Singapore regulator gives and takes advice on robo-advice
The humans at the Monetary Authority of Singapore (MAS) have laid down some guidelines and want opinions on providing robo-advisory services.
In a consultation paper released today (7 June), MAS says it seeks to support innovation in financial services by recognising the unique characteristics of digital platforms.
MAS states that financial institutions (FIs) regulated under the Securities and Futures Act (SFA) and the Financial Advisers Act (FAA) can already provide digital advisory services, and some have started to do so. It has also received interest from new firms intending to offer these services to retail investors. To make it easier to operate in Singapore, MAS intends to refine the licensing and business conduct requirements.
These rules include allowing digital advisers that operate as fund managers under the SFA to offer their services to retail investors even if they do not meet the track record requirement, provided they meet certain safeguards. These safeguards include offering diversified portfolios of non-complex assets; and having key management staff.
With its typical tech-savvy tone, MAS will require providers of these services to manage the new technology risks associated with these activities.
MAS says unlike conventional financial advisory services, the delivery of digital relies on the use of algorithms and online tools to analyse client data and recommend investment portfolios. As digital advisory tools may be susceptible to technology risks such as erroneous algorithms and cyber threats, it has set out expectations on the governance and management. This includes having adequate board and senior management oversight and compliance arrangements to monitor the quality of advice provided.
The public consultation will end on 7 July 2017.
None shall sleep
MAS has been innovative in fintech for a while – with last month alone comprising a partnership and paper pushed away.
International Finance Corporation (IFC) and MAS started working together to establish and develop their ASEAN Financial Innovation Network (AFIN).
Also, MAS began a paperless pilot with four banks to explore simplifying online banking transactions with the use of the government’s MyInfo website service.