MAS to boost financing options for Asia's growth companies

Singapore

THE Monetary Authority of Singapore (MAS) will roll out a host of initiatives over the next few days to help beef up financing channels for growth companies in Asia.

And to support innovation, MAS will develop better technology infrastructure to sharpen Singapore's competitive edge in areas such as foreign exchange (FX) and trade; it will also set up a dedicated group to boost capabilities in data analytics.

Ravi Menon, managing director of MAS, said in a statement on Monday: "The underlying thrust of MAS' various initiatives is to provide a conducive environment for innovation, which is critical for the future of financial services.

"We'll do this through a judicious regulatory framework and enabling technology infrastructure. And even as we allow more risk-taking, we want to do so without compromising the safety of financial institutions and the stability of the financial system."

The announcements follow the recommendations of the Committee on the Future Economy (CFE), which were unveiled last week.

Given the focus on attracting startups, MAS said it will study the use of dual-class share structures to support the growth of high-tech companies. This structure can alleviate short-term pressures on financial performance for high-tech firms, but can also pose governance risks, it noted. The Singapore Exchange is soon expected to seek public feedback on ways to set up a listing framework for such shares.

MAS will also look at successful private-market financing platforms around the world to assess whether they can be used here. It did not specify examples of such platforms, but there are online platforms, such as the US-based Equidate, that provide accredited investors with access to companies selling equity at a pre-IPO stage. This gives rich investors first dibs on companies that may become global behemoths down the road.

Private-banking clients already have privileged access, but not through a set platform. Banks can offer access to pre-IPO funds, for example, or informally match-make business owners with such private investors.

MAS will also simplify the authorisation process and regulatory framework for venture capital (VC) managers to support fledgling firms.

While VC and private equity (PE) assets under management in Singapore have grown by an average of 30 per cent a year in the last five years, the industry here remains young.

"There is scope to expand both the number and variety of VC managers," said MAS, adding that VC managers should be able to operate more nimbly in supporting startups in Singapore and the region once simplified rules are put in place.

MAS, having kept its eye on small and medium-sized enterprises (SMEs), said it will boost the role of finance companies that actively provide SME lending.

"While their financing needs are generally well met, more can be done to encourage more customised small business lending. MAS will adjust the regulations that apply to finance companies, with a view to enhancing their ability to better meet the financial needs of SMEs while ensuring prudent risk management."

MAS will also look to develop an electronic marketplace for trade-finance assets, working with a local fintech firm to get the platform ready in the next few months. With this electronic trade-finance platform, participating banks will be able to "distribute trade finance assets internationally, unlock capital to originate new trade finance lending, and increase the supply of trade finance for the region", MAS said.

No further details were given, but this comes as Singapore is looking to reinvent its national trade declaration platform, banking sources told The Business Times. The idea is for banks to have a one-stop shop to check on transaction values and detect fraud, though observers have flagged the difficulties of doing this without the cooperation of customs departments around the world. The hope is that bank customers can use the same platform to shop for the best trade-finance deals, akin to an Uber for trade financing.

MAS will promote electronic trading platforms for FX, to sharpen Singapore's competitive edge as Asia's leading FX hub.

In the consumer space, Singapore will centralise the process of client verification, so that banks can use government-registered data - based on client consent - to complete common banking transactions such as account opening or card application.

To move towards cashlessness, Singapore will implement in the third quarter a central addressing scheme under which users will be able to make immediate fund transfers by using proxies such as mobile numbers and NRIC numbers. This means cumbersome account numbers will not be needed for transactions like fund transfers.

MAS will also build data infrastructure for natural catastrophe and cyber risk insurance to boost growth in this emerging business in Asia.

MAS's new data-analytics group will be set up from March 15. The group will look at data-management policies and conduct data analyses on supervisory and financial-sector data. It has appointed David Roi Hardoon as its chief data officer and head of the group. He joins MAS from Azendian Solutions, where he was the co-founder.