Singapore overhauls retail investment protection rules

Safeguards introduced to protect Singapore-based investors were announced via a series of changes to the Securities and Futures Act passed by Singapore Parliament yesterday.

The amendments to the law, released via a speech to parliament, will tighten the classification of accredited investors and reinforce the governance and enforcement powers of the Monetary Authority of Singapore (MAS).

Announcing the amendments, Minister for Education (Higher Education and Skills) Ong Ye Kung said that the changes are “significant and timely”. Among the changes, it will now be much harder for individuals to qualify as ‘accredited investors’. The previous rules define those with over S$2m of net personal assets as accredited investor, which is a status needed to be sold sophisticated investment products.

The new bill “tightens the way” net personal assets is calculated, so that the net equity of an individual’s primary residence can only contribute up to S$1m (US$0.7m) of the S$2m (US$1.4m)  investor threshold.

Ong, who is also a board member of the MAS said that the authority also intends to introduce an opt-in regime for the accredited investor class. “So even if an investor qualifies as an accredited investor, intermediaries cannot automatically treat him as such,” said.

Riskier products

The changes have been introduced in a bid to keep unaware or illiquid investors from being inadvertently exposed to riskier non-conventional investment products.

The amendments will also standardise the maximum penalty awarded in cases involving market misconduct to be either US$2m or three times the amount of benefits gained or losses avoided, whichever is greater.

This is an enhancement of the current rules, which cap the penalty at three times the benefits gained or losses avoided, subject to a minimum of S$50,000 (US$35,084)

Under the new rules the Singapore Central Bank will also classify ‘buy-back’ arrangements involving gold, silver and platinum as debentures.

‘Transparency and credibility’

“This Bill introduces significant and timely changes to our capital markets legislation, particularly to strengthen safeguards for retail investors and enhance the transparency and credibility of the securities and derivatives markets,” added Ong. “MAS will continue to review its capital markets regulatory framework to ensure that it keeps pace with market developments and international standards, and supports the growth of Singapore’s economy.”

Gary Robinson
Head of Video and Ezines at Open Door Media Publishing. Deputy Editor, International Investment. An experienced journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as a fully qualified IFA, Gary works across both International Investment and InvestmentEurope titles. Previous video production credits include projects on BBC, C4 and SKY.

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