The securities and futures act governs who may deal in capital markets products in Singapore, and MAS rejects or queries a large share of licensing and notification submissions for the same recurring reasons: incomplete fit-and-proper disclosures, unverified exemption reliance, and representative notifications filed out of sequence with the underlying licence.
Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.
What this chapter explainer covers
This instalment of our securities and futures act chapter explainers looks specifically at why applications under the SFA get rejected, queried, or unwound after the fact, rather than repeating the eligibility and process material covered in earlier instalments of the series. The Securities and Futures Act 2001 is the primary statute regulating capital markets activity in Singapore, covering everything from dealing in securities and derivatives contracts to fund management, and it is administered by the Monetary Authority of Singapore. Because the regulated activities under the SFA range so widely, from a boutique fund manager to a large derivatives dealer, the rejection patterns tend to cluster around a small number of structural issues that recur regardless of the size of the applicant.
Who this matters to
This explainer is written for directors and compliance officers of entities that deal in capital markets products, fund managers considering whether they fall under the licensed or registered regime, and the corporate secretarial and legal teams who support MAS submissions. It is also relevant to groups adding a new regulated activity to an existing capital markets services licence, since a variation of licence carries many of the same disclosure obligations as a fresh application and is frequently under-prepared for on the assumption that it will be a light-touch administrative update. Representatives being appointed or transferred between licensed entities, and the human resources or company secretarial staff who process their MASNET notifications, should also pay close attention to the sequencing issues discussed below.
Eligibility, scope and key requirements
Part IV of the Securities and Futures Act 2001 sets out the licensing regime for holders of a capital markets services licence and their representatives. Section 82(1) of the Securities and Futures Act 2001 requires a person to hold a capital markets services licence before carrying on business in a regulated activity, unless a specific exemption applies, such as the exemption available to certain financial institutions already regulated under other MAS-administered Acts. Representatives who conduct the regulated activity on the licensed entity’s behalf must separately be notified to MAS before they commence acting, and the fit-and-proper criteria applied to the entity under the licensing framework are applied again, individually, to each representative. A common misunderstanding is treating the corporate licence as automatically covering everyone the entity later hires; it does not, and each representative addition or departure carries its own notification obligation and timing.
Eligibility also has to be reassessed whenever the entity’s shareholding or group structure changes. A change in controller, meaning a person who acquires a significant stake in the licensed entity, itself requires prior MAS approval in most cases, and completing the change before approval is granted is treated as a serious compliance failure rather than a technical oversight. Similarly, a licensed entity that is acquired by, or merges into, another group needs to consider whether its existing licence can continue under the new structure or whether a fresh application, or at minimum a notification of the change, is required. Groups restructuring for tax or holding-company reasons sometimes overlook this because the operating business itself does not change, even though the regulated entity’s ownership does, and MAS treats ownership continuity as a distinct question from operational continuity.
Numbers at a glance
- Capital markets services licence application fee: approximately S$1,000 (confirm against MAS’s current schedule)
- Annual licence fee: typically in the range of S$4,000 to S$10,000 depending on regulated activities
- Representative notification: a smaller per-representative fee, payable before the representative may act
- Typical first-time licence processing period: 12 to 16 weeks (3 to 4 months)
- Additional time if MAS raises queries or the application is refiled: 6 to 10 weeks
- Change of controller: prior MAS approval required before completion, not after
Cost and timeline: what applicants should budget for
MAS licensing fees vary by the regulated activity and the applicant’s licence tier, but as a general planning benchmark, a capital markets services licence application fee is commonly in the region of S$1,000, with annual fees for an active licence typically ranging from around S$4,000 to S$10,000 depending on the number and type of regulated activities carried out; applicants should always confirm the current figures against MAS’s published fee schedule before budgeting. Representative notifications carry a smaller per-representative fee. In terms of timeline, a well-prepared capital markets services licence application is commonly processed by MAS over approximately 12 to 16 weeks (3 to 4 months), though applications with gaps in the fit-and-proper disclosures, or that rely on an exemption MAS does not accept, can take considerably longer while queries are answered. A rejected or withdrawn application typically costs an applicant a further 6 to 10 weeks to refile once the underlying issue is corrected, on top of the original processing period, so the practical cost of an avoidable rejection is measured mostly in delay rather than in fees.
Step-by-step process for a clean submission
1. Map every activity the business actually intends to carry out against the SFA’s regulated activity categories before drafting the application, rather than after MAS raises a query about scope. 2. Confirm whether any exemption relied upon, such as an exemption for dealing with accredited or institutional investors only, is genuinely available on the facts, and document the basis for that conclusion in the application file. 3. Collect fit-and-proper disclosures, including full disclosure of past regulatory action, bankruptcy history and directorships in other jurisdictions, from every proposed director, shareholder controller and representative before submission, not on a rolling basis afterwards. 4. Draft the business plan and compliance arrangements to match the actual scale of the operation; a business plan that describes a much larger operation than the initial headcount and systems can support is a common trigger for supplementary queries. 5. Submit representative notifications only once the underlying licence has been granted or the relevant transitional provision confirmed, to avoid a notification being processed against a licence that does not yet exist. 6. Build in a compliance sign-off step before submission, ideally involving external counsel for first-time applicants, so that scope, exemptions and disclosures are checked as a package rather than individually.
