Capital Markets Services (CMS) Licenses are issued by the Monetary Authority of Singapore (MAS) under the Securities and Futures Act 2001 (SFA). The SFA establishes a comprehensive regulatory regime for financial products, for persons who deal in such products, and for the raising of capital. A CMS licence is typically granted to a corporation.
The various regulated activities that require a CMS licence, as outlined in the SFA’s Second Schedule, include:
- Dealing in capital markets products (which replaced “dealing in securities” after 8 October 2018). This covers services like payment gateway services and payment kiosk services.
- Trading in futures contracts.
- Leveraged foreign exchange trading.
- Fund management. This includes managing collective investment schemes.
- Advising on corporate finance.
- Product financing (which replaced “securities financing” after 8 October 2018).
- Providing custodial services for securities.
Purpose and Scope of CMS Licensing:
- Integrated Regulatory Regime: The SFA aims to create a single and coherent regulatory framework for financial products and capital raising, enhancing efficiency and oversight.
- Investor Protection: A primary objective is to protect investors by ensuring that adequate information is provided to the public, particularly for public issues of securities. MAS reviews applications and disclosure documents to ensure this.
- Market Supervision: MAS, as the de facto central bank and financial regulator, supervises the securities industry and has powers of intervention and inspection to maintain fair and orderly markets and ensure proper management of systemic risks.
- Regulated Products: The SFA covers various investment products, including shares, debentures, units in collective investment schemes, business trusts, and interests in limited partnerships or limited liability partnerships.
Key Requirements and Obligations for CMS Licensees:
- Prospectus Requirements: Public offers of securities generally require a prospectus or profile statement to be registered with MAS. This ensures that essential information is provided to investors.
- Exemptions: Certain offers, such as those made to institutional investors or accredited investors, may be exempt from prospectus requirements, as these entities are deemed to have the expertise to assess investment viability without the same level of regulatory protection.
- Electronic Submissions: CMS licensees utilise MASNET, a communications network operated by MAS, for electronic submissions of financial regulatory forms, notifications, and to retrieve invoices, circulars, and consultation papers.
- Compliance and Enforcement: Licensees are subject to MAS’s oversight, including its powers to conduct investigations and impose civil enforcement actions for market misconduct.
In summary, CMS Licenses are a critical component of Singapore’s financial regulatory landscape, ensuring that capital markets activities are conducted transparently, fairly, and with adequate protection for investors under the purview of the Securities and Futures Act.
