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DSB seeks industry feedback on UPI legal terms and conditions consultation
The Derivatives Service Bureau (DSB) has opened a consultation on the legal terms and conditions and client support model expected to apply to users of the Unique Product Identifier (UPI) Service, due to launch next year.
The consultation sets out the proposals for users of the UPI Service as well as highlighting the resulting user experience for firms utilising the current OTC ISIN Service, and as such the DSB recommends that current and potential users review and respond to the questions set out in the consultation paper. The deadline for industry feedback is Wednesday 19th January 2022.
The DSB, was founded by the Association of National Numbering Agencies (ANNA), to facilitate the allocation and maintenance of ISINs, CFIs and FISNs for OTC derivatives, and was subsequently mandated by the Financial Stability Board as the sole UPI Service Provider to facilitate creation and distribution of UPIs globally.
The UPI is designed to facilitate effective aggregation of over-the-counter (OTC) derivatives transaction reports on a global basis. Reporting parties will be mandated to incorporate the UPI into their workflows and submit these to trade repositories once mandates come into effect in each of Africa, Asia, Australia, Europe and the Americas.
The DSB UPI Legal Terms and Conditions Consultation sets out a range of proposals aimed to align with industry feedback for the DSB to support the UPI Service within the existing DSB legal framework that is used for the OTC ISIN Service. Proposals include the use of a single overarching legal agreement with fee-paying users able to subscribe to OTC ISIN and/or UPI Services, introduction of a Client Onboarding and Support Platform (COSP), use of the Legal Entity Identifier (LEI) for user onboarding verification, use of pre-payment for lower value user fees, the fee model variables to be used for annual fee determination, the approach to termination, suspension and renewals, dispute resolution mechanism and the transfer of user data in the case of a contingency scenario, amongst others.
Emma Kalliomaki, Managing Director of ANNA and the DSB, says: “The DSB is an industry led utility, producing standardised OTC data for an evolving market. Good governance principles are at the core of the UPI, to ensure for a better service for the market. The DSB would like to encourage all interested parties to review the proposals of the UPI Legal Terms and Conditions Consultation and provide their feedback by 19 January 2022 when the feedback window closes.
Like this article? Sign up to our free newsletter Author Profile Related Topics Legal & RegulationWaystone partners with Invenomic to launch US Equity Long/Short UCITS Fund
Waystone has launched the Invenomic US Equity Long/Short UCITS Fund on the MontLake UCITS Platform ICAV. The fund launched with USD35 million in AUM with a strong pipeline to grow quickly to USD100 million.
The fund joins the Waystone Investment Solutions product suite at Waystone Fund Management.
The Invenomic US Equity Long/Short UCITS Fund, managed by Invenomic Capital Management LP, is a fundamentally driven diversified all cap US equity long/short strategy with a strong value bias.
Invenomic Capital Management LP was founded in 2015 by Ali Motamed. For over 17 years, Motamed has developed and managed what has become the Invenomic strategy. The objective of the fund is to achieve long-term capital appreciation. To achieve this, the Invenomic strategy adopts three core principles: 1) investing in fundamentally sound companies 2) disciplined short selling and 3) diversification – an essential risk management tool.
Motamed says: “We are very pleased to bring our strategy to the European market with the help of Waystone. We have been running our strategy with daily liquidity in the US for over four years now and feel that a UCITS fund available to non-US investors is a crucial next step in the development of our business. With this launch we can offer our long/short equity strategy to investors all over the world.”
Kenneth Sim, Global Head of Distribution, Waystone, says: "We are excited to be partnering with Invenomic on the launch of its UCITS Fund. Following a decade of clear outperformance of growth over value, we have seen a clear shift in demand from investors looking for value-tilted strategies that can generate absolute returns through alpha. In response to this, the Waystone Investment Solutions team has sourced and partnered with Invenomic Capital Management LP to bring its strong track record and expertise to the European UCITS market, which has come at a time where such value-related strategies are starting to experience their long overdue tailwinds. We feel that the strategy is a compelling investment opportunity for our clients looking to diversify their portfolios. We look forward to building a successful partnership with Invenomic.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Funds Launches & Fundraising UCITsVibrant Capital Partners makes investment and business development hires
Vibrant Capital Partners has added to its Structured Credit Investment and Business Development teams with two hires.
Shawn Lim, former Vice President of Corporate Structured Products at Oak Hill Advisors, has joined Vibrant Capital Partners as a Vice President on its Structured Credit Investment team. Lim will be responsible for sourcing, analysing and executing investments in collateralised loan obligation (CLO) liabilities and equity.
Zachary Radler, former Director at GoldenTree Asset Management, has joined Vibrant Capital Partners as a Director on its Business Development team. Radler will focus on deepening the Firm’s relationships with institutional investors across North America.
Rehan Virani, Chief Executive Officer of Vibrant Capital Partners, says: “Shawn and Zach, the latter of whom I worked alongside for several years, are experienced, high-integrity professionals, and our ability to attract individuals with their pedigree demonstrates the strength of the Vibrant platform. We look forward to leveraging Shawn’s credit research expertise and Zach’s global institutional relationships as we continue to develop bespoke investment products within corporate structured credit.”
Kashyap Arora, co-Chief Investment Officer of Vibrant Capital Partners, adds: “It is a pivotal time for our industry, with increasing institutional investor interest in the CLO asset class across both primary and secondary markets following its resilience over credit cycles. We are pleased to continue to differentiate our platform and create value for investors.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & AppointmentsBrummer multi-strategy hedge fund stays positive amid hefty fixed income losses
Brummer & Partners’ flagship multi-strategy hedge fund vehicle ended last month in marginally positive territory, as solid gains made by its systematic trend-following managers were set against hefty losses in its fixed income relative value exposures, which were hit by short-term interest rate surges in Sweden.
The Brummer Multi-Strategy (BMS) fund made a 0.2 per cent gain in its SEK and USD classes during October, but it remains down 0.3 per cent over the 10-month period since the start of January. The twice leveraged BMS 2xL version gained 0.3 per cent last month, but year-to-date it also is languishing in negative territory to the tune of -1.3 per cent.
Trend-following manager Florin Court led the way with a 5.1 per cent monthly return, which was driven by lower moves in bond prices as well as gains in commodities. Lynx, another managed futures name, gained 1.2 per cent, making money in bond moves but losing out from long-dollar bets. Florin Court has now soared more than 29 per cent since the start of 2021, with Lynx up 2.6 per cent.
On the downside, fixed income relative value fund Frost collapsed 17.7 per cent last month – its worst monthly showing since inception. The hefty loss – which leaves the strategy down 17.5 per cent year-to-date – stemmed mainly from the recent surge in short-term Swedish interest rates and flattening of the yield curve, Brummer said on Tuesday.
“In Sweden, there is now a significant divergence between the Riksbank’s communicated trajectory for short term interest rates and what the market is pricing in,” the long-running Swedish hedge fund pioneer noted in an update.
Elsewhere, Manticore, a long/short equity fund, added 1.1 per cent as a result of positive alpha around the earnings season, as did Kersley, a financials-focused long/short equity manager, which was up 0.1 per cent. Manticore has gained 2.8 per cent year-to-date, with Kersley up 0.5 per cent.
