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Publication
Keeping your dawn raid guidance current
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
Developments and market trends in Asia
Global | Publication | December 2016
Author Stella Cramer
Singapore’s financial regulator, the Monetary Authority of Singapore (MAS), has launched guidelines for its FinTech Regulatory Sandbox, which is now open for applications.
The regulatory sandbox is available to financial institutions or any interested firm that wishes to experiment with innovative financial services in a production environment but within a defined space and duration.
The guidelines explain the objectives of the regulatory sandbox and provide guidance on the application process including a:
template application form; and
practical example to illustrate MAS’ expectations on matters such as the evaluation criteria for entry into the sandbox. Applications for entry into the regulatory sandbox may be made at any time.
Singapore’s financial regulator, the Monetary Authority of Singapore (MAS), has launched guidelines for its FinTech Regulatory Sandbox, which is now open for applications.
The announcement of the guidelines was made by MAS Managing Director Mr Ravi Menon as part of the Singapore FinTech Festival on November 16, 2016.
The Singapore regulatory sandbox is available to financial institutions or any interested business that wishes to experiment with innovative financial services in a production environment but within a defined space and duration.
When a regulatory sandbox was first proposed by MAS in a consultation paper in June 2016, interested firms were encouraged to approach MAS to discuss how their FinTech solutions could be launched while the proposed guidelines were being considered and finalised.
The guidelines incorporate the feedback that the MAS received from the industry and have been road-tested against the approaches they have received from interested businesses.
The objective of a regulatory sandbox is to encourage innovation and experimentation of novel FinTech products, where for a defined period, the regulator will agree to relax certain regulatory requirements that a business would otherwise be subject to. Several jurisdictions including the United Kingdom, Malaysia and Hong Kong have also introduced a regulatory sandbox.
The guidelines explain the objectives of the sandbox and provide guidance on the application process, including a template application form and a practical example to illustrate MAS’ expectations on matters such as the evaluation criteria for entry into the sandbox. Applications for entry into the regulatory sandbox may be made at any time.
The MAS will assess each regulatory sandbox application against the following criteria:
If the application is successful, the applicant is known as a “sandbox entity”.
The MAS will determine the specific legal and regulatory requirements it is prepared to relax for the sandbox duration on a case by case basis, however Annex A of the guidelines includes examples of the types of laws and regulations that the MAS may relax and those that it will require to be maintained. For example, the MAS intends to require sandbox entities to maintain confidentiality of customer information and anti-money laundering compliance. On completion of the sandbox duration, the sandbox entity must exit the sandbox and the relaxation of laws and regulations by the MAS will expire.
To ensure transparency, the sandbox entity must notify its customers that the financial service is operating in a sandbox. Customers must acknowledge that they have read and understood the risks with the financial service. The MAS will also publish the names of all approved sandbox entities on its website.
On exiting the regulatory sandbox, the sandbox entity will be able to deploy the financial service on a broader scale provided: (i) the sandbox has achieved its test outcomes, and (ii) the sandbox entity can fully comply with the relevant legal and regulatory requirements.
At an exciting time for FinTech in Singapore, the issuance of the guidelines reflect the MAS’ commitment to building Singapore into a smart financial centre. The MAS has already received proposals to leverage a range of technology in the regulatory sandbox including distributed ledgers, machine learning, and big data analytics.
In the words of Mr Menon at Singapore's first FinTech festival on Wednesday, “Be it countries, businesses, or people – those who are alert to technology trends, understand their implications, and harness their potential will gain a competitive edge. To be sure, many of these technologies are disruptive to existing jobs and existing business models. But if we do not disrupt ourselves – in a manner we choose – somebody else will – in a manner we will not like.”
Author Emma de Ronde, James Parker and Nicholas Wilson
The SFC has recently commenced a consultation into proposals to update the Fund Manager Code of Conduct and the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. Among other proposals, the SFC is consulting the market about making changes that would require asset managers carrying on certain business to adopt additional corporate governance documentation and make additional disclosure in fund offering documentation. The consultation period will close on 22 February 2017.
In an effort to strengthen Hong Kong’s status as a leading asset management centre, on 23 November 2016 the Securities and Futures Commission (SFC) launched a three-month consultation into proposals to amend the Fund Manager Code of Conduct (FMCC) and the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the Code of Conduct).
The FMCC applies to persons who are licensed or registered with the SFC to carry on Type 9 (asset management) regulated activity in respect of collective investment schemes. The Code of Conduct applies to all other persons that are licensed or registered with the SFC. Relevantly, in its consultation paper, the SFC also notes that persons who are licensed or registered with the SFC to carry on Type 9 (asset management) regulated activity in respect of discretionary accounts should generally observe similar requirements to those applicable to managers of collective investment schemes under the FMCC.
Since the global financial crisis, regulatory bodies have made reforms to areas which affect the asset management industry, such as systemic risk, shadow banking, liquidity and risk management. These changes have been made to increase financial stability and improve investor outcomes. Following suit, the SFC has conducted a review of the existing regulatory framework governing the asset management industry in Hong Kong and sets out a series of proposed reforms in its two-part consultation paper.
In the first part of the paper, the SFC sets out its proposals to update the FMCC in the following areas:
In the second part, the SFC sets out its proposals to amend the Code of Conduct in two ways, by:
Interested parties are invited to submit their comments to the SFC by 22 February 2017.
The SFC will publish its consultation conclusions following the end of the consultation period. The SFC’s consultation conclusions will set out the changes that will be made to the FMCC and the Code of Conduct and the timing for these changes to come into effect.
Further detail and the consultation paper can be found on the SFC’s website.
Publication
Unannounced inspections or ‘dawn raids’ are used by antitrust authorities to obtain evidence when there are suspicions that individuals or businesses have infringed the antitrust rules.
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