Case Study: CMS License Advisory Supporting Regulatory Market Entry in Singapore

Background on Case Study CMS License

One firm in the financial services industry was intending to launch regulated capital markets operations in Singapore as one of its regional expansion policies. In order to conduct its activities in Singapore within the confines of the regulatory framework, the company had to procure a Capital Markets Services (CMS) Licence by the Monetary Authority of Singapore (MAS).

Although the company had good commercial and technical competencies, it lacked previous experience in tactical actions in the regulatory licensing arena in Singapore. The management realised that the CMS licence application procedure encompassed elaborate regulatory examinations on all governance, compliance, and risk management, and operational preparedness.

In this effort, the firm contracted our CMS Licence Advisory Services to facilitate it through the licensing process in a well-organized and regulator-oriented and efficient manner.

Issues and Challenges

The CMS licence application had various challenges, which are more likely to be encountered by firms in Singapore when venturing into regulated financial markets.

The misunderstanding of MAS regulatory expectations and the translation of the latter into functional operation frames was one of the key challenges. The scope of MAS requirements is very wide, as it addresses internal controls, compliance arrangements, fit and proper assessments, and business conduct standards.

The other problem was readiness of documentation. Although the company had internal policies and procedures, most of them were not formulated to satisfy the regulatory specificity of MAS. This took a lot of effort to improve and harmonize documentation in order to assist in the licence application.

The company was also experiencing the problem of showing organisational substance. MAS also attaches a lot of importance to possessing qualified staff, well defined governance frameworks and relevant separation of responsibilities. It was a very important aspect of the application to ensure that these elements were clearly stated and supported.

Lastly, the company had fears of the possibility of delays or other regulatory investigations as a result of delayed or inconsistent submissions. Co-ordination and regulation acumen were also crucial to control the use effectively.

Objectives

The main goal of the engagement was to assist the firm in the preparation and submission of a full fledged CMS licence application which could satisfy the MAS regulatory expectations.

In particular, the firm was going to:

• Know MAS requirements that are relevant to its proposed regulated activities.
• Develop governance, compliance and advanced risk management systems in line with CMS licensing requirements.
• Make up quality and consistent licensing documents.
• Demonstrate organisational substance and operation preparedness.
• Follow the path of MAS application successfully.

The advisory services should have been comprehensive, regulator-oriented, and should have been aligned to the business model of the firm.

How We Helped

We have implemented a guided and regulator-compliant method of CMS licence advisory which is expected to enable the success of the application as well as compliance preparedness over the long term.

We started by undertaking a CMS licensing readiness test. We reconsidered the activities offered by the firm, its corporate framework, and the current policies to find the gaps in comparison to the MAS CMS licensing regulations.

On the basis of this evaluation, we have worked out a transparent licensing roadmap with the identification of important work streams, documentation and submission deadlines. This road map gave the management a realistic picture of the licensing process and was used in managing expectations.

We assisted the company to prepare and improve the most important regulatory documents such as compliance manuals, risk management frameworks, internal control policies, and governance arrangements. These documents were designed in such a way that they represented the real life operations of the firm and were made to meet the MAS expectations.

We also helped in demarcation of roles and responsibilities within organisations. This involved the documentation of the roles of directors, senior management, compliance, risk functions and formalisation of reporting lines and supervisory structures.

We assisted in the preparation of the CMS licence application forms and submissions as part of the application process. This was especially done in relation to being clear, consistent, and aligned with all materials to minimize chances of follow-up questions by the regulator.

During the engagement, we collaborated with the management to clarify the regulatory requirements in a practical manner and enable them to make informed decisions. We aimed at integrating regulatory knowledge and did not consider licensing as an administrative practice.

Value Delivered

This interaction shows the extent that professional CMS licence advisory services can assist companies that wish to gain access to regulated capital markets in Singapore.

With the assistance of our services, which assisted the firm in going through the CMS licensing process in a systematic and regulator-oriented fashion, we reinforced the governance, compliance, and operational structures. The process of licensing preparation also helped to raise awareness of regulatory requirements internally, which would contribute to the sustainable and compliant business development.

The CMS licence advisory framework put in place by this engagement gave a great platform to continue with regulatory compliance and responsible market participation in Singapore.