Elsewhere, discretionary macro manager Arete has generated 8 per cent over the last 10 months, having risen 1 per cent in October primarily on the back of successful stock market positioning.
Quant equity fund AlphaCrest dipped 2.7 per cent last month, and is down 0.7 per cent for the year, while Lynx Constellation, a machine-learning strategy, lost 1.6 per cent in October, and has now plummeted more than 18 per cent year-to-date. Pantechnicon, a long/short equity strategy recently added to the BMS vehicle, was flat in October.
“The fact that BMS finished the month in positive territory is a testament to the strength of the diversification in BMS’s portfolio,” Brummer said of the overall October performance. “Frost has reduced risk significantly to adjust the portfolio to the current market conditions. Frost’s negative contribution to BMS’s return is however limited since the allocation to Frost has been kept low.”
As of November 1, BMS’s portfolio managers primarily increased the allocation to Kersley and Florin Court. The portfolio managers also redeemed from its 1.2 per cent allocation to Lynx Constellation and instead increased the allocation to Lynx main programme. In total, the allocation to Lynx was increased on the margin, the Stockholm-based firm added.
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Results & performance Investing in Hedge FundsExabel and ExtractAlpha partner to launch alternative data insights platform
Exabel, a data and analytics platform for investment teams, is partnering with ExtractAlpha to deliver a new insights platform for ExtractAlpha’s investment clients.
The ExtractAlpha Intelligence Engine will give portfolio managers and hedge funds additional insights based on ExtractAlpha’s diverse alpha signals. The platform delivers user-friendly dashboards, visualisations and KPI monitoring capabilities, with a focus on TrueBeats - ExtractAlpha’s advanced earnings and sales surprise forecasting model. This assists investors in idea generation and fundamental analysis by spotting trend shifts in ExtractAlpha’s data. Partnering with Exabel gives alternative data vendors a compelling extra presentation and monitoring layer that investors value, utilising Exabel's unique Al analytics, financial modelling and data science platform.
The ExtractAlpha Intelligence Engine forms part of Exabel’s growing partnership program. The platform empowers data vendors to discover new value-added insights in their datasets, demonstrate extra value to potential customers in easy-to-create report cards, and deliver a new, proven Insights product that appeals to a wide group of professional investors. Through the partnership with Exabel, ExtractAlpha’s clients can now much more easily and quickly identify alpha generating investment opportunities from its TruBeats revenue and EPS predictions.
ExtractAlpha is an independent research firm dedicated to providing unique, actionable alpha signals and datasets to institutional investors. ExtractAlpha’s rigorously researched quantitative products are designed for institutional investors to gain a measurable edge over their competitors and profit from these unique new sources of information.
Neil Chapman, CEO of Exabel, says: “We are delighted to be partnering with ExtractAlpha on this new insights platform. ExtractAlpha are well established in the alternative data world and their team’s magpie-like eye for value in a dataset has led to them accumulating an impressive portfolio of signals. We are proud to be able to help present these signals to ExtractAlpha’s clients in their best possible light.
“Today most investors want to use alternative data, but many find the cost and complexity of modelling data in-house a prohibitive burden. Exabel allows active managers to benefit from alternative data immediately to supplement fundamental strategies.
“We are looking forward to working with ExtractAlpha to create actionable insights on its data. Dashboards, intelligent screening of KPI predictions and company drill down tools are among the many features our easy to use SaaS platform can deliver.”
Vinesh Jha, CEO of ExtractAlpha, says: “Today’s institutional investors are inundated with interesting-sounding datasets, but the vast majority of these datasets do not have true predictive power and the data delivery is often not designed with the end user in mind. We are excited to work with Exabel on addressing this issue by delivering our consistently profitable, predictive analytics via Exabel’s intuitive, user-focused, and feature-rich platform. This collaboration will allow discretionary managers access to the same powerful insights which our quant clients have been leveraging for years - including the most accurate earnings prediction model available on the market - in a way which is designed for their individual workflow.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Services Research & AnalyticsCrypto hedge fund Corinthian names ex-Macquarie equity research chief Peter Redhead as COO
Corinthian Digital Asset Management, a diversified digital assets offshoot of London-based crypto arbitrage hedge fund Argentium, has named ex-Macquarie and JP Morgan equity research head Peter Redhead as partner and chief operating officer.
Redhead joins as Corinthian, which was established by Argentium founder Paul Frost-Smith, prepares to open its debut hedge fund strategy Chiron to external capital in February 2022.
Redhead previously spent more than five years at Macquarie Global, most recently as global head of equity research. Earlier, he had been managing director and head of EMEA equity research and head of Asian equity research at JP Morgan.
Over the course of his 25 years-plus career, he has also been CEO of leading financial services recruiter The Rose Partnership, and non-executive director of BeQuant, a regulated crypto exchange.
Commenting on the hire, Corinthian CEO Frost-Smith said Redhead’s “drive and entrepreneurial spirit, and keen interest in the development of the crypto markets as they move towards institutional adoption, will be invaluable.”
Chiron, the firm’s first hedge fund in digital assets, runs a core portfolio of crypto outperformance strategies, coupled with an opportunistic trading approach to relative value opportunities in the crypto markets. It seeks to deliver exceptional returns with an actively managed volatility profile.
UAE-headquartered Corinthian was established by ex-JP Morgan and Credit Suisse manager Paul Frost-Smith who, having developed arbitrage-based algorithmic trading strategies at Argentium, looked to broaden his focus across the entire cryptocurrency value chain beyond high frequency arb.
“It is true that some investors want a market neutral approach, but a significant majority do not; they want exposure to potentially great returns but in a managed way and without doing extensive homework. There is a lot of talk around institutional adoption but, despite the hype, that has not happened yet,” Frost-Smith said.
“This asset class has inherent risks and a sensible minimum return hurdle has to be recognised. This is not achievable, in my view, solely through market neutral or arbitrage strategies: the best approach is a long delta, long volatility portfolio, based on relative value, and appropriately hedged.
He added: “In addition, some investors are seeking a more diversified approach through fund of funds or VC products – this is something that Corinthian recognises and is building out, as the market starts to shake out and winners and losers in the many and varied crypto tech battles start to emerge.”
Frost-Smith and Jerome Dupuy are the managing partners of Corinthian, joined by Sophia Herman as partner and head of investments and Peter Redhead as partner and COO. Gejia Ouyang is head of BD APAC and Paola Mantovani is head of BD EMEA and head of investor relations.
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Digital Assets Moves & AppointmentsSterling Trading Tech sees increased adoption of advanced Rest API risk & margin system
Sterling Trading Tech (STT), a specialist in technology solutions for real-time risk management and margin calculations for equities, equity options, futures, and options on futures has reported continuous interest and adoption of its Rest API cloud-based Risk & Margin System.
