[SINGAPORE] The Monetary Authority of Singapore (MAS) has signalled a potential shift in Singapore’s investment landscape by seeking feedback for its proposed private market regulatory framework.
The call for feedback stems from a growing demand from retail investors for private market investments, and interest from industry players to offer retail investors such products.
After gathering feedback from the industry and investor community, the proposed long-term investment fund (LIF) framework could potentially provide retail investors with a safe and structured way to access private market investment funds.
Retail investors locked out
Private markets have historically been the domain of accredited investors and institutions, both within and outside the Republic.
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In markets such as the United States, regulatory safeguards are responsible for this exclusivity as well, having been designed to protect less sophisticated investors from potentially complex and illiquid investments.
Like MAS, the US Securities and Exchange Commission seeks to shield retail investors from riskier asset classes through accreditation thresholds.
Given the higher risk, longer time horizons and limited transparency often associated with private assets, further concerns about investor suitability have also contributed to this restricted access.
But times have changed, and so have investment appetites.
While public markets remain important for core portfolio building, retail investors today are more fintech-savvy and hungry for alternatives.
They are turning their attention to the private domain, where dynamic market movements and specialised opportunities are emerging – especially in the startup and innovation ecosystem.
Yet, entry has been difficult, as most retail investors do not meet accreditation requirements. In response, many have sought out workarounds – from equity crowdfunding platforms to offshore investment structures – all to get in on the private market action.
These alternative avenues, however, often carry more risk than reward due to minimal investor protection, regulatory ambiguity and limited transparency.
This growing tension – between increasing demand for access and the need for proper safeguards – is exactly what makes MAS’ proposal both timely and necessary.
Game changer
Under the proposed LIF framework, retail investors stand to gain exposure to private markets through diversified, professionally managed funds in a regulated, risk-calibrated environment.
This would take shape under two fund structures: direct funds and long-term investment fund-of-funds (LIFFs).
Direct funds would allow retail investors to invest directly in private market assets, providing transparency into the underlying investments. LIFFs, on the other hand, leverage the expertise of fund managers to create diversified portfolios of private market funds.
Together, these options cater to varying investor risk appetites and on multiple fronts. This is groundbreaking.
For retail investors, this would offer a new pathway to participate in private market growth stories that were once out of reach – now with the benefit of institutional safeguards.
For fund managers and private companies, this framework stands to create a new channel of capital – potentially unlocking more funding options for early-stage startups and private enterprises. This added liquidity could foster innovation and broaden the investment landscape in Singapore.
These two potential structures, if executed well, could highlight how retail participation in private markets can be done responsibly.
What the framework needs
For this framework to truly work, it must be anchored by smart planning and strong execution.
As retail investors’ appetite for private markets continues to grow, here’s what the framework must deliver to truly meet their needs:
First, investor education. Private market investments are fundamentally different from public ones – there is less liquidity, limited transparency, and they often have longer lead times with fewer redemption opportunities.
Therefore, any framework that has been established must ensure that the product disclosures are clear and risk awareness is effectively communicated. Laying the groundwork is crucial to ensuring investors understand the inherent risks of private market investing.
Second, product accessibility. Will there still be eligibility tiers within this investor class to accommodate different risk profiles and investment capabilities?
MAS will need to strike the right balance between accessibility and safeguards to protect retail investors while still offering meaningful investment opportunities.
Third, ecosystem readiness. The central bank will need to understand the attitudes of fund managers and intermediaries towards this potential shift, as these parties will have to gear up operationally to support this new class of investors.
Beyond just robust regulation, this proposed framework calls for adaptation across the ecosystem. If implemented thoughtfully, it could signal the beginning of a more accessible and equitable investment era in Singapore.
Questions that lie ahead
As MAS moves forward with shaping this regulatory framework, several areas would have to be addressed, particularly regarding the impact on fund accounting, including valuation, liquidity and data transparency.
For instance, if future fund structures allow shares to be bought and sold on a stock exchange more frequently than the underlying funds permit redemptions, a key question arises: How would the trading price of those shares compare to the fund’s net asset value, which is typically calculated by a fund administrator?
Such potential disconnects raise important questions about transparency and valuation practices, especially as retail investors become more actively involved in these asset classes.
At the same time, it also presents an opportunity for software providers to bridge these gaps by enabling faster, more accurate and more transparent data across the ecosystem.
For those working in private markets, this ultimately represents a major step towards a more dynamic, inclusive and connected investment landscape.
But it is not just about broadening access. It is also about building the infrastructure to support a system that serves the many, not just the few.
The writer is managing director, Asia-Pacific and Middle East, at Carta
