A corporation that wishes to carry on a full commercial banking business in Singapore must apply for a licence under the Banking Act (Cap. 19) (BA). However, if its banking business is limited, it may apply to the MAS for approval to operate as a merchant bank instead. The typical activities of a merchant bank include corporate finance, mergers and acquisitions, underwriting of share and bond issues, portfolio investment management and other fee-based activities.
Exchanges, market operators, clearing houses and trade repositories
Corporations establishing or operating a market must apply to be an approved exchange or recognised market operator under the SFA, unless exempted by the MAS. Corporations establishing a clearing facility must apply to be an approved clearing house or a recognised clearing house under the SFA, unless exempted by the MAS.
Generally, corporations operating systemically important markets or clearing facilities will be regulated by the MAS as approved exchanges or clearing houses, which are subject to a higher level of statutory obligations than recognised market operators or clearing houses.
Corporations establishing a trade repository must apply for a licence under the SFA.
In addition, no corporation may be the holding company (a controller or majority shareholder) of an approved exchange, approved clearing house or licensed trade repository unless the MAS has granted it approved holding company status.
Capital markets activities
Corporations carrying on business in any capital markets activities must apply for a capital markets services licence under the SFA. However, financial services firms carrying on regulated activities may be exempted from the requirement to hold a capital markets service licence. For example, the following are exempted:
- any bank licensed under the BA in respect of any regulated activity;
- any merchant bank approved by the MAS in respect of any of its approved regulated activities;
- any finance company licensed under the Finance Companies Act (Cap. 108) (FCA) in respect of any regulated activity that is not prohibited by the FCA;
- any securities exchange, futures exchange, recognised market operator or approved holding company in respect of any regulated activity that is solely incidental to its operation of a securities market or futures market or to its performance as an approved holding company; and
- any approved clearing house or recognised clearing house in respect of any regulated activity that is solely incidental to its operation of a clearing facility.
Financial advisory activities
Corporations carrying on business in any financial services activities must apply for a financial adviser’s licence under the FAA.
However, exemptions similar to those relating to capital markets services licences above are applicable to financial advisory activities, too. There are also other exemptions available under regulations issued under the FAA (eg, where financial advisory services are only provided to certain persons).
Money-changing and remittance businesses
Corporations carrying on, or advertising that they carry on, money-changing or remittance business must apply for a licence under the Money-changing and Remittance Businesses Act (Cap. 187) (MCRBA).
Persons carrying on or holding themselves out as carrying on the business of moneylending must apply for a licence under the Moneylenders Act (Cap. 188) (MA), unless exempted or excluded under the MA.
Only public companies incorporated in Singapore may conduct financing business. They must apply for a licence under the FCA to carry out such business.
Corporations proposing to carry on trust business, or holding themselves out as carrying on trust business, must apply to the MAS for a trust business licence under the Trust Companies Act (Cap. 336) (TCA).
Payment and settlement systems
The MAS may classify a payment system as a designated payment system under the Payment Systems (Oversight) Act (Cap. 222A) (PSOA), if satisfied that it is systemically important to the financial system of Singapore or if it is in the interests of the public. An operator and settlement institution of the designated financial system is subject to statutory obligations under the PSOA.
In addition, the PSOA governs the issuance and management of stored value facilities.
Criteria for obtaining a licence, approval or recognition
Generally, the MAS will take into account, among others, the following factors when determining whether to grant a licence, or approve or recognise an organisation in respect of its regulated activities:
- the financial soundness, track record, international standing and reputation of the applicant and its parent institution or major shareholders;
- the strength of the home country supervision and the willingness and ability of the home supervisory authority to cooperate with the MAS;
- the ability to meet the minimum financial requirements prescribed under the relevant statutes;
- the strength of internal compliance systems;
- fitness and propriety of key office holders;
- risk management systems and processes that are robust and commensurate with the size and complexity of its proposed business;
- a well-considered strategy in banking or financial services, supported by sound business plans that include a detailed assessment of the sustained economic viability as well as the nature and criticality of the business; and
- whether the public interest will be served by the granting of a licence or approval.
Authorised individuals associated with financial services firms
Individuals who wish to conduct capital markets or financial advisory activities on behalf of a financial services firm must be appointed as representatives under the MAS’s Representative Notification Framework. The register of representatives is publicly accessible via the MAS’s website.
In addition, generally, key decision-makers of a financial services firm such as the chairman, chief executive officer and directors must be approved by the MAS.
Back to top