The Sterling Risk & Margin System (SRM) provides advanced analytics as a RaaS (Risk-as-a-Service) solution utilising sophisticated quantitative and big data techniques to manage risk in real-time. The SRM calculates risk scenarios, stress tests, portfolio margin, risk-based haircuts, maintenance margin and VaR for each account, with the capability to add and handle firm-specific house rules. Additionally, the SRM is utilised by FiNRA approved broker and dealers and have been included in FINRA applications as the house risk and margin management system.
While the SRM offers a GUI for client front end access via its browser-based risk monitor, the flexible, cloud-based technology also offers access using its API. This has contributed to the continued adoption by clearing firms, hedge funds, broker dealers and proprietary trading groups, who can not only monitor risk using the GUI but can pull data into their downstream systems using the API.
“We have seen an increase in clients utilising the Rest API alongside the GUI and integrating the data and analytics into their existing systems. In some cases, it is specifically for filling a need by utilising one aspect of the system,” states Andrew Actman, Managing Director of Business Development. “The ability for clients to manage their risk and margin together in one real-time solution is a game changer for the industry.”
The Sterling Risk & Margin product line continues to evolve its offering. Its latest release includes support of global equity and equity options markets for risk calculations. It also released a sophisticated custom house/risk policy builder functionality allowing users to construct and manage their own risk or margin policy using any combination of risk measures, including multiple price and volatility scenarios, an OCC TIMS estimate with various addons and VaR (Value at Risk).
As one of the leading providers of equity and equity options trading solutions, STT offers trading platforms, OMS and infrastructure solutions, and risk and margin tools. Its professional and retail trading platforms are available to the global trading community for equities, options, futures, and digital assets. Platforms and products can be white labeled to enhance our clients’ brand identity.
Like this article? Sign up to our free newsletter Author Profile Related Topics Trading & ExecutionCME Group reports 32 per cent ADV growth in October
CME Group has reported its October 2021 market statistics, showing average daily volume (ADV) increased 32 per cent to 20.4 million contracts during the month.
Erik Norland, Senior Economist, CME Group, says: “Amid continued supply chain disruptions, rising inflation and continued labour shortages, the past month we have seen a sharp change in investor expectations regarding future rate hikes in both the UK and the US.
In the UK investors now anticipate a BoE rate hike as soon as 4 November. Meanwhile, in the US, market participants trading Fed Funds Futures anticipate that the Fed could hike rates one or two times in the next twelve months according to CME’s FedWatch tool.
"Previously, investors did not anticipate any Fed rate hikes until 12-24 months in the future. By contrast, few expect that the ECB will hike rates soon, although there is an expectation that they will gradually bring their policy rate back towards zero over the next several years. While short-term expectations for the ECB have not changed a great deal, longer-term Eurozone bond yields followed Gilt and Treasury yields higher while still remaining significantly lower than their peers.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Surveys & researchBitfinex Derivatives to launch solana-bitcoin, avalanche, bitcoin and cosmos Perpetual Swaps
Bitfinex Derivatives will launch perpetual contracts for solana, bitcoin (SOLF0:BTCF0), avalanche, bitcoin (AVAXF0:BTCF0) and cosmos (ATOF0:USTF0).
SOLF0:BTCF0, AVAXF0:BTCF0 and ATOF0:USTF0 will go live on 02/11/21 at 13:00 PM CET. SOLF0:BTCF0 and AVAXF0:BTCF0 will be settled in bitcoin. ATOF0:USTF0 will be settled in tether tokens (USDt). All of the contracts offer users up to 100x leverage.
“We’re delighted to announce the addition of Solana, bitcoin and Avalanche, bitcoin, along with Cosmos, to the growing portfolio of perpetual swaps available to trade on the exchange,” says Paolo Ardoino, CTO at Bitfinex Derivatives. “We anticipate great interest in these products, particularly among funds and professional investors for hedging purposes and to manage risk.”
Bitfinex Derivatives platform and products are only available in eligible jurisdictions, and are exclusive to verified users.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital AssetsAIMA guide on SEC Marketing Rule offers practical approach to implementation
On 2 November, AIMA is hosting a webinar to launch its Implementation Guide to the SEC’s modernised Marketing Rule.
The guide was produced with the assistance of AIMA partners ACA Group and Dechert LLP, drawing on their expertise in investment advisory consulting and legal representation.
Unlike a traditional manual to memorialise the 430-page Rule, which was published on 22 December, 2020, the Guide is designed to provide a concise overview of the requirements under the new Marketing Rule, serving as a more practical resource for AIMA members as they navigate the new regime. Focusing on the most common areas of concern for investment advisers and the most notable changes in the new Rule, the Guide then distils the Rule into more concise form, providing practical guidance in an easy-to-use form. Definitions are broken down to identify what does and does not qualify, absolute requirements are identified, considerations for principle-based decisions are reviewed, checklists are provided and real-world examples are used – all in a manner that should prove useful to seasoned practitioner and layperson alike.
Following launch of the Guide, AIMA will offer educational programming to more deeply explore specific elements of the Rule, continuing in its objective to provide members with practical, useful tools to address the ever-changing regulatory landscape.
“This Guide is a refreshing take on traditional manuals, offering practical, easy-to-use guidance on what remains a complex topic. AIMA spent more than a year engaging with the SEC on behalf of members during the comment period to ensure their concerns were heard. In listening to those concerns, it was clear that we also had to provide relatable guidance that could be quickly understood by all levels of staff,” says Jack Inglis, CEO, AIMA
“Since the day the New Marketing Rule was approved, ACA has been entrenched in the day-to-day concerns of firms working to understand its nuances, update policies, and prepare to present performance in line with the new rule. We’ve found through the Marketing Rule gap analyses we've performed for our clients, there are many updates to consider and it has become clear that making the necessary changes cannot happen overnight. We’re pleased to have partnered with AIMA and Dechert on this guide which will help to provide a strong foundation for firms to stand upon,” says Carlo di Florio, Chief Services Officer, ACA Group
“It’s been a pleasure working with AIMA and ACA on this guide. We hope that asset managers will find it a helpful and practical tool in navigating this important regulatory development,” says Karen Anderberg, Partner, Dechert LLP.
Like this article? Sign up to our free newsletter Author Profile Related Topics Legal & Regulation North AmericaTNS strengthens European reach to deliver enhanced market data capability and ultra-low latency connectivity
Transaction Network Services (TNS) has invested significantly in its European backbone and data solutions in 2021, offering expanded market data from all major European equities exchanges and ultra-low latency TNS Layer 1 in-data centre architecture connected to TNS’ points-of-presence (PoPs) across Europe.
The organisation enhanced its already extensive market data portfolio adding Wiener Boerse AG, which operates the stock exchanges in Vienna and Prague. TNS is also working with Deutsche Börse to provide access to Eurex and Xetra market data for non-member organizations, leveraging its established presence at the datacentre in Frankfurt.
“This strengthening of our European backbone is part of our commitment to provide premium infrastructure-as-a-service (laaS) across Europe,” comments Alastair Watson, Managing Director of TNS’ EMEA Financial Markets business. “Access to streaming market data globally is critical to the operations of financial firms. Coupled with our proven, reliable, low latency technology, we can deliver data in an efficient and cost-effective manner. This provides a far less complex alternative to firms sourcing and maintaining their own dedicated exchange connectivity for data sourcing.”
