On 29 May 2026, the Monetary Authority of Singapore (“MAS“) published two Information Papers based on thematic inspections of fund management companies (“FMCs“), setting out supervisory expectations across risk management and valuation practices, concerning effective governance structures, frameworks, policies and procedures (“P&Ps“) and controls for overseeing and managing the FMCs’ investment process and with respect to valuation of funds’ assets. FMCs must benchmark current practices and promptly remediate gaps.
Risk Management Practices
- Governance: The Board and senior management (“BSM“) must establish governance structures, P&Ps and controls over fund launches, investment changes, due diligence and ongoing monitoring, with oversight by committees independent of portfolio management. Conflicts of Interest (COI) must be identified, mitigated and disclosed.
- P&Ps: Comprehensive P&Ps must be in place before fund launch, with clear roles, regular reviews, and documented justification for any deviations.
- New Fund Launches: FMCs must assess investment objectives, risk-return profiles, operational readiness, personnel suitability and regulatory requirements before launching or changing funds. Model due diligence and proper approvals are required.
- Investment due diligence: Sufficient due diligence is required on every potential investment, including authenticity, suitability and risk-return assessment. FMCs remain accountable even when relying on external advice.
- Ongoing monitoring: Independent monitoring frameworks must cover material risks (market, credit, counterparty, liquidity, operational), with appropriate metrics, limits and timely escalation. Investor disclosures must accurately reflect actual exposures.
Valuation Practices
- Governance: The BSM must ensure independence and objectivity in valuation during normal and stressed conditions, with oversight by committees independent of portfolio management.
- P&Ps: Valuation P&Ps must cover all asset classes and instruments, with defined methodologies, frequency, escalation procedures and regular reviews.
- Price validation checks: Independent price validation checks (price variance, source-to-source, stale price, net asset value (NAV) variance, etc.) must be implemented with defined tolerance levels and clear escalation protocols.
- Valuation approaches: Valuation must be performed by competent independent parties. A three-level fair value hierarchy applies (Level 1: quoted prices; Level 2: observable inputs; Level 3: unobservable inputs). MAS highlights heightened complexity for private credit and digital assets. Fair value decisions must be communicated promptly to fund administrators.
Click on the following links for more information (available on the MAS website at www.mas.gov.sg):
- Information Paper on Risk Management Practices for Fund Management Companies
- Information Paper on Valuation Practices for Fund Management Companies
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