvency;
b) other qualifications or experience, having regard to the nature of
the duties the applicant will perform;
c) ability to perform the functions of a representative efficiently,
honestly and fairly; and
d) reputation, character and integrity.