Eurex is a leading derivatives exchange for futures and options, while Xetra is the exchange for German institutional organisations and the premier ETF trading venue in Europe. In Vienna, Wiener Boerse AG operates at one of the oldest exchanges in the world. These additions complement TNS’ existing European equities data portfolio which includes Cboe Europe, Euronext, Aquis, LSE and SIX Swiss, among others.
The TNS infrastructure brings together over 2,800 financial community endpoints to address the needs of financial market participants worldwide. TNS offers a range of connectivity, colocation, cloud, market data and VPN solutions within its laaS portfolio.
Traders using the company’s Managed Hosting solution benefit from TNS’ global point-of-presence footprint and extensive existing on-net connections, which include uninterrupted access to more than 100 exchanges with local, physical support around the globe. Additionally, real-time monitoring is provided by TNS’ Network Operation Centres in the UK, US and Australia.
Eagle Point Credit Management closes Defensive Income Fund at hard cap of USD300m
Eagle Point Credit Management (Eagle Point), a specialist investment manager focused on investing in CLO securities, portfolio debt securities and other credit investments, has held the final close of its Defensive Income Fund.
The fund had an original target size of USD250 million, was oversubscribed and closed at its hard cap of USD300 million.
“We saw very strong demand for our defensive income strategy, which we believe provides an attractive and uncorrelated source of yield,” says Thomas Majewski, Managing Partner of Eagle Point. “This niche investment strategy capitalises on Eagle Point’s highly differentiated approach to source, diligence and acquire portfolio debt securities, including debt and preferred equity issued by credit funds and BDCs, which is unique among institutional credit managers. We greatly appreciate the confidence that our investors have in our ability to deliver yield across market cycles.”
Eagle Point’s Defensive Income Fund was supported by a diverse group of limited partners, including endowments, foundations, public pension funds, insurance companies and family offices.
Eagle Point was formed in 2012 by Majewski and Stone Point Capital.
Digital asset fund flows total USD288m in past week
Digital asset investment products saw inflows totalling USD288 million last week, bringing the total inflows year-to-date to a record USD8.7 billion, according to the latest Digital Asset Fund Flows Weekly report from CoinShares.
Bitcoin saw the majority of inflows totalling USD269 million last week bring total inflows for October to USD2 billion.
The record-breaking previous week, following the US SEC permitting a Bitcoin futures ETF decision, was not repeated last week with only USD53 million of inflows from US-based ETFs.
Multi-asset investment products saw outflows totalling a record USD23 million, in what is now a three week run of outflows.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital AssetsSingapore: Fostering Governance, Integrity and Best Practices
By Martin O’Regan – Comprising more than 1,000 managers with USD4 trillion of assets under management makes Singapore a leading Asian investment management hub. These impressive numbers demonstrate potential for the ever-changing industry.
A shifting and growing business landscape requires firm leadership, thoughtful insights, reforms, and competency training to ensure the community can continue to capitalise on industry trends. The successful launch and take on of the Singapore Variable Companies Act (VCC) has been the catalyst for a lot of the current growth. With a pro-business regulator marketing locally and overseas, together with the local funds community being strong advocators of the VCC, are the leading reasons for its growing success.
Designed to meet the changing global regulatory trends, VCC’s growth in Singapore since its introduction in 2020 has seen a diverse range of VCC set ups. At Solas, we have onboarded VCCs for family offices, charitable trusts, long/short equity, private equity and venture capital (mainly in life sciences, deep tech and biotech). For VCC to function as a collective investment vehicle, it can be applied as a Master-Feeder structure where VCC is the master and a feeder. For master VCC, it has mainly been applied for Indian focused portfolios to help comply with onshore Indian regulations and a Cayman feeder in the same structure to capture the NRI investment community. We have seen VCC being a feeder into Luxembourg masters and the VCC is also a pooling vehicle for Asian investors.
Singapore’s status as a fast-growing investment hub has a lot of regional and global managers looking for access to Asia via Singapore. This upward trend has Solas engaging in more double taxation work from the private equity and real estate sector. The Singapore Double Tax Treaty furthers Singapore’s global competitiveness — to meet the demands, Solas provides services to help clients meet tax substance requirements for holding companies and SPVs by providing resident directors, facilitating board meetings for investment and divestment decisions and quarterly meetings for oversight and governance of the ongoing operation of those Singapore entities.
We are proactively gearing up for the dynamic investment landscape by improving our infrastructure and product offering. As we anticipate 2022, Solas has developed in-house capabilities for digital assets and Environmental, Social and Governance (ESG), which we see as key drivers going forward. Aside from VCC, sustainable investing will add value to Singapore with the metrics sizing up the sustainability of an investment or business, thus attracting more investors. To better serve digital assets, we have brought in industry experts to help develop our due diligence and onboarding process, upgrade our policies and procedures and revamp our ongoing monitoring for this asset class. We have been involved with the first digital asset fund to be tokenised on the ADDX platform, and this being the first VCC on ADDX was very exciting for us.
With the demand growing from progressive investors and fund managers, it is about building more substantial digital capabilities and regulatory developments to grow Singapore as a digital asset hub.
Fostering Governance, Integrity and Best Practices
With growth comes change; in the past, the roles of independent fund directors were relatively passive, however with the increased level of complexity in the industry, directors must now account for the value they can bring to the board. The growing sophistication of funds will require directors to demonstrate skills in risk, strategy oversight, compliance and investment processes. It is increasingly important to discuss fund directors’ role and effectiveness in protecting the fund and its investors. They are the accountability and independence that investors count on to maintain the integrity of the fund.
This is where the independent fund directors’ knowledge and code of conduct have shifted from a nice-to-have to a must-have. They must understand what works under the current system and what doesn’t. Fund directors provide an oversight function for investors and bring impartiality and experience to a fund’s board and the fund’s affairs and activities. Investors look at the comfort of independence that you are acting on their behalf. Transparency and transparent reporting are what regulators look at; hence, while there is no legislation in VCC for how directors should behave, I have helped set up and chair the Singapore Fund Directors Association (SFDA) to outline best practices that will serve the industry’s interests. The SFDA has developed a Code of Conduct which intends to provide the board of directors of investment fund entities with a framework of principles and best practice recommendations for effective and efficient governance. The framework is also intended to ensure that fund directors demonstrate a high standard of professionalism and ethical behaviour when discharging their obligations. In Singapore, it is still a work in progress and, as a community, we are working on setting high standards in motion.
Gaining unparallel access to the community through industry-led initiatives sets a way forward for professional conduct practices and competency training. The SFDA sets out to be a dynamic facilitator of excellence in fund director practices through education, information sharing or exchange and accreditation.
Revamp of Limited Partnerships
As Singapore strives to create a holistic ecosystem of governance and best practices, the momentum of the private equity market in South East Asia also sees a revamp of the limited partnership regime.
Overseen by a mutual limited partnership agreement, the benefit of a limited partnership is that there is no legal reporting requirement for the return of capital and distribution of profits that you see with companies. While this offers the flexibility of raising capital without giving up control, companies organised as limited partnerships pose particular risks to investors. They do not enjoy the same rights as corporate shareholders.
ACRA’s recent call for feedback to revamp the Limited Partnership Act (Chapter 163B) that governs the establishment of limited partnerships is a welcome move to make the funds friendlier and attractive. This will bolster Singapore’s position as an established asset and wealth management centre.
Working together with regulators and fund management industry associations like SFDA to introduce policy initiatives to enhance further and expand LPs’ appeal makes it a compelling alternative to well-established fund structures in other jurisdictions. Understandably, time to familiarise and accept new policies is needed. Again, how the industry uses these advantages will depend on the efficacy and critical knowledge of the asset management value chain.
What’s Coming
The local asset management industry continues to build capacity and capabilities, securing steady progress, especially during these challenging times. Solas is excited to be a part of it. Our new motto: Leading the Way Forward: Reliable, Relatable and Reputable, continues to signify our commitment to expand our knowledge with well-established fund industry experts in our professional network, growing our experience and reputation. We hope to grow with the industry as it grows for us.
Martin O’Regan
Managing Director
Martin O’Regan is an Independent Director with over 20+ years’ experience and a qualified accountant (FCPA, FCCA). Prior to setting up his own directorship firm at Solas Fiduciary Services, he spearheaded Intertrust Singapore to expand its fiduciary services in Asia. He previously headed the alternative Funds Services in Asia for Deutsche Bank, Citi Fund Services (Bermuda), Apex Fund Services (Dubai) and UBS Fund Services (Cayman Islands and Hong Kong). Martin is licensed as a director with Cayman Islands Monetary authority (CIMA), and Chairman of the Singapore Fund Directors Association (SFDA).
Like this article? Sign up to our free newsletter Author ProfileSingapore in the green lane
By Armin P. Choksey – In the last few years, the world has witnessed significant progress in harmonising environmental, social, and governance (ESG) disclosure frameworks. The launch of new initiatives globally shows that both investors and stakeholders recognise the value of streamlining ESG disclosures and the importance of consolidating them.
Singapore stands at the cusp of green innovation. It has the prowess to not only become a sustainable development hub but also contribute effectively to global ESG research and standards.
Singapore leading the way
The regulatory push in Singapore has been encouraging to promote the adoption of ESG among financial institutions and the marketplace at large. Singapore’s pragmatic and progressive regulatory authority, Monetary Authority of Singapore (MAS), has been engaging financial institutions to consider ESG criteria in their decision making and product development process.
For instance, MAS’ Sustainable Bond Grant Scheme encourages the issuance of green, social and sustainability bonds in Singapore and is open to first-time and repeat issuers. Earlier this year, the MAS published the Environmental Risk Management (ERM) Guidelines for banks, insurers and asset managers to strengthen the financial sector’s role in the transition to an environmentally sustainable economy.
The Green Finance Industry Taskforce (GFIT) was convened by the MAS and comprises of representatives from financial institutions, corporates, non-governmental organisations, and financial industry associations. GFIT proposed a taxonomy and launched an ERM handbook; issued a detailed implementation guide for climate-related disclosures by financial institutions aligned with TCFD; introduced a framework to help banks assess eligible green trade finance transactions; and launched a whitepaper on scaling green finance in the real estate, infrastructure, fund management and transition sectors. GFIT also launched a series of workshops to build capacity in green finance for financial institutions and corporates
In early 2022, MAS will set out its regulatory expectations on the disclosure standards that must be met by retail funds in Singapore. This demonstrates the practical and focused approach of the regulator which has been a pillar of its success. The road to developing a global ESG standard is still some time to go but the journey has already begun with one initiative at a time.
PwC Singapore is committed to drive sustainable investments and create sustained outcomes. The firm is doing its part to help financial institutions shift towards sustainable investments given that’s the future direction. Singapore-headquartered Asian Investment Fund Centre is a part of PwC’s network of asset and wealth management industry specialists in Asia Pacific, offering a one-stop shop for various cross-border services.
Armin P. Choksey
Partner, Asian Investment Fund Centre, PwC Singapore
Armin leads PwC’s Asian Investment Fund Centre and its Asia Pacific Asset and Wealth Management Research Institute based in Singapore. His key areas of focus include: market entry, funds distribution strategies, operational due diligence, responsible investments strategy and implementation, target operating model, product development, policy initiatives, performance measurement and verification, product rationalisation and operational efficiency of the asset and wealth management business.
Like this article? Sign up to our free newsletter Author Profile Related Topics ESG & Responsible InvestingSingapore: The Asset Management Centre of the Future
By Mark Voumard – The genesis of Singapore’s asset management industry development: 2021 – 2035
It’s 2035 and Jane Lee, a resort hotel executive in Singapore is planning to invest in one hedge fund and two mutual funds, all Variable Capital Company’s (VCC) managed by asset managers based in Singapore, Asia’s largest asset management centre, fund domiciliation hub and private banking nexus. Her AI digital PA navigates to her personal, cloud based, financial portal reviewing the latest return data and scans her personal, long term financial plan and goals, leading to approval, and Jane is ready to invest. Her AI program using U-Reg, an advanced KYC/AML software, locks into each manager’s online application and completes each subscription form in 30 seconds, supplying certified true copies with a digital watermark of her passport, proof of address and proof of Accredited Investor status. Each fund manager’s AI system checks and verifies all the information resulting in approval within five minutes, with Jane’s AI PA remitting funds in Singapore’s digital currency, the SG-ED.
Global economic shift to Asia
In 2021, a Regional Comprehensive Economic Partnership (RCEP) pact (and the world’s largest free trade agreement) was signed, focusing on reducing trade barriers in Asia. By 2030, it was adding USD220 billion a year to world incomes and USD560 billion to world trade. In 2031, China surpassed the US as the world’s largest economy and by 2033, 42 per cent of world GDP and 36 per cent of global consumer spending was generated in Asia.
The period 2022 to 2029, saw technological innovation and the rapid adoption of technology by governments in Asia; in particular, in Singapore, where the city state ramped up subsidies and multiyear training of the local workforce, to truly transform itself into a knowledge economy. The adoption of digital tools and processes boosted productivity growth and unleashed a wave of innovations across many domestic sectors including finance and asset management.
Strong growth as an asset management and fund domiciliation hub
By 2035, global Assets Under Management (AuM) grew from USD89 trillion in 2021 to USD240 trillion (CAGR 6.84 per cent). By 2035, AuM across the asset management industry in Singapore rose from USD3.5 trillion to USD20 trillion (CAGR 14.34 per cent), second globally as a fund hub, only to Luxembourg’s USD22 trillion (CAGR 11.27 per cent), followed by Shanghai with USD15 trillion. Whilst investment vehicles established and operated in Luxembourg and Singapore are used to make regional (pan-EU and pan-Asian) investments respectively, in the case of Shanghai, most of the capital and assets are domestic, not cross border. In the region, both Australia and Japan have built large pools of domestic capital in domestic vehicles but with a focus still on primarily investing in domestic assets.
Singapore’s growth spurt began in the early 2020s with the launch of the VCC in January 2020. Singapore was already one of the leading asset management and private wealth centres in Asia experiencing double digit CAGR in AuM when it launched the VCC to bring funds onshore where they could be serviced locally and to win a percentage of the global fund domiciliation business.
Prior to the VCC launch, 85 per cent of the money managed from Singapore was in Cayman structures and 4 per cent in Luxembourg structures. 500 VCCs were launched in the first two years (during the first Covid pandemic) and as of August 2035 there are 7,000 VCCs with 70 per cent of the money managed from Singapore now in Singapore domiciled structures. Globally, the trend to onshoring continued through the 2020s, boosted in part by the rollout of the global minimum tax in 2023 that was extended to the financial industry, hitherto exempt, in 2028. Whilst some US-based managers continue to use Cayman and increasingly Delaware vehicles, the rest of the world, over time, shifted to either Luxembourg, despite the partial break-up of the EU in 2027, for European investments or Singapore for Asian investments.
Between 2021 and 2035, Singapore’s share as a percentage of global AuM increased from 3 per cent to approximately 9 per cent and the number of licensed asset managers based in Singapore increased from 1,050 to 2,950. By 2028, the Asian Regional Fund Passport (ARFP), a cross-border, online system allowing residents of 15 countries across Asia to access funds domiciled and or managed in each of the other 14 countries, had overcome prior obstacles and was in full swing. By 2029, Asia accounted for 75 per cent of all the venture finance in the world versus 3 per cent in 2005. With a focus on political stability, the rule of law and the strongest IP rights in Asia, Singapore became the regional headquarters for many of the Asian recipients of this wave of money.
Use of AI by hedge funds
XAI or Explainable Artificial Intelligence (a term created by DARPA) allows humans to understand how and why AI generates a specific set of results and allows managers to be able to explain to investors exactly how alpha is being generated. Singapore bet the house on this technology providing significant government funding for hedge funds utilising XAI, leading to Singapore becoming a world-leading XAI hub.
Introduction of digital currency
The MAS issued its own digital currency, the SG-ED in 2025, which further cemented Singapore’s position as a centre for crypto and blockchain investing and trading. That said, as more and more central banks issued their own digital currencies (CBDCs) with China leading the charge in 2022 issuing an ‘e-yuan’ and the US belatedly issuing its own USD-ED in 2028, the growth of independent crypto currencies such as Bitcoin fell dramatically. The use of the SG-ED prompted previously unbanked assets from across Asia to shift into its rigorous financial system and improved speed, cost, and transparency of cross-border payments.
The talent bottleneck
The knowledge economy created tremendous demand for skilled workers with the numbers in the financial industry jumping to 700,000 in 2034 from 200,000 in 2014 and the finance industry contributed to 48 per cent of Singapore’s GDP in 2034 versus 19 per cent in 2021. The path was not easy with a talent bottleneck developing in the asset management industry between 2020 and 2022. A subsequent significant increase in the number of global asset managers basing themselves in Singapore, bringing with them international expertise, beneficial for knowledge transfer and upskilling of the local workforce, combined with strong support by the MAS for academic programs and training provided by the industry, resulted in a significant expansion of financially trained workers.
Mark Voumard
Founder and CEO of Gordian Capital
Executive Committee Member and Co-Chair of the Promotion and Advocacy Working Group, Singapore Funds Industry Group (SFIG). Mark Voumard, who has almost four decades of experience in Asia, is founder and CEO of Gordian Capital, Asia’s leading independent alternatives institutional platform and fund structuring specialist (AUM USD7 billion) where since 2005, he has been involved in the structuring and launch of over 100 funds (hedge, private equity, venture capital, real estate, and private credit).
Like this article? Sign up to our free newsletter Author Profile Related Topics Technology & software solutionsThe global secondaries market: What Singapore-based sponsors can learn
By Tom Lin and Morgan Shubin, Clifford Chance – It has become fashionable to say that secondary transactions are now ‘mainstream’, with some market participants pointing to the flourishing GP-led segment of the market as a ‘fourth leg’ option for liquidity alongside conventional exit routes for PE assets (i.e. sale process, IPO or recapitalisation). That might not be necessarily a perfect characterisation, though we suspect it might be to a degree with some nuance. However you might characterise it, the growth in deal activity (market commentators expect transaction value to exceed USD100 billion for the first time in 2021), extraordinary fundraising, the concerted expansion of global managers into the strategy (whether through acquiring established platforms or team build-outs) all points toward one direction of travel: bigger, more competitive and more complex.
A growing market
The pandemic has supercharged the growth in transactions led by the sponsor, or GP-led secondaries to use jargon, involving single assets or concentrated portfolios with a crown jewel. This was driven in part by the outlook of an uncertain exit environment as the macroeconomic shock of the pandemic first took hold, coupled with (and giving way to) a recalibration of sponsors’ (and investors’) expectations on value and growth potential resulting from the market dislocation. Tailwinds driving the accelerated growth potential of certain asset classes resulted in GPs doubling down, whilst headwinds facing other asset classes resulted in GPs looking to extend holds on assets with strong fundamentals to undertake strategic pivoting.
Our perspective at Clifford Chance is perhaps unique in that our ‘boots on the ground’ capital solutions team in Singapore is lucky enough to run deals across European and APAC opportunities. Whilst the market opportunity in APAC has historically been small by comparison (it’s commonly accepted that APAC represents around 5-10 per cent of global secondaries volume), there is cause for optimism in regional activity growth driven by a number of factors. A slowdown in primaries, a backlog of transactions disrupted by the pandemic, and the opportunity for international investors to use a secondary strategy to access mature assets in the region as a means of diversification, are commonly recognised as such factors. In this context, supported by a strong advisory community on the ground in Singapore and elsewhere in the region, more proven GPs are reviewing assets through the secondaries lens which, empirically, has resulted in higher quality GPs bringing deals to the market during 2021.
Learning the lessons
Singapore-based sponsors thinking about entering the secondaries market will be in the privileged position of being able to build on the lessons learned in the US and European secondaries market, allowing for swifter identification of key issues and an ability to refer to ‘market practice’ where relevant and helpful. For example, an issue that has received a lot of attention in global secondaries transactions is how conflicts of interest are managed and, for some market participants, the increasingly robust approach that GPs are taking towards conflicts management. In a GP-led secondary transaction, the sponsor sits on both sides of the trade. One thing we have observed as perhaps the biggest issue in the whole area is validating valuations and LP agitation about the extent to which value was really right. We think LPs are increasingly sceptical about fairness opinions (often commissioned by the LPAC or advisory committee of a fund, around the process of conflict management rather than the actual proposed price) and, as a consequence (and certainly for the concentrated or single-asset deals), they expect to see more market-testing of value with lead secondary buyers being bidders in a market auction akin to a traditional M&A buyout.
In relation to deal terms, careful consideration must be given to the manager’s duties to each of the buying and the selling entities, and how best to evidence the mitigation of conflicts of interest to the investors in each vehicle. This may be particularly acute where a sponsor is asking for a staple, or when bringing in their current flagship fund to co-invest alongside the secondary vehicle (a trend we have seen emerge as the equity cheques required now routinely exceed what can be put together with only one or two lead underwriters of a deal – not to mention the ‘strong buy signal’ that comes about with a sponsor’s flagship fund coming into a deal). What should the liability package look like and does that pass muster as a reasonable allocation of risk from a buy-side and a sell-side perspective? How do you price in an identified but unquantifiable risk (e.g. an ongoing tax or regulatory investigation)? How do you structure rollover election options when pressured to not offer a ‘status quo’ option for the existing investors by over-subscribed buy-side demand from lead secondary buyers?
Ready to go
Our view is that, with the benefit of deal trends and sentiment from global transactions, the Singapore ecosystem is particularly well set up (and we would say is more than ready) to support significant growth of the secondary strategy in the immediate timeframe for pan-APAC opportunities. The increasing availability of W&I insurance for these types of deals and access to the underwriting markets from Singapore-based brokers, is one example. As a financial hub, the private capital participants on the ground (experienced placement agents, counsel and lenders) in Singapore will support managers seeking to move into, or increase their presence in, this segment of the market. The key, as always, is proactively planning transactions with transparency in mind and adapting deal technology developed globally to local market conditions.
Morgan Shubin
Senior Associate
Morgan Shubin specialises in the establishment and operation of private funds, and secondaries deal technologies. Morgan advises a wide range of private investment fund houses, including those focused on private equity, venture capital, real estate, debt and funds of funds, in relation to their private fund structures, secondaries transactions, co-investments, carried interest schemes and the funds aspects of M&A transactions.
Morgan also advises investors in relation to the terms of their investments in private funds.
Tom Lin
Partner
Tom Lin specialises in M&A and corporate finance with a focus on private equity transactions, advising on buyouts, secondaries, joint ventures, MBOs, minority and co-investments, public M&A, management incentives and restructurings. Tom has particular market recognition for his work in complex private equity secondaries transactions and is regularly sought out to advise on GP-led liquidity offerings in Asia and Europe.
Like this article? Sign up to our free newsletter Author ProfileSingapore: Addressing climate change and sustainability
By Ashmita Chhabra – With the United Nation’s COP26 summit approaching, the need to do more to address climate change is once again in focus. As a key financial services hub in Asia, Singapore has an important role in the development and integration of sustainable finance practices into the real economy. The capital market’s ability to drive meaningful change by encouraging disclosure, stakeholder engagement and innovative green financing initiatives are all part of Singapore’s commitment.
Developing a sustainable ecosystem
The Monetary Authority of Singapore (MAS) intends to make sustainable finance a defining feature in Singapore’s role as a global financial centre. Its inaugural sustainability report, the first of its kind by a central bank in Asia, outlines plans to strengthen and develop a green finance ecosystem, build a climate-resilient reserves portfolio, while reducing its own carbon footprint. Those efforts include testing the climate resilience of its official reserve investments and deploying USD1.8 billion to five asset managers under its Green Investment Programme (GIP) to manage new mandates focused on climate change and the environment.
The investment management industry has also been rapidly developing policies and framework to meet demand and major state-led institutional investors have followed global trends in ESG adoption, with themes such as carbon transition now core to investment decision managing. While much of the disclosure requirements remains voluntary, MAS expects financial institutions operating in the city-state to make climate-related disclosures from June 2022, in line with international frameworks, including the TCFD recommendations.
The EU introduced the first part of its Sustainable Finance Disclosure Regulation in March and plans to have in place more stringent measures next year requiring asset managers investing in the region to produce comprehensive reports, with quantitative ESG metrics around their investments, including carbon emission data points. Regulators in the US and the UK are set to push through similar rules.
Preparing to deliver
Having the right tools to provide accurate and meaningful qualitative and quantitative data, like through the use of Apex Group’s new Carbon Footprint Assessment solution, will be key to financial sector firms delivering on those regulatory and fiduciary demands. Only by obtaining a clear picture of their ESG performance – both as a business and across their portfolio companies – can they create an action plan that helps ensure they play their part in building a more sustainable future.
Recent research by Apex Group shows that many asset managers in Singapore recognise this responsibility; however, the commitment to act leaves room for improvement. 94 per cent of private equity firms in Singapore agreed that climate change is an urgent issue, with 84 per cent agreeing they and their investments should take greater responsibility. Yet less than half of respondents (40 per cent) measure their own carbon footprint and only 32 per cent that of their investments.
Encouragingly, however, all the private equity firms from Singapore that took part in the study said they have plans to be carbon neutral, with 44 per cent already having a well-defined process underway, and 56 per cent planning to do so in the future. Part of that commitment is down to the fact that pressure is mounting on the financial sector, not least from regulators.
Ashmita Chhabra
Managing Director
Business Development - Asia Pacific, Apex Group
Executive Committee Member and Co-Chair of the Promotion and Advocacy Working Group, Singapore Funds Industry Group (SFIG). Ashmita is based in Singapore and oversees business development and strategy. She has over 17 years’ experience working with asset allocators and fund managers in the alternatives funds sector. Prior to Apex, Ashmita spent a decade building the global alternatives research business at Eurekahedge, a subsidiary of Mizuho Bank with her teams in Singapore and New York. She was also responsible for key client relationships with global allocators, advisory firms, fund of funds and investment banks. She is Chair of the Singapore Fund Administrators Association (SFAA).
Like this article? Sign up to our free newsletter Author Profile Related Topics ESG & Responsible InvestingSingapore: Optimal location for global asset management
By Ashmita Chhabra and Mark Voumard – Singapore stands out as best in class as a location to do business in APAC with its political and economic stability, sound and predictable regulation, an engaged regulator, world-class infrastructure, and as an innovative financial centre with a well-developed range of service providers.
Singapore is fast becoming an APAC hub for asset managers domiciling their investment funds in addition to their investment management activities. Singapore’s asset management industry grew strongly in 2020, with AuM rising by more than 17 per cent to SGD4.7 trillion (USD3.50 trillion).
The introduction of the Variable Capital Company (VCC) in January 2020 generated strong interest from local and a growing number of global investors even during the pandemic, with over 400 VCCs launched to date. Recognising a need for investment funds to be structured as corporate entities, the VCC incorporates the best features of a fund into a corporate structure, providing a flexible and effective option for global asset and wealth managers looking at the region. Additionally, VCCs can avail themselves of certain tax incentive schemes, including access to 90+ DTAs. Singapore is the ideal location to domicile Asian-focused funds and further, a base to forge fund distribution and wealth management partnerships.
Apart from asset managers, family offices have been early adopters of the VCC, leveraging the novel features of the structure, with the combined benefit of government incentives for family relocation, coupled with tax incentives and exemptions for family offices, for more effective wealth management.
Singapore’s strong focus on sustainability resulted in the MAS being the first central bank in Asia, and the second in the world, to publish a standalone sustainability report in June 2021, setting out its strategies to facilitate Singapore’s transition to a low carbon future.
