Traders in Southeast Asia as well as those looking to trade with offshore brokers based in the region will need to familiarize themselves with major local regulators, one of which is the Monetary Authority of Singapore (MAS).
You can check whether a broker you are thinking of trading with is regulated by the Monetary Authority of Singapore by looking them up in the MAS's Financial Institutions Directory. You can find out whether they have a license, the date the license was issued, what its current status is, and more.
You can also use the Search function in the upper right-hand part of the MAS webpage to look up the name of the broker that interests you. Doing so may bring up public memos regarding that broker.
Is MAS a legitimate regulator?
The Monetary Authority of Singapore (MAS) is a legitimate regulator. In fact, it is Singapore's central bank and financial regulatory authority.
The government of Singapore created MAS in 1971 to function as the government's banker and financial agent. The abbreviation is pronounced M-A-S, but it is a bit of a pun, since mas in Malay means gold.
At the time of its foundation, there was another government body called the Board of Commissioners of Currency already in existence. In 2002, that board and the MAS merged, and now the MAS fulfills the duties of both.
Responsibilities
MAS's responsibilities are extensive. They include regulatory oversight for a wide range of matters governing banking, money, securities, insurance, currency issuance, the foreign exchange reserves, and trading and investments. The agency is responsible for monetary policy, which it influences via the foreign exchange markets.
MAS issues licenses to businesses operating in the banking, capital markets and insurance sectors.
Describing its duties and activities, MAS writes:
As an integrated financial supervisor, MAS fosters a sound financial services sector through its prudential oversight of all financial institutions in Singapore — banks, insurers, capital market intermediaries, financial advisors, and stock exchanges. It is also responsible for well-functioning financial markets, sound conduct, and investor education.
Forex brokers are regulated by MAS in the Capital Markets category, with the license type, Capital Markets Services Licensee.
Once MAS issues a license to a Forex broker or other financial entity, that entity needs to conform to the regulations set by MAS. IF they violate those regulations, MAS can take actions against them, or even revoke their license.
Who should register?
The following types of financial service providers should apply for a license with the MAS:
- Capital markets services licensees
- Approved CIS trustees
- Exempt capital markets services entities
- Licensed trust companies
- Exempt trust companies
- Approved exchanges
- Approved holding companies
- Approved clearing houses
- Recognized market operators
- Local banks
- Full banks
- Qualifying full banks
- Wholesale banks
- Merchant banks
- Finance companies
- Representative offices
- Financial holding companies
- SGS primary dealers
- Licensed financial advisors
- Exempt financial advisers
- Direct insurers
- Reinsurers
- Captive insurers
You can browse by these categories in the Financial Institutions Directory on the MAS website.
Registration and compliance requirements
As already mentioned, the type of license that Forex brokers need to apply for from the MAS is Capital Markets Services Licensee. Here are some of the requirements to apply for this type of license. Keep in mind that all fees are listed in Singapore dollars (SGD).
- Pay a non-refundable $1,000 application fee.
- Pay an annual fee ranging between $2,000 and $8,000 for "dealing in capital markets products."
- Pay a fee of $5 per representative from the 101th representative onwards every year.
- There are additional fees for engaging in other activities. For example, there is an annual fee of $4,000 for advising on corporate finance, and an annual product financing fee of $2,000.
- The base capital requirement for a broker dealer is anywhere from $5,000 to $5 million. Factors that can affect the amount include "the types of products offered, clientele type, whether the broker-dealer is a member of an approved clearing house or exchange, if it carries any customers' positions in its books or handles customers' money or assets or enter into transactions with customers as principal."
- Applicants must demonstrate their "fitness and propriety," their track records, their compliance, their risk management systems, and their business models.
- Appoint two directors, one of whom resides in Singapore, and a CEO who resides in Singapore and has 10 years of experience or more. For every activity the applicant engages in, they need at least two individuals employed full-time as representatives in Singapore.
- Submit Form 1 under the Securities and Futures (Licensing and Conduct of Business) Regulations (SF(LCB)R) through the website (not via email).
For a full list of requirements to apply for a license as a FX trading broker through MAS, you can see the official guide from MAS. All fees are listed on the same page.
Once an application is submitted, the review process can take around 6 months. It is vital for licensed entities to pay their annual fees in a timely manner and fulfill all other demands to maintain their licenses for as long as they are in business.
Powers at MAS's disposal
What happens if an MAS-regulated broker violates regulations in Singapore? The exact enforcement actions that MAS takes will depend on the nature and severity of the violation. Here are some examples of types of enforcement actions at the agency's disposal:
- Prohibition orders
- Compositions
- Reprimands
- Civil penalties
- Suspensions of regulatory status
- Revocations of regulatory status
- Criminal prosecutions
Singapore's government has a reputation for enacting harsh consequences on those who violate its laws. You can view a list of enforcement actions that the regulator has taken against licensees in the past. For each, there is a public notice you can read for more details.
If there is a specific company or individual you are interested in, use the search function to look up their name. If any actions have been taken against them, they should come up.
Reporting to the MAS
If a Forex broker regulated by the MAS has wronged you, or you believe they have broken Singapore's laws, you can report them to the MAS.
Simply fill out their Consumer Feedback Form. When you fill out the form, provide the name of the financial institution you are reporting, and the name of any associated agent or adviser.
Under Feedback, you can write out the details of the situation. You may attach files to provide additional information or to support your claims.
Once the MAS has a chance to review your complaint, they can contact you if they require any further details. If they agree that the broker has violated the terms of their license, they can take an enforcement action against them.
Conclusion
If you are looking to work with a regulated broker, Singapore tends to impose harsh penalties for law breaking, and their strong regulatory oversight through the Monetary Authority of Singapore (MAS) is no exception. Before you open an account with a broker that claims to be regulated by the MAS, always visit the MAS official website and look up the license to verify it in the Financial Institutions Directory.
