Regulations for Fund Management Companies

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

  (b) $100,000

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  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)