Mr Speaker, on behalf of Mr Lawrence Wong,

a.Deputy Prime Minister and Minister for Finance, and

b.Minister-in-charge of the Monetary Authority of Singapore (“MAS”)

2. I beg to move, “That the Bill be now read a second time”.

Introduction

3. MAS plays a central role in upholding Singapore’s status as a safe and trusted international financial centre. As our financial industry grows in size and complexity, MAS must continually review and enhance its regulatory powers, to ensure it can effectively supervise financial institutions (or “FIs”), as well as investigate and punish serious misconduct in our financial sector.

4. The Financial Institutions (Miscellaneous Amendments) Bill (“FIMA Bill”) will harmonise and enhance MAS’ investigative powers across 6 Acts, namely,

a.the Financial Advisers Act 2001 (or “FAA”);

b.the Financial Services and Markets Act 2022 (or “FSMA”);

c.the Insurance Act 1966 (or “IA”);

d.the Payment Services Act 2019 (or “PS Act”);

e.the Securities and Futures Act 2001 (or “SFA”); and

f.the Trust Companies Act 2005 (or “TCA”),

(collectively, the “MAS-administered Acts”).

5. Other key amendments in the FIMA Bill pertain to the regulation of capital markets in Singapore. These amendments

a.empower MAS to issue directions to Capital Market Services Licence holders (or “CMSL holders”) to manage potential risks from their conduct of unregulated businesses; and

b.enhance MAS’ supervisory powers.

Key Features of the FIMA Bill

(A) Enhancement of MAS’ investigative powers

6. Let me start with the amendments to enhance MAS’ investigative powers.

7. MAS investigates and enforces a wide range of violations using its powers under the laws and regulations it administers. Such violations range from breaches of business conduct requirements by regulated FIs, to insider trading and fraud or deception when dealing in securities.

8. Let me give two examples of recent cases:

(i) First, MAS reprimanded several FIs and individuals, including AIA Financial Advisers Pte Ltd and 2 Aviva entities, for breaching requirements under the FAA in relation to remuneration of supervisors as well as adequacy of risk management.

(ii) Second, following contraventions of the SFA and its business conduct requirements by Three Arrows Capital, MAS issued 9-year prohibition orders against Three Arrows Capital’s Chairman and CEO.

9. Such enforcement actions are not possible without MAS conducting rigorous investigations of suspected violations. However, some of the investigation powers available to MAS under the SFA and FAA are not available in the other MAS-administered Acts, specifically the FSMA, IA, PS Act and TCA.

10. For convenience, I shall refer to this latter group of legislation as the “Other MAS-administered Acts”. We also need to strengthen or widen some existing powers under the SFA and FAA to ensure their effectiveness. The FIMA Bill will close these gaps by enhancing and making consistent the investigation powers across all the MAS-administered Acts. The FIMA Bill will also facilitate the transfer of evidence between MAS and other agencies, for enforcement to be more efficient and effective.

11. I shall now explain the main categories of amendments in detail.

Amendments to strengthen evidence gathering capabilities

12. First, MAS is proposing to introduce in the Other MAS-administered Acts, the power to require persons to appear before an MAS officer for examination and statement-recording for the purpose of investigations under the relevant Acts. Such powers already exist under the SFA and FAA, and are effective in enabling investigators to obtain information about suspected misconduct.

13. Second, the FIMA Bill will remove the requirement in the SFA and FAA for MAS to first issue orders to a suspect to produce information and show that the suspect has failed to comply with such orders, before MAS can enter – without a warrant – premises believed to be occupied by the suspect. This will enable MAS to enter premises without tipping off the suspect, and hence reduce the risk of the suspect destroying evidence relevant to the investigation. A similar power to enter premises without a warrant will be extended to the Other MAS-administered Acts.

14. MAS officers will not have powers to search the premises and seize evidence on the premises when they exercise the power of entry without warrant. They can, however, require any person on the premises to produce information, or state where such information can be found. MAS officers can also require any person on the premises to preserve evidence.

15. The FIMA Bill will also introduce provisions in the Other MAS-administered Acts to empower MAS to obtain a Court warrant to search premises and seize evidence. This power already exists in the SFA, FAA and TCA, and it allows MAS to obtain evidence that is in the possession of uncooperative subjects, before it is concealed, removed, tampered with, or destroyed.

Amendments to facilitate transfer of evidence

16. The FIMA Bill will also amend the current transfer of evidence provisions in the SFA and FAA. This will help facilitate exchange of information between MAS and the Police, Public Prosecutor or other law enforcement agencies.

17. In cases where MAS’ investigations reveal serious misconduct that warrants a criminal prosecution, MAS’ ability to transfer evidence to the Police would be helpful. It reduces the need to duplicate investigations and enhances the efficiency of our law enforcement agencies. Conversely, there may be cases investigated by the Police or other law enforcement agencies that may be more effectively or appropriately dealt with by MAS through regulatory actions.

18. However, under the current SFA and FAA, MAS may only transfer evidence to the Police or Public Prosecutor for the purpose of criminal investigations or proceedings for market misconduct offences under the SFA, and offences under the FAA. The FIMA Bill will expand the existing provisions to allow evidence gathered by MAS to be transferred to the Police or the Public Prosecutor, for the purpose of criminal investigations or proceedings for any offence under the MAS-administered Acts.

