How should operational risk requirements be calculated for fund management companies?
Refer to below for the calculations. However, if you do carry out other financial activities other than what is listed above, the method of calculation may differ. Please contact a professional for more guidance.
According to MAS (Notices),
last revised on 27 September 2021
Calculation of the operational risk requirement
4.1.2 A CMSL that is referred to in paragraph 3.2.1 but not being a CMSL to which paragraph 4.1.2A also applies, shall calculate its operational risk requirement as the higher of –
(a) the sum of –
(i) 5% of its average annual gross income up to $10 million of average annual gross income, calculated in accordance with paragraph 4.1.4, for the 3 immediately preceding financial years; and
(ii) 2% of its average annual gross income above $10 million of average annual gross income, calculated in accordance with paragraph 4.1.4, for the 3 immediately preceding financial years; and
3.2.1 Financial resources or adjusted net head office funds, whichever is applicable, in relation to a CMSL licensed only to carry out the regulated activities of –
(a) fund management;
(b) real estate investment trust management;
(c) advising on corporate finance;
(d) providing custodial services;
(e) dealing in capital markets products, where the CMSL is a limited-activity CMSL;
(f) a combination of the regulated activities set out in (a) to (f)