COVID-19 Measures

COVID-19 continues dominating business, also for financial institutions. The Monetary Authority of Singapore issued several circulars outlining expectations to limit presence in the office and safe distancing measures. On the other hand, MAS has announced support schemes for financial institutions in addition to the general government grants in Singapore.

MAS is expecting financial institutions reduce working from the office and work from home instead. Where work at the the financial institution’s premises is required, strict safe distancing measures apply and appropriate clearance must be obtained. Onsite review of financial institutions ‘compliance with safe distancing measures has been announced.

Conversely, MAS is also accommodating to the challenges of financial institutions in this extraordinary situation. With the implementation of the circuit breaker, MAS announced on 7 April 2020 that it will among others take the following regulatory and supervisory measures regarding operations of financial institutions:

• provide financial institutions more latitude on submission timelines for regulatory reports, i.e. extend specified deadlines for submissions, and defer non-urgent industry projects;
• allow for representatives of Singapore financial institutions that are unable to return to Singapore to conduct regulated activities abroad and for representatives of foreign related financial institutions to carry out regulated activities from Singapore, both subject to certain conditions (FAQs on Relief Measures Relating to COVID-19 Situation); and
• suspend regular onsite inspections and supervisory visits till further notice.

Contact us if you require further information on the timeline extension or other relief measures.

Grants to Support Financial Institutions and FinTech Companies

In addition to this adaptations in regulatory requirements, MAS has also launched a financial support package of SGD 125 million for financial institutions and fintech firms to deal with the immediate challenges from COVID-19 and position them strongly for the recovery and future growth. The measures will support our workers, enhance operational readiness and resilience, accelerate digitalisation and boost capabilities across the sectors. An overview of the support package covers the following three areas

Training Allowance Grant
The course fee subsidy for attending IBF accredited courses is increased to 90%, for a limited period of time even up to 95% and extended to fintech firms. In addition, training allowance is paid of SGD 10 per hour of training for self-sponsored individuals and SGD 15 per hour of training for employees sponsored by financial institutions and fintech firms.
If you are working with foreign clients, you may use this opportunity to learn more about cross-border compliance regarding Indonesia, Malaysia and Thailand in the e-learning by our partner BRP

Digital Acceleration Grant

Smaller financial institutions and fintech firms can obtain up to 80% of financing for the adoption of digital solutions. The funding supports a wide range of digital solutions.

The Digital Acceleration Grant (DAG) scheme supports Singapore-based smaller financial institutions and fintech firms adopt digital solutions to improve productivity, strengthen operational resilience, manage risks better, and serve customers better. The scheme parameters consisting:

1. Funding Amount: 80% co-funding of qualifying expenses for applications submitted by 31 Dec 2021, thereafter 70% co-funding will apply.
2. Funding Duration: Institution projects: 1 year, industry pilots: 2 years
3. Eligibility: Singapore-based financial institutions and fintech firms with not more than 200 employees.

Reach out to us if you have any questions about the Digital Acceleration Grant or if you would like to explore with us, how regtech solutions can facilitate your operations.

Additional Guidance on the Payment Services Act

In order to provide more clarity on the Payment Services Act including what activities require licensing and what the regulatory obligations of the various payment institutions are, MAS has updated its FAQs on the Payment Services Act. If you are in the process of preparing your application for a payment services license, these FAQs may fill in some details that you are struggling with. Alternatively, you can always reach out to us to discuss your questions.

Aaron Chua, Manager at Ingenia, is providing an overview of AML/CFT measures for payment services providers dealing in digital payment tokens in “RegWatch: Guidelines to Notice PSN02 on Prevention of Money Laundering and Countering the Financing of Terrorism — Digital Payment Token Services“: from non-face-to-face on-boarding to transaction monitoring. For any additional questions, reach out to Aaron.

Collection of Personal Data for COVID-19 Contact Tracing

Contact tracing during these extraordinary times of COVID-19 has raised a flurry of questions vis-à-vis personal data collection around the globe.  Click here for advisory by the Personal Data Protection Commission in the context of Singapore.

Industry Updates & Developments

Continuing Uncertainty and Opportunities (?) Due to COVID-19

Volatility due to the COVID-19 pandemic continues impacting financial markets. Derivative specialist Leonteq pulled its forecast for the full year and expects a period of persistent uncertainty. The global spread of the COVID-19 disease and the oil price drop affected all asset classes underlying structured products. Investment banks also saw a mixed first quarter. According to a report financial markets data and infrastructure provider Refinitiv, fees generated by the equity capital market were up by 22.9%, fees by debt capital market underwriting declined by 4.8%, and fees from mergers & acquisitions falling by 39.2% in Asia Pacific (excluding Japan) compared year-to-year.

In contrast, a report by KPMG China expects family offices to increase transactional activities and seize opportunities created by the outbreak. The report underlined acquisition opportunities for family offices with strong cash flow, projecting increased M&A activity and an increased market share from the segment. It highlighted opportunities in healthcare, logistics, automation, virtual offices, entertainment, retail and education, though it also noted higher valuations in the coming period. Co-investment strategies, re-valuation strategies that focus on the coronavirus impact and value creation through M&A via mutual benefits of business synergy on top of the price tag are some of the recommended considerations for the acquisitions.

Ingenia is organising a webinar together with the Association of Independent Asset Managers, North Ridge Partners, Fundnel, VentureCap Insights and Vulpes Investment Management on how such direct investments can be accessed and evaluated. Register here.

Growing Segment of Boutique Financial Institutions

In 2019, the Monetary Authority of Singapore admitted 196 capital markets intermediaries; an increase of 29 from 2018. 158 out of these 196 new financial institution have been authorised for fund management. For more insights, see MAS’ “Licensing & Registration Report for Capital Markets Intermediaries“.

A reason for this increase in capital markets intermediaries may be in the increasing awareness that the traditional private banking offering alone may not be truly aligned with the families’ long- term objectives. Relationship managers’ long-standing relationships with some clients have come under extreme stress as margin calls were made or earlier house views, to which portfolios were allied, have been demolished. As a result, these experienced relationship managers set up independent asset management companies (“EAMs”).”If you aspire to work with wealthy families you need to be independent” read the article in which the managing partner at a Singapore-based multi-family office shared his view on the multi-family office model and the advantage of this structure to work with different service providers to match families and their diverse need.

Ingenia has been providing assistance to private bankers and other investment professionals in setting up and obtaining the required license for their independent entity. Contact us, if you would like to learn more about what it takes to obtain a license yourself. We are happy to assist. After all, MAS noted in its report that they “found [applications assisted by service providers] to be more complete and with fewer errors. This helped reduce the time taken to process the application.”

Ascend of FinTech Companies

At the same time, fintech continues growing. 415 entities have notified MAS of their payment service activities and been granted temporary exemption from holding a license under the Payment Services Act. Among notable names benefiting from exemption are Alibaba.com, Alipay, Bitgo, Paxos, Paypal, Binance, Coinbase and Ripple. All these entities must now work towards proper licensing during the transition period.

In Hong Kong, virtual banks are launching, some however with delay due to the COVID-19 pandemic. Of the eight virtual bank licensed last year, other than ZA Bank which have fully kicked off for business, three have made soft launches (Ant Bank, Airstar Bank and Mox) and the remaining four have yet to announce any launch dates (Welab Virtual bank, Ping An One Connect Bank, Tencent-backed Fusion Bank and Bank of China(HK)-backed Livi Bank). In Singapore, licenses for digital banks will be delayed. MAS announced that the much coveted licenses will only be granted in 2H2020.