19. Presently, the Police or other law enforcement agencies may only transfer evidence to MAS for the purpose of civil penalty investigations or actions for market misconduct offences under the SFA. The FIMA Bill will replace these provisions with the power for the Police or other law enforcement agencies to transfer evidence to MAS, for the purpose of taking regulatory actions in respect of any misconduct under the MAS-administered Acts, if such transfer is in the public interest.

20. In this regard, the specific provisions for the transfer of evidence between MAS, the Police and other law enforcement agencies are consistent with the existing general common law principle permitting enforcement agencies to share with other enforcement agencies, evidence that would ordinarily be kept confidential where it is in the public interest to do so. Expressly legislating for the transfer of evidence between MAS, the Police and other law enforcement agencies, notwithstanding this common law principle, will make clear when evidence may be transferred and facilitate operational arrangements in respect of the transfer.

(B) Enhancing MAS’ powers in the capital markets

21. Sir, let me now explain in more detail how the Bill will enable MAS to regulate FIs in the capital markets sector more effectively. This pertains to amendments specific to three (3) Acts, namely the SFA, FAA and TCA.

22. The first set of amendments relates to expanding MAS’ powers to issue directions to CMSL holders and their representatives for their unregulated businesses. Currently, CMSL holders may conduct unregulated businesses such as dealing in products that are not regulated by MAS. Examples of such products include digital payment token derivatives that are traded on overseas exchanges.

23. These unregulated businesses may pose contagion risks to CMSL holders’ regulated businesses. For instance, losses from a CMSL holder’s unregulated business could adversely impact its ability to meet its obligations to customers in its regulated business. Customers may also not be fully aware that regulatory protections do not apply to the CMSL holder’s unregulated businesses.

24. While MAS has issued guidance to CMSL holders on risk-mitigating measures and safeguards that they should adopt when they conduct unregulated businesses, we should put these on a clear legal footing. The FIMA Bill will empower MAS to issue legally binding directions to CMSL holders and their representatives in relation to their conduct of unregulated businesses, to mitigate risks posed to its regulated businesses.

Enhancement of MAS’ supervisory powers

25. The second set of amendments enhances MAS’ supervisory powers under the SFA, FAA and TCA. They will harmonise requirements across the Acts, and where relevant, also align MAS’ powers under these Acts with the Banking Act 1970.

26. I will highlight a few key amendments:

a.The first relates to the appointment and removal of key persons. Regulated FIs are generally required to obtain MAS’ approval before appointing their chief executive officers and directors. However, this requirement currently does not apply to locally incorporated recognised market operators and recognised clearing houses, and approved trustees. The FIMA Bill will therefore introduce approval requirements for such entities. In addition, while MAS already has powers across the SFA, FAA and TCA to remove a director or key management officer, there are some minor differences in the grounds for removal. The FIMA Bill will consolidate the grounds for removal into a single ground of not being “fit and proper”. Certain factors that MAS may consider in its assessment are also set out in the Bill.

b.The second area relates to persons obtaining control of a capital markets FI. In general, a person acquiring control in capital markets FIs must obtain MAS’ approval before doing so. However, this requirement does not currently apply to locally incorporated recognised market operators and recognised clearing houses, and approved trustees. The FIMA Bill will extend the approval requirement to such entities. For other capital markets FIs, the FIMA Bill will also clarify when MAS’ approval must be sought. Currently, a person must seek MAS’ approval prior to entering into an “arrangement” by which the person would obtain control of a CMSL holder or a licensed financial adviser. Such an arrangement may include early stages of negotiations for the acquisition. This is not MAS’ intent. The FIMA Bill will make clear that MAS’ approval need only be sought before a person obtains control of the regulated entity.

c.The last aspect relates to the appointment of external auditors. Presently, MAS’ powers in relation to external auditors of Approved Exchanges, Approved Clearing Houses, Approved Holding Companies, and Licensed Trade Repositories are limited to matters that the auditor must immediately report to the MAS, such as when the auditor becomes aware of any matter that constitutes a breach of the SFA, or an offence involving fraud or dishonesty. It is important that the auditors appointed by such entities can satisfactorily discharge their duties, given the central role that these entities play in the capital markets. The FIMA Bill will introduce the requirement for such entities to obtain MAS’ approval for the appointment of their external auditors on an annual basis. MAS will also have powers to direct these entities to remove or replace their appointed auditors, where the appointed auditors are unable to discharge their duties satisfactorily. With these amendments, MAS will align the approach for capital markets FIs with the approach that MAS has taken for other systemically important FIs under its purview, such as banks and insurance companies.

27. Lastly, the FIMA Bill will also introduce various miscellaneous amendments such as – (a) amendments to clarify MAS’ reprimand powers; (b) amendments consequential from the introduction of new processes – such as updating some of the Acts to remove references to physical licences; and (c) amendments to provide for definitions necessitated by amendments made by this Bill.

Conclusion

28. MrSpeaker, in conclusion, the FIMA Bill will enhance MAS’ ability to enforce its regulatory regime and supervise capital markets FIs more effectively. This will further strengthen Singapore’s position as a safe and trusted international financial centre.

29. Sir, I beg to move.