The Monetary Authority of Singapore (MAS) released a consultation paper on proposals today to enhance its regulatory framework for safeguarding investors’ interests.
Firstly, it plans to extend the current regulatory safeguards available to investors in capital markets to investors in non-conventional investment products.
In a statement, MAS said, “In recent years, there has been an increase in the number of non-conventional products offered to retail investors as alternative investments. Many of these products have features that are similar to regulated capital markets products, but are structured to assign ownership of underlying physical assets to investors, thereby taking them outside the regulatory perimeter of the Securities and Futures Act (SFA).”
By introducing capital markets regulatory safeguards for investors in non-conventional investment products, it will ensure structures which are in substance capital markets products are regulated as such.
Secondly, MAS proposes complexity-risk ratings for investment products to help retail investors differentiate between simpler and more complex investment products, as well as gauge their riskiness.
Under the proposed framework, all investment products sold to retail investors will be rated along two dimensions; complexity of structure and risk of loss of initial investment principal. Product issuers will be required to disclose these ratings.
Thirdly, is to provide accredited investors (AI) the option to benefit from the full range of capital markets regulatory safeguards that are applicable for retail investors.
In line with the practice of other major financial centres, non-retail investors are considered to be better informed and/or better able to access resources to protect their interests, and hence require less regulatory protection. However, the global financial crisis has led the international regulatory community to examine whether this is still a valid notion.
Hence, MAS proposes to provide AIs with a choice to benefit from the full range of capital markets regulatory safeguards that are applicable for retail investors. Under this proposal, AIs will by default be treated as retail investors unless they choose to “opt-in” to AI status.
Lee Boon Ngiap, Assistant Managing Director of Capital Markets at MAS, said, “Taken together, the three proposals will further safeguard investors’ interests and empower them to make better informed investment decisions.”
The public is invited to participate in the consultation exercise on the proposed changes from 21 July to 1 September 2014.
Muneerah Bee, Senior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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