Singapore: MAS Proposes Revisions To The Exemption Framework For Cross-Border Business Arrangements Of Capital Markets Intermediaries

Last Updated: 6 December 2018
Article by Eric Chan
Most Read Contributor in Singapore, August 2019

 The Monetary Authority of Singapore ("MAS") has on 4 December 2018, published a consultation paper, inviting comments to a proposal to effect changes to the current exemption framework under the Securities and Futures Act ("SFA") and the Financial Advisers Act ("FAA"), for cross-border business arrangements between certain types of financial institutions in Singapore (each a "local FI") and their foreign related corporations that conduct a similar activity on a regulated basis outside of Singapore (each an "FRC").

The current approval regime

Currently, the SFA and FAA regulatory regimes provide for MAS to have the power to approve such collaborative cross-border business arrangements between a local FI and its FRC. The effect of such approval is that the FRC will be able to serve persons who are in Singapore, without the need for the FRC itself to hold a licence under the relevant licensing rules of the SFA or the FAA. In the SFA context, such an arrangement is commonly referred to as a "paragraph 9 arrangement" (the numeric reference being the relevant paragraph in the Third Schedule of the SFA) and in the FAA context, it is commonly referred as a "paragraph 11 arrangement" (the numeric reference being the relevant paragraph in the First Schedule of the FAA).

The exemption regimes under the SFA and the FAA for paragraph 9 arrangements and paragraph 11 arrangements respectively, are necessary because an FRC that serves persons in Singapore will otherwise risk breaching licensing rules in Part IV of the SFA, or in the FAA (as the case may be), when it deliberately or actively targets or promotes its overseas service offerings (which if conducted from Singapore would have required licensing), at persons who are in Singapore. This in turn arises from the fact that both the SFA and the FAA contain provisions that enable the respective licensing requirements of Part IV of the SFA and of the FAA, to be extended extra-territorially to a foreign person where that foreign person carries on, outside of Singapore, an activity which has a substantial and reasonably foreseeable effect in Singapore.

Currently, paragraph 9 and paragraph 11 arrangements have to be approved by MAS upon a joint application by the local FI and its FRC.

Proposal for a new notification regime

MAS is now proposing to streamline this exemption regime by dispensing with the need for MAS to give case-by-case approval of such cross-border business arrangements, and switching instead to a post-fact notification approach.

Under the proposed revised framework, the local FI and its FRC would be able to carry out the collaborative cross-border business arrangement, without first having to seek prior written approval from MAS, provided that MAS is notified within 14 days of the commencement of the arrangement and a pre-defined set of boundary conditions are observed.

Proposed boundary conditions

The boundary conditions proposed by MAS broadly cover the following aspects:

(a) notification to MAS of the arrangement within 14 days of commencement, and notification within 14 days of any material change;

(b) the local FI and the FRC having the requisite licences or authorisations to conduct the relevant activity under the arrangement;

(c) the clientele served under the arrangement should be non-retail customers;

(d) there being appropriate internal controls through which the local FI is able to oversee the conduct of the FRC and staff of the FRC;

(e) annual certifications by external auditors that the boundary conditions are observed; and

(f) annual data reporting requirements to MAS to enable MAS to carry out effective, risk-based oversight of all such arrangements.

Changes to the scope of the regime

MAS is also proposing to vary the classes of local FIs who would be able to avail themselves of the revised exemption regime. At present, the FRC exemption regime is available to the FRCs of the following classes of local FIs:

(a) all capital markets intermediaries licensed under section 82 of the SFA;

(b) regulated banks, merchant banks, finance companies and insurance companies, which have claimed exempt status under the SFA licensing rules and are able to conduct the relevant capital markets activities in accordance with the SFA;

(c) all financial advisers licensed under section 6 of the FAA; and

(d) regulated banks, merchant banks, finance companies, insurance companies and licensed capital market intermediaries, which have claimed exempt status under the FAA licensing rules and are able to provide financial advisory services in accordance with the FAA.

With the recent amendments to the SFA that took effect on 8 October 2018, and which conferred on MAS the jurisdiction to licence and regulate OTC derivatives brokers, certain types of derivatives brokers and futures brokers have been given the benefit of licensing exemptions, so that they do not need to hold capital markets services licences under section 82 of the SFA. MAS is thus proposing to extend the new FRC exemption regime to this group of exempt brokers and their FRCs.

Additionally, MAS is proposing to exclude from the scope of the new FRC exemption regime, arrangements involving only the issuance or promulgation of research reports, this being a class of financial advisory services regulated under the FAA. This proposal stems from the fact that there already exists a wider basis of exemption available under regulation 32C of the Financial Advisers Regulations. An exemption under regulation 32C, allows a foreign research house to distribute its research through a local financial adviser without the need for the foreign research house and the local financial adviser to be related to each other.

Finally, MAS is also proposing to exclude venture capital fund managers and their FRCs from the scope of the FRC exemption regime. MAS considers the FRC exemption regime ought not to be applicable to the business model of venture capital fund managers. While venture capital fund managers do hold capital markets service licences issued by MAS, they are not required to observe many of the ongoing business conduct rules applicable to other classes of capital markets services licensees. They are also only permitted to manage venture capital funds (as defined in the Securities and Futures (Licensing and Conduct of Business) Regulations) and cannot offer managed account services.

Impact assessment

This effort by MAS to simplify regulatory processes should be very much welcomed by the financial industry as a whole. It reflects a recognition by the financial regulator that regulatory regimes have become increasingly complex over the years, and it bodes well that the regulator is willing to consider ways and means to simplify things for the industry, whenever it is possible to do so.

It remains to be seen what the new notification regime will involve specifically. But one does hope that MAS will make a conscious effort to keep the notification regime as simple and as fuss-free as possible.

The consultation period closes on 31 January 2019.

A copy of the consultation paper may be obtained here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions