Regulation of Micro-investment Products

Mr Desmond Choo asked Prime Minister in view of a broader trend of financial institutions and companies selling micro-investment products (a) what is the situation in Singapore; and (b) how will MAS seek to regulate such products and educate Singaporeans about such investments.

Micro-investment products, as their name suggests, require small minimum investment amounts – some as low as $1. The product range largely mirrors those of investment products available for larger minimum investment amounts. Examples of micro-investment products include regular investment savings plans, investments in exchange-traded funds, as well as private equity or debt investments. Given the small minimum investments required, these products are aimed at retail investors.

The offer of micro-investment products1 to retail investors, so long as these are capital markets products, is subject to regulation and business conduct requirements by MAS. These include rules on assessing investor suitability, fair dealing, minimum product disclosures, as well as safe custody and segregation of customers’ monies and assets.

The current take-up of micro-investments among Singapore investors remains fairly low. As at end-2020, approximately $3.4 billion was invested in such products with MAS-licensed banks, robo advisers and securities crowdfunding platforms, and this constitutes less than 3% of the financial industry’s total assets under management for retail funds. Nevertheless, there is growing interest amongst investors for such micro-investment products.

MAS through MoneySense undertakes ongoing initiatives to educate consumers on the factors to consider prior to committing to an investment. Beside understanding the product’s features, benefits and risks, investors should also deal only with entities regulated by MAS. Investors can access MoneySense content through the MoneySense website and social media as well as public seminars and workshops.