The Monetary Authority of Singapore (MAS), Singapore’s central bank, is looking at regulating client-facing digital advisory services.
Digital Advisory Services, or “robo-advisory services” are sprouting up to fill the space of wealth management companies at lower entry levels of investment. Digital advisory represents disruption and competition in the market of wealth advisory. This development is hitting markets worldwide including the US and EU, where both countries are already reviewing regulatory requirements. MAS is looking to de-regulate certain requirements for digital advisory services to function in Singapore.
The MAS consultation sets out areas of concern, including:
Minimum standards of care that digital advisors should exercise – conditions and issues in client-facing robo-advisory including establishment, monitoring and testing of algorithms;
Licensing and exemptions from the need to collect full information from clients;
Licensing under the Securities and Futures Act (SFA) and the Capital Markets Service License (CMS), and expectations to obtain client’s prior approvals for transactions;
Specific amendments in the Securities and Futures Act on rebalancing of portfolios; and
Other licensing related questions, for example, the need to inform clients regarding risks in overseas related products.
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