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Monetary Authority of Singapore issues robo-advisory guidelines

Singapore's central bank unveiled guidelines on digital advisory services to improve clarity on the application of existing rules to facilitate operations of digital advisers in the country.

The Monetary Authority of Singapore refined the licensing and business conduct requirements under the Securities and Futures Act and the Financial Advisers Act after taking into account public feedback.

Under the norms, digital advisers looking to provide fund management services to retail investors may obtain a license even if they do not meet the SFA's corporate track record requirements, so long as they meet other safeguards. Those operating as financial advisers will be also permitted to pass their clients' trade orders to brokerage firms without the need for an additional capital markets services license under the SFA.

Further, the new rules will exempt digital advisers from a Financial Advisers Act requirement to collect comprehensive information on the financial circumstances of a client.

Meanwhile, the regulator also highlighted unique risks, such as faulty algorithms and cyber threats, in the business model and advised digital advisers to form strong frameworks to supervise their algorithms and manage technology and cyber risks.