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Comparing the regulatory landscape for FinTechs regulated as fund managers to operate in Hong Kong and Singapore
Hong Kong and Singapore are constantly in a fight for the first place as Asia’s FinTech hub. They both have great startup culture as well, making them great places to incorporate or expand to. This article will compare the regulatory landscape for fintech startups and fund managers in these two common jurisdictions, allowing startups and businesses to make more informed choices.
Hong Kong and Singapore, both being global cities located at the heart of Asia, have strategic advantages and developed an edge over the rest. Hong Kong being situated so closely to China has an advantage in that it is easily accessible to one of the largest markets in the world and to the Pearl River Delta. Singapore’s location also allows it to be a maritime focal point with the busiest port in the world. This is because they have the extensive international port connections. All these factors have been leveraged by the two cities in making them business hubs, but more importantly, their legal and regulatory landscapes have been shaped to provide businesses ease in setting up and carrying on operations.
Hong Kong and Singapore, both being global cities located at the heart of Asia, have strategic advantages and developed an edge over the rest. Hong Kong being situated so closely to China has an advantage in that it is easily accessible to one of the largest markets in the world and to the Pearl River Delta. Singapore’s location also allows it to be a maritime focal point with the busiest port in the world. This is because they have the extensive international port connections. All these factors have been leveraged by the two cities in making them business hubs, but more importantly, their legal and regulatory landscapes have been shaped to provide businesses ease in setting up and carrying on operations.
Moreover, if fintech firms in Hong Kong want to carry out regulated activities, they must be licensed by the SFC. The Securities and Futures Ordinance (SFO) defines the types of regulated activities that are relevant to fintech businesses and which licenses they require. These activities, including but not limited to, dealing in securities, leveraged foreign exchange trading, advising on securities, providing automated trading services, securities margin financing, and asset management.
In Singapore, the Monetary Authority of Singapore (MAS) is the city-state’s regulatory body. Similar to Hong Kong, the MAS does not have regulations that strictly apply to fintech firms. Instead, they also have a wide array of regulations and acts that the fintech firms usually fall within depending on their businesses. These include the Banking Act, Moneylenders Act, Money-Changing and Remittance Business Act, Securities and Futures Act, and the Payment Services Act. Notably, the Payment Services Act is relatively new and is intended to keep up with the innovations in electronic payment systems and services that are being provided such as GrabPay. The regulated payment services include money transfers, electronic money issuance and digital payment tokens. These legislations coupled with the guidelines and directions issued by the MAS make up the fintech regulations.
Comparing the regulatory landscape for fintech firms also requires us to take a look at the general legal environment. In Hong Kong, the city prides itself on the rule of law. Due to “One country, two systems”, the city has a legal system separate from that of China. This offers the city a lot more autonomy, allowing for a sound legal system and the world’s freest economy. This is highly advantageous to fintech firms and allows them a lot of leeway in many ways. Singapore, similarly, has an extremely sound legal system that allows for the easy setup of businesses.
Both Hong Kong and Singapore have a lot in common and even have a lot of overlapping regulations. The clear regulations and strong legal environment make both places highly attractive for businesses including fintech firms.