MAS Goes Big on Fintech

This article was written by Alessandro Ravanetti, the co-founder and CMO of Crowd Valley, a global fintech company.

If you are following the news in the financial technology industry there is something that's pretty clear now. Singapore is pushing very aggressively to become a key fintech hub.

It's quite impressive to look at the new developments of the last ten months. It was August 2015, when the Monetary Authority of Singapore (MAS) launched the Financial Sector Technology & Innovation (FTSI) scheme, putting in charge Sopnendu Mohanty, a former Citigroup banker, to head the unit. The scheme came with a five-year plan, committing S$225 million ($167 million), to support fintech innovation.

Singapore is pushing very aggressively to become a key fintech hub.

Going forward, new initiatives have been announced in April at Asia Society in New York by Ravi Menon, MAS Managing Director, and the country's Deputy Prime Minister Tharman Shanmugaratnam. Revealed was the launch of the first Singapore FinTech Festival, to be held in November 2016, supported by the Association of Banks in Singapore (ABS). There will be conferences and a ‘fintech hackcelerator’ with awards for the most creative fintech apps.

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Guidelines for a Regulatory Sandbox

MAS has not stopped there. On the 6th of June 2016, it issued a consultation paper on proposed guidelines for a regulatory sandbox for financial technology experiments. “MAS aims to provide a responsive and forward-looking regulatory approach that will enable promising FinTech innovations to develop and flourish,” said Jacqueline Loh, Deputy Managing Director of MAS. “The sandbox will help reduce regulatory friction and provide a safer environment for FinTech experiments. We believe this will give innovations a better chance to take root.” she added. The public consultation closes in two weeks, all comments should be sent by 8 July 2016. More details and contact information in the official paper that can be downloaded here.

But that’s not all. Singapore and Australia signed a new pact at the start of June, the Innovation Functions Cooperation Agreement, that will allow fintech firms from both countries to accelerate the process of entering each other's markets.

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This month was pretty busy for them, as they also announced new regulations for securities crowdfunding (SCF), with new measures to simplify the use of it for ventures that are looking for funding and for crowdfunding platform operators. The platform operators, raising less than S$5 million within 12 months, will be allowed to do that without having to issue a prospectus, easing checks needed for investors.

The financial requirements for platforms that don’t handle or hold customer monies, assets or positions, that don’t act as principal against their customers and that raise funds only from accredited and institutional investors, will be substantially reduced. The aim is to make it easier for operators to be licensed as dealing intermediaries.

With these new regulations, the minimum capital requirement will be S$50,000 (previously it was S$250,000). Also the minimum operational risk requirement will be reduced to S$50,000 (S$100,000) and the requirement for a security deposit will be removed completely (previously it was S$100,000). New guidelines on SCF advertising and frequently asked questions on lending-based crowdfunding will be released later.

“Securities-based crowdfunding is a useful addition to our financing landscape. At the same time, SCF investments can be quite risky. The measures we are implementing seek to strike the right balance between improving access to SCF for start-ups and SMEs and protecting investor interests.” said Lee Boon Ngiap, MAS assistant managing director of capital markets.

What’s clear is that they are not just trying to boost the industry, instead the aim seems to be to build a well-balanced fintech innovation ecosystem, that can grow well in the long term becoming a key hub not just for Asia but for the world. We will have to wait and see if this is going to happen, but this is certainly promising.