Common mistakes and rejection reasons
The most frequent rejection reason is an application that relies on an investor-class exemption, such as dealing only with accredited or institutional investors, without the applicant having a verifiable process for confirming investor status before each transaction; MAS routinely queries this because the exemption is conditional on the process, not merely on the applicant’s stated intention. The second recurring issue is incomplete disclosure of past regulatory history: a proposed director who omits a minor past infringement or an overseas licence that was later surrendered creates a fit-and-proper problem that is far more damaging once discovered by MAS than the original infringement would have been if disclosed upfront. Third, representative notifications are commonly rejected or delayed because they are submitted before the underlying entity licence is active, or because the representative’s declared scope of activity does not match any regulated activity the entity is actually licensed for. Fourth, applicants frequently underestimate the compliance function required for the scale of business proposed, submitting a business plan describing significant trading volumes supported by a compliance arrangement more appropriate to a much smaller operation, which invites a supplementary information request that can add months to the timeline. Fifth, groups that operate a regulated activity before their licence or representative notification takes effect, even for a short bridging period during a corporate restructuring, create an unauthorised business issue that can affect the entity’s standing for the pending application itself. Sixth, we regularly see placement or offering documents drafted for a related SFA-regulated activity that are inconsistent with the disclosures made in the licensing application, an internal contradiction that MAS is well positioned to detect during review. Finally, variations of licence to add a new regulated activity are sometimes submitted with disclosures that have not been refreshed since the original licence was granted years earlier, when in fact fit-and-proper and business plan information must reflect the entity’s current state, not its state at initial licensing.
As with company law matters, a recurring theme behind SFA rejections is handover failure rather than ignorance of the rules: compliance officers assume legal counsel has confirmed an exemption is available, counsel assumes compliance has verified it operationally, and neither party revisits the assumption once the business has scaled. Building a single, jointly-owned compliance matrix that tracks each regulated activity, its supporting exemption or licence basis, and the date it was last reviewed, is the most effective structural safeguard we recommend to licensed and exempt entities alike, particularly those adding activities or representatives on an ongoing basis rather than applying once and never revisiting the position.
It is also worth separating a rejection at the application stage from a problem surfaced later by MAS inspection or by a counterparty during due diligence. Application-stage rejections are usually the cheaper problem: MAS identifies a gap, the applicant responds, and the timeline extends by weeks rather than months. Problems surfaced later, such as a fund manager discovered to have been dealing outside the scope of its registration, or a representative found to have been acting before their notification took effect, carry a materially higher cost, including potential referral for enforcement action and reputational damage with investors and counterparties. Entities preparing for a capital raise, a change of controller, or a sale of the regulated business should treat a full scope-and-licensing review, covering every regulated activity actually carried out against what is actually licensed, as standard transaction preparation rather than a discretionary extra step.
FAQs
What does the securities and futures act actually regulate?
The Securities and Futures Act 2001 regulates dealing in capital markets products, fund management, and related activities such as clearing and providing custodial services, and it sets out the licensing regime administered by MAS for firms and individuals carrying on these activities.
Why do capital markets services licence applications commonly get delayed?
Delays most often stem from incomplete fit-and-proper disclosures, exemption reliance that MAS does not accept on the facts presented, or a business plan that is inconsistent with the compliance arrangements described in the same application.
Can a representative start work before MAS processes their notification?
No. The representative notification must be effective before the individual begins conducting the regulated activity on the licensed entity’s behalf; acting beforehand creates an unauthorised activity issue for both the individual and the entity.
Does an exemption from licensing remove all compliance obligations?
No. Exempt entities and arrangements still need to satisfy the conditions attached to the exemption on an ongoing basis, and MAS can and does query whether an exemption is genuinely available when the underlying facts change.
How long should we budget for a capital markets services licence application?
Budget approximately 12 to 16 weeks for a well-prepared first application, and expect a further 6 to 10 weeks if MAS raises queries or the application needs to be refiled.
Related guides
For the fuller eligibility and process picture, see our companion piece, Securities and Futures Act (SFA) chapter explainers: Complete 2026 guide. Directors of SFA-regulated entities carry duties under company law as well as under the SFA; see Director’s Duties in Singapore: A Complete Guide for 2026 on our sister site. Licensed entities that employ specialist finance staff from overseas may also find Singapore Financial Services Sector EP 2026: Salary Thresholds, COMPASS and What Banks Must Know useful from our employment pass team. For the statute itself, refer to Singapore Statutes Online, and for the licensing framework and current fee schedules, refer to the Monetary Authority of Singapore. Corporate entities applying for a licence should also keep their ACRA filings current; see ACRA.
Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email [email protected]. Raffles Corporate Services works with a panel of corporate and employment law firms; this article is general information, not legal advice.