Factbox: Singapore toughens rules for fund managers

(Reuters) - Hedge funds have streamed into Singapore over the past decade, lured by business friendly regulation and tax incentives.

Managers serving fewer than 30 sophisticated investors were able to operate without a license from the Monetary Authority of Singapore (MAS) and could start a fund in a matter of days.

However, the aftermath of the 2008 financial crisis and multi-billion dollar fraud committed by Bernie Madoff in the United States have prompted the city-state to tighten the rules for investment managers.

The following are facts on the new rules MAS is proposing for fund mangers, due to come during 2012:

LICENCES/REGISTRATION

Managers with more than S$250 million ($192.44 million)in assets under management will have to obtain a Capital Markets Service license from MAS, even if their client base is purely made up of sophisticated investors.

Funds with less than S$250 million will have to register with MAS before they can begin their operations.

STAFF

All fund management companies must appoint at least two directors with financial services experience. They must also have at least two full-time representatives who each have at least five years of relevant experience and reside in Singapore.

RISK MANAGEMENT

MAS is proposing that all fund managers, regardless of their size of assets, should have in place a formalized risk-management framework.

AUDITS

All fund managers will have to appoint an independent auditor to verify their financial statements and report on their compliance with MAS regulations.

WORKING CAPITAL

All funds will be required to have a minimum capital base of S$250,000 ($192,400). Funds with more than S$250 million under management will also be required to hold an additional capital base of 10 percent of the three-year average gross income of the fund or S$100,000 depending on which is higher.

CLIENT MONEY

All funds must place their customers' money with a licensed custodian.

(Reporting by Rachel Armstrong; Editing by Matt Driskill)