The Monetary Authority of Singapore is consulting on the licencing and regulation of so-called ‘robo-advisory’ services in the city-state.
The paper, released via a statement yesterday, proposes to allow automated advisors to offer fund management services to retail clients without being bound by the strict provisions of the Securities and Futures Act and the Financial Advisers Act.
Existing fund managers need to have SG$1bn (US$720m) in assets under management and a substantial track record, something which few of the technology-led start-ups looking to offer low-cost, algorithmic services have.
Under the MAS proposals, robo-advisors will be able to miss out these requirements as long as they are able to show that they are providing investors with a “diversified portfolios of non-complex assets”; that their management includes staff with wealth management experience; and that they undertake an independent audit of their digital advisory business within a year of commencing operations.
It is expected that algorithm-based fund management could significantly lower the cost of simple advice for retail investors and also assist in bridging the saving’s gap that is prevalent in many jurisdictions.
MAS added that it has been trying to encourage innovation in the delivery of financial services, as part of a wider government bid to improve the country’s start-up ecosystem. Growing numbers of ‘fintech’ firms have moved to or started up in the city-state over the past few years, supported by the promise of supportive regulation and funding.