Singapore Waits With Open Arms & New Rules

"Yesterday is not ours to recover, but tomorrow is ours to win or to lose."

Lyndon B. Johnson (1908 - 1973), 36th President of the United States

MAS, the central bank of Singapore has recently announced new controls for exempt-fund manager entities with assets over S$250 million ($182 million). Over this benchmark, funds will require to be licensed. Those hedge funds below this will require base capital of S$250,000 or $182,000 presumably held in escrow in a local bank account.

Damage done? Probably not. For many firms with AUM over the $150-185 MM barrier one is looking at the average hedge fund industry single manager assets anyway. The need to license will presumably be more form filling with regards to staffing, activities and presumably some frm of transparency with regards to assessing portfolio risk using whatever metrics MAS thinks are necessary to assess industry wide risk.

The fact of the matter is with the EU and the U.S. poised to introduce more of a hands on approach to the exempt-fund manager industry, including potentially setting pay, one can expect a growing number of disgruntled workers to locate in more favorable regimes and climes. In this regard, Singapore is likely to continue to be attractive.

Over the longer term, aside from taxes and compliance costs, any real sustainable hedge fund industry growth in Asia that invests in Asian assets must require the growth of new products including the development of a viable local fixed income market. Mahalo.