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Path clear for robo advisers in financial services

Jun 08. 2017
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INVESTORS could soon be getting financial tips from so-called robo advisers offering financial advice or portfolio management services – often at cheaper rates than their human counterparts.

The Monetary Authority of Singapore (MAS) has proposed to make it easier for digital advisory services providers to operate by offering some major concessions under the financial regulatory framework.

One is to allow digital or robo advisers operating as fund managers under the Securities and Futures Act to offer their services to retail investors. This could happen even if robo advisers do not meet track-record requirements, as long as they provide certain safeguards.

A MAS consultation paper released on Wednesday proposed that there would not be separate licensing for digital advice. But firms offering these services would have to comply with some safeguards. 

One is that portfolios must be diversified and comprise non-complex assets. The firms must have management staff with relevant experience in fund management and technology. They must also undertake an independent audit within a year of operations – among several MAS proposals to refine licensing and business conduct rules aimed at supporting innovation in financial services. The public consultation ends on July 7.

On why the MAS is proposing these moves, Lee Boon Ngiap, MAS assistant managing director of capital markets, noted that some financial institutions, such as OCBC and UBS, have already started offering digital advisory services.

MAS has also received growing indications of interest from other entities wanting to offer such services to retail investors.

“Some are existing fund managers, and some are new startups by experienced investment fund managers from the industry,” Lee said.

The regulator has given approval in principle for capital market services licences to be issued to Singaporean digital wealth adviser StashAway and digital advisory platform provider Autowealth.


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