SINGAPORE – The Monetary Authority of Singapore (MAS) has proposed new measures to improve investor protection, including extending current regulatory safeguards to cover non-conventional investment products and making it mandatory for all investment products to be rated according to their complexity and risk.
A consultation paper released by MAS earlier this week noted the increase in the number of complex non-conventional products offered to retail investors and the way that such schemes are structured in order to assign ownership of underlying physical assets to investors which, as a result, takes them out of the regulatory boundary of the Securities and Futures Act (SFA) and the Financial Advisers Act.
Two such non-conventional products –buy-back arrangements involving the exchange of precious metal, and collective investment schemes (CIS) which do not pool investors’ contributions – are being targeted by MAS. The central bank has recommended that the current regulatory safeguards available to ordinary investors in capital markets under the SFA should be expanded to investors involved with non-conventional investment products such as these. As part of this, the exchange of precious metals would be regulated as ‘debentures’ and non-conventional CIS, speculated to cover land banking, would be regulated as conventional CIS. The amendments to CIS coverage would put MAS’s regulatory coverage of the product in line with Hong Kong and the UK.