On 2 July 2026, the Monetary Authority of Singapore (MAS) published an updated version of its Guidelines on Liquidity Risk Management Practices (Fund Management Companies) [SFA 04-G08]. The update follows a consultation paper MAS issued on 17 December 2025, which closed for feedback on 28 February 2026. Fund management companies (FMCs) licensed or registered in Singapore now have until 2 January 2027, six months from publication, to bring their liquidity risk management frameworks into line with the revised expectations.
For directors and compliance officers of Singapore-based FMCs, including those managing Variable Capital Company (VCC) sub-funds, this is a substantive rewrite of how redemption terms, liquidity tools and governance around fund liquidity are expected to work, not a light-touch clarification. This article sets out what changed, why MAS made the change now, and what an FMC’s board and compliance function should be doing before the January 2027 deadline.
Why MAS revisited SFA 04-G08
The Guidelines on Liquidity Risk Management Practices for Fund Management Companies were last substantively updated in 2018 and refreshed again in 2024. MAS’s December 2025 consultation paper explained that the update was needed to align Singapore’s expectations with two international workstreams: the International Organization of Securities Commissions’ May 2025 final report on revised recommendations for liquidity risk management in collective investment schemes (CIS), and the Financial Stability Board’s December 2024 final report on liquidity preparedness for margin and collateral calls.
MAS had also flagged liquidity risk management as a supervisory focus area in its April 2026 Supervisory Priorities circular for capital markets entities for 2026/27, alongside continuing attention to technology risk and anti-money laundering controls that RCS has covered separately for MAS Technology Risk Management and outsourcing and AML/CFT obligations for licensed entities. Global episodes of open-ended funds struggling to meet redemption requests against illiquid underlying assets gave regulators, including MAS, reason to tighten expectations rather than leave them as general principles.
What actually changed under the July 2026 guidelines
The updated SFA 04-G08 guidelines make five changes that matter most in practice.
1. Exchange-traded funds are removed from scope
Exchange-traded funds (ETFs) are no longer within the scope of the Guidelines, reflecting their continuous secondary-market pricing and creation and redemption mechanism, which differs materially from a traditional open-ended CIS relying on periodic dealing at net asset value. FMCs that manage ETFs are still expected, as a matter of sound practice, to consider both the liquidity of the underlying assets and the liquidity of the ETF units in the secondary market as part of their broader liquidity risk management framework, even though the Guidelines themselves no longer formally apply to that fund type.
2. Redemption terms must align with underlying asset liquidity
This is the central change. FMCs managing open-ended CIS are now expected to structure redemption frequency and notice periods so that they genuinely match the liquidity profile of the scheme’s underlying assets. A fund holding a significant proportion of illiquid or hard-to-value assets, such as private credit, unlisted equity or certain real estate positions, should not offer investors daily or weekly redemption unless the FMC can demonstrate the fund can genuinely meet those terms in stressed conditions. Where a mismatch exists, the FMC must give investors adequate disclosure of the illiquidity and of the redemption-term mismatch itself, not bury it in generic risk-factor boilerplate.
3. Anti-dilution liquidity management tools become an explicit expectation
MAS now expects FMCs to actively consider, and where appropriate adopt, anti-dilution liquidity management tools. These include swing pricing (adjusting the fund’s dealing price to reflect the cost of trading activity caused by subscriptions or redemptions), an anti-dilution levy charged against transacting investors, and structural tools such as redemption gates that cap the proportion of a fund that can be redeemed on a single dealing day. Swing pricing is intended for use under normal market conditions where the fund’s offering documents provide for it. Suspension of dealing remains reserved for extraordinary market conditions and must be exercised in the best interests of fund investors as a whole, not merely the manager’s convenience.
4. Redemption pricing must reflect real transaction costs
The Guidelines now make explicit that both explicit costs (such as brokerage and transaction taxes) and implicit costs (including the market impact of having to sell assets to fund redemptions) should be built into redemption pricing methodology. The intent is to prevent redeeming investors from being subsidised, in effect, by investors who remain in the fund, a dilution problem that becomes more acute the less liquid the underlying portfolio is.
5. Stronger governance and disclosure around liquidity tool design
Boards and senior management of FMCs are expected to approve the design of liquidity management tools, document the rationale for the redemption terms offered on each fund, and review these arrangements periodically rather than treating them as a one-off decision made at fund launch. Disclosure to investors on how and when liquidity tools may be triggered is expected to be clear and specific to the fund, not a generic disclaimer.
The related change to the Code on Collective Investment Schemes
Alongside the SFA 04-G08 update, MAS also updated the Code on Collective Investment Schemes (CIS Code) to tighten portfolio liquidity expectations for money market funds, including introducing expectations on the eligibility of deposits placed by such funds with financial institutions. Money market funds are widely used by Singapore corporates and family offices for short-term cash management, so FMCs and their compliance teams should check that their money market fund documentation and counterparty deposit policies are updated alongside the liquidity risk management changes, rather than treating the two updates as unrelated workstreams.
How this sits alongside MAS’s other 2026 fund management reforms
SFA 04-G08 is a guideline issued under section 321 of the Securities and Futures Act 2001, sitting underneath the general FMC licensing framework in SFA 04-G05. It should not be confused with the separate MAS Valuation and Risk Management Papers published on 29 May 2026, which addressed valuation governance and broader risk management practices for VCC sub-funds specifically. The two workstreams are complementary: valuation policy determines how a fund’s assets are priced, while the liquidity risk management guidelines determine whether the redemption terms offered to investors are realistic given how liquid, or illiquid, those priced assets actually are. An FMC managing VCC sub-funds should read both together rather than treating either in isolation.
2026 has been a busy year for MAS’s fund management regulatory agenda more broadly. RCS has separately covered the Streamlined Fund Manager Framework introduced this year, the sunset and migration of the Registered Fund Management Company (RFMC) regime, the Asset Management Hub carried-interest tax exemption package, and the Hedge Fund Investment Programme aimed at attracting managers relocating to Singapore. Firms building out a licensing pathway under the Licensed Fund Management Company (LFMC) regime or holding a Capital Markets Services (CMS) licence for fund management should treat the updated SFA 04-G08 guidelines as part of the same 2026 compliance cycle, not a standalone item.
What FMCs should do before 2 January 2027
| Action | Why it matters |
|---|---|
| Map each open-ended CIS against the liquidity of its underlying assets | Identifies funds where redemption frequency may no longer be defensible under the updated Guidelines |
| Review offering documents for anti-dilution tool provisions | Swing pricing and anti-dilution levies can generally only be used if the fund’s constitutive documents already permit them |
| Update redemption pricing methodology | Explicit and implicit transaction costs, including market impact, now need to be reflected, not assumed away |
| Refresh investor disclosure on illiquidity and redemption-term mismatch | Generic risk-factor language is unlikely to meet the strengthened disclosure expectation |
| Put liquidity tool design and periodic review on the board’s agenda | MAS expects documented governance oversight, not delegation to operations staff alone |
| Check money market fund documentation against the updated CIS Code | Deposit-eligibility expectations for money market funds changed at the same time |
How Raffles Corporate Services can help
RCS supports Singapore-incorporated fund management companies, including those managing VCCs and their sub-funds, with corporate secretarial support, licensing applications, and coordination with legal and compliance advisers on regulatory change management. If your FMC needs help mapping the updated SFA 04-G08 guidelines against your existing fund documentation, or preparing board papers ahead of the 2 January 2027 compliance date, our team can help you scope what needs to change and by when.
The Editorial Team, Raffles Corporate Services