Both domestic and foreign investors can participate in the trading of government and corporate bonds in Singapore. The protection investors’ interests—including regulations on bondholder rights, bankruptcy, prevention of fraud, and ethics—are discussed in this section.

Investor Participation—Retail Investors

There are no specific rules governing retail investor participation in the Singapore market. Most financial institutions in Singapore provide services to retail investors interested in buying or selling bonds.

The Monetary Authority of Singapore (MAS) published a comprehensive guide to Singapore Government Securities (SGS) for retail investors covering SGS market operations, instruments, tax conventions, and market institutions. Procedures for purchases and sales of SGS may differ from bank to bank. Investors may consult any SGS primary dealer.

Investor Participation—Foreign Investors

Nonresidents are allowed to transact SGD-denominated bonds, asset swaps, interest rate swaps and futures, and other financial products in Singapore. However, if the bond issuer is an unrated foreign entity, banks may only place or sell SGD-denominated bonds to sophisticated investors (as defined under the Companies Act).

Nonresidents can freely remit funds in and out of Singapore.

MAS also provides a brief guide for nonresidents investing in SGS. Details are provided at the websites linked below.

Investor Protection—Prevention of Fraud

MAS has numerous statutes proscribing activities deemed fraudulent, with attendant penalties. These statutes include the Futures Trading Act, Directives for Merchant Banks, and the Financial Advisers Act.

For listed securities, MAS and the Singapore Exchange (SGX) oversee market activity to ensure market participants observe rules and practices. Guidelines are listed under the Rules and Market Practice of the Singapore Government Securities market.

There are generally no restrictions governing cross-border portfolio investments. There are no exchange controls under the Monetary Authority of Singapore (MAS).

Capital Inflow

There are no restrictions on the purchase by nonresidents of money market instruments, bonds, or equity shares. Foreign currency receipts by domestic firms may be held in foreign currency.

Capital Outflow

There are no restrictions on repatriation of capital and profits. Residents are also allowed to invest in securities abroad.

Nonresidents are allowed to issue bonds and equity shares. However, while all rated or unrated foreign entities are allowed to issue bonds in the domestic market, issues by unrated companies may only be sold to institutional investors (as defined under the Companies Act).

SGD proceeds of an initial public offering (IPO) or bond issuance for offshore use by nonresident financial institutions need not be converted into foreign currency prior to outward remittance.

For more details on regulations pertaining to foreign investments, refer to the section on Rules and Regulations—Market Regulation—Currency Exchange Controls.

The Monetary Authority of Singapore (MAS) also regulates mutual funds. From July 2002, offshore mutual funds and unit trusts have been able to offer units to Singapore residents without having to set up a SGD-denominated feeder fund.

The Central Provident Fund (CPF) is a mandatory, government-run retirement scheme that is the primary source of retirement funds for Singaporeans. It is under the regulation of the Ministry of Manpower Service.

 The insurance and investment regulations in Singapore are facilitated and controlled by the Monetary Authority of Singapore (MAS) under the Insurance Act of 2002.

Singapore maintains a managed-float exchange rate regime for the Singapore dollar (SGD). The Monetary Authority of Singapore (MAS) manages the SGD against a basket of currencies of major trading partners and competitors.

Import/Export of Currencies

There are no restrictions on the amount of foreign and local currency that can be brought into or taken out of Singapore. Buying or selling SGD on the foreign exchange market is also unrestricted.

Domestic/Foreign Currency Accounts

Resident Accounts—Residents are only allowed to maintain foreign currency account with an Asian Currency Unit (ACU)-licensed bank in Singapore.

Nearly all commercial and merchant banks in Singapore operate ACUs, which may accept deposits from, and lend to, other banks and nonbank customers in foreign currency. Details of the terms and conditions of ACUs operations are provided at the links below.

Nonresident Accounts—There are no restrictions nor limits on nonresidents maintaining SGD or foreign currency bank accounts in Singapore.

Borrowing/Lending

Domestic Borrowing—MAS notice 757 places two main restrictions on nonresident financial institutions borrowing locally:

• Banks may lend SGD to nonresident entities so long as total SGD credit facilities to the institution do not exceed SGD5million. For SGD proceeds used outside Singapore above this amount, banks should swap or convert proceeds in excess of SGD5 million into foreign currency upon drawdown;
• Banks may be prohibited to extend SGD lending facilities exceeding SGD5million to nonresident entities if there is sufficient evidence to suggest that the institution may use the proceeds to speculative against SGD. Individuals, nonfinancial institutions and corporate treasury centers, classified as nonresidents, are exempt. Moreover, the SGD5million cap may be waived by MAS in some cases.

Offshore Borrowing—Foreign borrowing is permitted for both residents and nonresidents, subject to withholding tax on interest earned by foreign banks from transactions.