The Monetary Authority of Singapore has worked hard over the years to ensure a regulatory environment that helps build the financial sector. The regulator has made determined efforts to attract and grow the buy-side community, including asset management firms, hedge funds, private banking and corporate treasury industries.

However, indications are that the push to build a “light touch regulatory framework” in an effort to attract hedge funds may have received a setback. Reports suggest that the central bank will require hedge funds to be licensed, as part of a drive to tighten the rules. Hedge funds have so far been exempt from holding a capital market services licence, so long as they manage funds for 30 or fewer qualified investors.

Michael Coleman, chairman of AIMA’s local branch, said that “almost certainly there will be a move away from the current exempt regime to some form of licensing.” The fear is...