MAS Mulls Family Office Framework: Sources

The Monetary Authority of Singapore is said to be exploring options for implementing rules that would put family offices on a firmer legal footing. But the regulator denies it is working on proposals specifically related to family offices.

The Monetary Authority of Singapore (MAS) has been exploring options for putting family offices on a firmer legal footing in the city, sources have told AsianInvestor, although the market regulator has denied it is working on proposals specifically related to family offices.

It is thought that MAS has had a team focused on family offices for as long as three years. The understanding is that the regulator may be looking to implement rules or guidance for single family offices (SFOs), which manage money solely for their founding families.

However, people with knowledge of the matter say they are not aware of a schedule for the introduction of any legislation. They say the MAS has been biding its time because it does not want to rush the framework and end up having to unwind something it puts in place.

There are no rules explicitly for single- or multi- family offices in Singapore, and as such a move could boost the city’s status as an Asian wealth management hub.

It is believed that any potential framework would distinguish SFOs from multi-family offices (MFOs), which oversee money for several clients, so are effectively service providers like asset management firms. Some MFOs start out as SFOs before taking in external clients, while others aim from the outset to look after the wealth of several families.

The hope is that a clear, explicit framework for FOs will encourage more families to set up an office in Singapore, following the growing number that have already done so (see AsianInvestor’s September magazine issue).

But the MAS denies it is working on such family-office initiative. “All persons who manage funds for a customer, regardless of the amount, are considered to be carrying out fund management, which is a regulated activity,” wrote an MAS spokesman in an email to AsianInvestor.

"Persons managing funds for related or connected persons may be exempted from licensing, subject to them meeting the exemption criteria," he added. "MAS is not working on any further regulatory proposals relating specifically to family offices."

Family offices would welcome such a move. “There has been talk of a regulatory framework for SFOs for a while now, but no details beyond that,” said the head of a Singapore based MFO. “This could mean the first steps by MAS towards putting in place a clearer regulatory environment for the entire SFO/MFO/IAM [independent asset manager] space.”

Sources noted that Singapore’s Economic Development Board has been promoting the city as a favourable place to set up an SFO, including conducting roadshows in Europe.

Kai Schneider, a partner in the investment funds practice at law firm Clifford Chance in Singapore, said that if it were making such a move, the MAS would be following in the footsteps of regulators in other jurisdictions.

If your sources are correct, this framework would be an interesting development, and consistent with what Dubai and Luxembourg have done,” he said. Those two jurisdictions have regulations in place specifically governing the family office segment, as does Qatar.

In Singapore, the investment industry is regulated by type of activity. Since an SFO managing $1 billion or more would be conducting asset management activities, it could be caught by the relevant rules on this area. But the entity would be doing so on behalf of its wealthy founding family alone, which would certainly be seen as a sophisticated investor.

The MAS team is thinking about issues such as how to draw a line between managing a cousin’s money, for example, and looking after an external client’s portfolio, noted sources.

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