MAS is working with financial institutions to strengthen the Singapore financial sector’s resilience against environmental risks, further cementing its commitment to ESG mid-2021 by announcing it is investing USD1.8 billion (SGD2.4 billion) into climate-related investment opportunities.
Singapore is extremely well positioned for global asset and wealth managers, asset owners, banks and other financial institutions that have begun to add Singapore in their asset management hub set-up and expansion plans to ride the growth momentum in and from which to access the region.
The launch of Singapore Funds Industry Group (SFIG) in April 2021, as a partnership between MAS and the private sector brings together the entire asset management ecosystem (investors, fund managers and service providers) with a common goal of supporting Singapore’s rise to a leading global full-service asset management and fund domiciliation hub.
SFIG’s mandate is to identify emerging industry trends and formulate strategies that will drive this mission via four Working Groups: Infrastructure & Innovation, Policy, Capabilities & Training, and Promotion & Advocacy.
MAS has been lauded as a forward-thinking regulator demonstrating a willingness to engage and collaborate with practitioners to create a balanced and effective environment for business, which goes a long way in supporting the growth and further development of the asset management industry in Singapore.
Ashmita Chhabra
Managing Director
Business Development - Asia Pacific, Apex Group
Executive Committee Member and Co-Chair of the Promotion and Advocacy Working Group, Singapore Funds Industry Group (SFIG). Ashmita is based in Singapore and oversees business development and strategy at Apex Group. She has over 17 years’ experience working with asset allocators and fund managers in the alternatives funds sector. Prior to Apex, Ashmita spent a decade building the global alternatives research business at Eurekahedge, a subsidiary of Mizuho Bank with her teams in Singapore and New York. She is Chair of the Singapore Fund Administrators Association (SFAA).
Mark Voumard
Founder and CEO of Gordian Capital
Executive Committee Member and Co-Chair of the Promotion and Advocacy Working Group, Singapore Funds Industry Group (SFIG). Mark Voumard, who has almost four decades of experience in Asia, is founder and CEO of Gordian Capital, Asia’s leading independent alternatives institutional platform and fund structuring specialist (AuM USD7 billion) where since 2005, he has been involved in the structuring and launch of over 100 funds (hedge, private equity, venture capital, real estate, and private credit).
Like this article? Sign up to our free newsletter Author ProfileSingapore: The ‘go to’ domicile for Asia Pacific expansion
Singapore continues to make significant efforts to further promote the appeal of the Lion City to hedge funds, private equity and other alternative investment managers, and it seems that its strategy is working. In 2020, Singapore’s asset management industry grew strongly, with assets under management (AuM) rising more than 17 per cent overall and at 31 per cent year-on-year in the alternatives sector. Venture capital and private equity continue to be strong performers within this segment.
Singapore provides a key gateway for global investment managers seeking to raise assets and invest across Asia Pacific’s financial markets and with a significant family office presence, Singapore also represents an important fundraising hub for those seeking to expand in the region.
A game-changing structure
Last year, the unveiling of the Variable Capital Companies (VCC) Act was widely seen in the investment industry as a potential game-changer. In addition to facilitating increasingly attractive and efficient structures for Asia-centric hedge fund strategies and other regional and global alternative investment strategies, the new investment fund framework is expected to have major employment benefits for Singapore’s financial services sector and beyond.
The VCC provides the fund management industry with a new corporate structure tailored for investment funds, offering them greater operational flexibility and cost savings. “Fund managers using the VCC framework benefit from its flexible capital structure, effective segregation of assets and liabilities, and ability to cater to open and close-ended funds,” says Gillian Tan, Assistant Managing Director (Development & International), Monetary Authority of Singapore (MAS).
Some fund managers have even redomiciled their existing funds to Singapore, including from Cayman Islands, Bahamas, Mauritius and Cook Islands. “This demonstrates the global appeal of VCC to fund managers who seek to enhance the substance of their activities locally, and to maximise operational efficiencies and cost savings from co-locating their fund management and fund domiciliation activities in Singapore,” Tan adds.
The VCC’s successful launch has been a catalyst for growth, but also shows the need for sustainable digital capabilities and regulatory developments to grow Singapore as a digital asset hub. Martin O’Regan, Managing Director at Solas, says: “The growing sophistication of funds will require directors to demonstrate skills in risk, strategy oversight, compliance and investment processes.”
A new asset management ecosystem
While the VCC has been a key development, it is not the only one. To underscore how the island views its position within the global funds industry, its financial regulator, MAS, recently announced a new partnership between it and the private sector to burnish Singapore’s reputation as a leading full-service asset management and fund domiciliation hub.
Known as the Singapore Funds Industry Group (SFIG), its mission is to bring together key players across the entire asset management value chain, including not just fund managers but also lawyers, tax advisors, fund administrators and corporate directors. These service providers work closely with fund managers to support a fund’s operations throughout its life cycle in areas such as fund structuring and set-up, fund administration, regulatory reporting, tax advisory, and fiduciary oversight.
Tan comments: “We encourage the fund management and administration industry to tap on SFIG to help ideate, test and implement as it works on digital utilities and infrastructure, provide feedback and insights on regulatory, legal and tax frameworks conducive to Singapore’s development as a funds hub, and contribute content and attend its training and engagement sessions.”
Singapore in the green lane
With the UN’s COP26 summit approaching, Singapore is positioning itself to play a key role as the financial services hub in Asia. Ashmita Chhabra, Managing Director at Apex Group, comments: “Pressure is mounting on the financial sector, not least from the regulators.”
MAS has released a sustainability report to prompt development of a green financial ecosystem and is fostering the development of a green bond market, with its Sustainable Bond Grant Scheme encouraging the issuance of ESG-compliant bonds in Singapore.
Further, a Green Industry Taskforce has been convened, proposing a taxonomy and launching an ERM handbook among other measures to promote ESG considerations in the Singapore markets, while MAS is looking to set out its expectations on disclosure standards that must be met by retail funds in Singapore early in 2022.
Armin P. Choksey, Partner, Asian Investment Fund Centre Leader at PwC Singapore, says: “The road to developing a global ESG standard has still some time to go but the journey has already begun with one initiative at a time.”
Secondary market grows in APac
Meanwhile, despite relatively small numbers of five to 10 per cent of global volume, the Singapore secondaries market continues to grow as such transactions become more ‘mainstream’, and there is cause for further optimism.
Tom Lin, Partner, and Morgan Shubin, Senior Associate at Clifford Chance, comment: “Our view is that, with the benefit of deal trends and sentiment from global transactions, the Singapore ecosystem is particularly well set up to support significant growth of the secondary strategy.”
A vision of the future
It feels like exciting times lie ahead for the Lion City, both for fund managers and service providers alike. Imagining how the industry will develop from 2021-2035, Mark Voumard, Founder and CEO at Gordian Capital, predicts a global economic shift to Asia; strong growth as an asset management and fund domiciliation hub; and the introduction of its own digital currency.
This report will shine a light for all those looking to get a better understanding of Singapore’s virtues, its myriad benefits and why it is fast becoming the ‘go to’ option for Asia Pacific expansion.
Like this article? Sign up to our free newsletter Author Profile Related Topics Special Reports