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Singapore authority reviewing VC regulation to boost startups

The Monetary Authority of Singapore (MAS) is reviewing the country's regulatory regime for venture capital (VC) managers to "grow the funding landscape" for startups in Singapore and the region, deputy prime minister and chairman of MAS Tharman Shanmugaratnam has said. 14 Nov 2016

MAS will "significantly simplify and shorten the authorisation process for new VC managers" and is "looking to exempt VC managers from business conduct requirements that are currently applied to asset managers in general", Tharman said in a speech at the launch of a financial technology, or fintech, innovation centre.

The Authority will run a public consultation on this proposal in January next year, with a view to introducing changes by July 2017, he said.

MAS will also look whether incentives designed to attract traditional asset managers to Singapore are suitable for VC funds and fund managers, Tharman said.

"We recognise that VC funds and fund managers are typically smaller in size and headcount than traditional asset managers. But they contribute in a different way, by supporting entrepreneurship and innovation in Singapore and the region. We will take this into account in assessing the requirements for VC funds and fund managers to qualify for our incentives," he said.

Venture capital specialist Bryan Tan of Pinsent Masons MPillay, the Singapore joint venture partner of Pinsent Masons, the law firm behind, said: "This reflects the thoughts within the VC community and the changes are likely to be welcomed."

Tharman also discussed the role of fintech in the Singapore banking scene. Launching the LATTICE80 innovation centre he said that fintech is "transforming financial services, both from within established financial institutions and from outside the regulated sector through new, fintech players".

At first "it was tempting to cast this as a battle between new, innovative and responsive players and lumbering, flat-footed banks and other financial institutions [but] the real picture is more nuanced, mainly because the incumbents have not been sitting still," Tharman said.

Established banks have been investing heavily in technology to streamline and optimise operations, he said, and many have been investing in fintech companies or setting up their own development operations.

"And not many technology companies aspire to become financial institutions. Complying with regulations, submitting to supervision, and churning out disclosure documents for the markets is not always an appealing prospect," he said.

Singapore, he said, should support both types of development, and MAS is working with the industry to improve collaboration.

In June, MAS proposed a 'regulatory sandbox' that aims to allow financial services firms, technology companies and other "non-financial players" in Singapore to test new financial technology products and services in an environment where some regulatory requirements are relaxed.

A 'fintech bridge' between the UK and Singapore was announced in May. The deal will involve the sharing and use of information on "financial services innovation" by the UK's Financial Conduct Authority (FCA) and MAS.

As part of the deal, the FCA and MAS have put in place a "regulatory cooperation agreement". The agreement is designed to help companies win authorisation for new financial technology products, services and business models in both jurisdictions.