New LFMCs required to submit quarterly MAS returns for first time

30 August 2024 | Asia | Articles

Since the MAS repealed its RFMC regime on 1st August 2024, all successful applicants became Licenced Fund Management Companies overnight. Firms now face important changes to compliance obligations, including being subject to risk-based capital requirements and having to report on this to the MAS each quarter. With a tight turnaround required – just 14 calendar days – we recommend doing a ‘practice run’ ahead of time.

As a reminder, Licenced Fund Management Companies (LFMCs) are required to submit the following returns to the MAS:

• Form 1 – a depiction of the balance sheet, prepared in accordance with the Fund Management Company’s (FMC’s) prevailing accounting framework.
• Form 2 – a series of regulatory computations which demonstrate to the MAS that the FMC meets its Base Capital Requirement (BCR) and Total Risk Requirement (TRR). And for those who calculate their TRR with reference only to their Operational Risk Requirement, demonstrating that they haven’t surpassed the Average Adjusted Assets threshold.
• Quarterly income and expenditure (QIE) – a P/L statement, along with details of the FMC’s fixed assets.

These are submitted via MASNET with a 14-day turnaround required – that is, by 14th October for the Q3 returns. You’ll have one extra day to submit the QIE.

Is a ‘practice run’ needed?

The BCR is the same for LFMCs as it was for RFMCs, so no changes there. However, the risk-based capital requirements are more complex and less static, so require careful attention. Issues can arise, especially for FMCs that operate in groups, or which have large balance sheets. We’ve even seen smaller firms have issues, since there are a few moving parts. Knowing ahead of time that there are potential issues can help you to plan and, if it comes to it, to be on the front foot when explaining capital deficits to the MAS.

How can Bovill Newgate help LFMCs submit their MAS returns?

Our Singapore-based team is well-equipped to assist you in preparing your MAS returns or reviewing what you’ve prepared in-house.