Introduction
On 29 May 2026, the Monetary Authority of Singapore (MAS) issued an information paper (the Information Paper) setting out its supervisory expectations on valuation practices for fund management companies (FMCs) under Regulation 13B(1)(b) of the Securities and Futures (Licensing and Conduct of Business) Regulations read with the MAS Guidelines on Licensing, Registration and Conduct of Business for FMCs.
MAS has issued the Information Paper following thematic valuation inspections of selected FMCs that manage funds across a range of investment strategies.
This alert highlights the key themes and main areas of concern identified by MAS, and their practical implications for FMCs.
1. Valuation Governance - Independence and Effective Challenge
What MAS is concerned about
MAS identified the following governance weaknesses:
Insufficient independence in valuation oversight, particularly where valuation decisions were influenced by portfolio management personnel.
Valuation committees lacking clear terms of reference or appropriate independent representation.
Potential conflicts of interest where valuation oversight was performed by individuals whose remuneration or responsibilities were linked to fund performance.
What MAS expects
FMCs should ensure that:
Valuation matters are overseen by senior management or dedicated valuation committees with sufficient expertise and independence from portfolio management.
Valuation governance frameworks include clear terms of reference, meeting protocols, escalation procedures and accountability mechanisms.
Significant valuation matters, methodology changes and fair value determinations are escalated to senior management on a timely basis.
Implication for FMCs
MAS is placing particular emphasis on valuation independence. FMCs should assess whether their valuation governance framework provides genuine challenge to portfolio management and adequately mitigates conflicts of interest, particularly in relation to private and difficult-to-value assets.
2. Valuation Policies and Procedures - Comprehensive, Current and Operational
What MAS is concerned about
MAS observed the following:
Valuation policies that were outdated, incomplete or inconsistent with current practices.
Valuation policies that did not provide sufficient guidance on key aspects of the valuation process, including exception handling, fair value assessments and valuation methodologies.
Failures to follow valuation policies, with deviations neither documented nor approved.
Insufficient guidance on how collateral and guarantees should be assessed and valued when determining recoveries and fair values for non-performing or impaired credit assets.
What MAS expects
FMCs should maintain valuation policies and procedures that:
Cover all relevant asset classes and financial instruments.
Establish clear valuation methodologies, (including for illiquid and hard-to-value assets where judgment is required in assessing collateral, guarantees and expected recovery values) as well as appropriate escalation procedures and record-keeping requirements.
Are reviewed regularly and updated when investment strategies, products, methodologies or market conditions change.
Implication for FMCs
MAS expects valuation frameworks to be operational tools rather than static documentation. Significant divergence between written policies and actual practice is likely to be viewed as a broader control weakness.
3. Price Validation Controls - Independent Verification and Timely Escalation
MAS identified the following weaknesses in FMCs' price validation frameworks:
Delays in identifying, investigating and escalating stale prices, suspended securities and other pricing anomalies, resulting in potentially outdated prices being used in fund valuations for extended periods.
Price validation checks that lacked sufficient rigour, including inconsistent stale price definitions, inadequate challenge of third-party valuations and reliance on non-independent pricing sources when investigating exceptions.
The use of inappropriate or overly broad tolerance thresholds that did not adequately reflect the characteristics of different asset classes and financial instruments.
Insufficient oversight of pricing produced by fund administrators and other third-party service providers, including failures to identify inconsistent valuations across different funds.
Inadequate documentation of price validation checks, investigations, escalation decisions and exception approvals.
What MAS expects
FMCs should:
Implement independent and ongoing price validation controls designed to identify stale prices, missing prices, unusual security-level movements and unexpected NAV fluctuations.
Establish appropriate tolerance thresholds, escalation procedures and approval channels for pricing exceptions, taking into account the characteristics of different asset classes and fund structures.
Conduct timely investigations and follow-up on all pricing exceptions, including the use of independent alternative pricing sources where appropriate.
Maintain effective oversight of valuations produced by fund administrators and other third-party service providers, including clear criteria for challenging valuations where necessary.
Maintain comprehensive records of validation checks performed, issues identified, investigations conducted and actions taken.
Implication for FMCs
MAS is signalling that reliance on third-party administrators does not reduce an FMC's responsibility for valuation accuracy. Independent challenge and effective exception management are likely to be key areas of supervisory focus.
4. Valuation Approaches and Methodologies - Robust Frameworks for Complex and Illiquid Assets
What MAS is concerned about
MAS identified a number of weaknesses in how FMCs approached the valuation of complex, illiquid and hard-to-value assets, including:
Delays in recognising and reflecting deterioration in private credit exposures, including the use of overly optimistic recovery assumptions and repeated loan restructurings without appropriate valuation adjustments.
Failures to adequately verify the accuracy and reliability of key inputs and assumptions used in valuation models, particularly where information was obtained from portfolio companies or other third parties.
Challenges associated with valuing digital assets and tokenised investments, including fragmented markets, price volatility, liquidity constraints and difficulties in identifying reliable pricing sources and valuation methodologies.
Insufficient assessment of valuation governance and valuation policies of underlying funds in fund-of-funds structures, which may expose FMCs to valuation risks originating from underlying managers.
Inadequate due diligence and ongoing oversight of external valuers, fund administrators and other valuation service providers, including insufficient scrutiny of their methodologies, assumptions and expertise.
What MAS expects
FMCs should:
Maintain robust valuation frameworks and methodologies for illiquid and hard-to-value assets, including fair value assessments, the use of valuation models, and the assessment of collateral, guarantees and expected recoveries where relevant.
Exercise appropriate oversight of third-party inputs and service providers, including conducting due diligence on valuation models, external valuers and fund administrators, and maintaining sufficient expertise to challenge valuations where necessary.
Assess valuation risks associated with underlying funds and specialised asset classes, including fund-of-funds structures and digital assets, and ensure that valuation methodologies remain appropriate for the nature and complexity of the investments.
Provide investors with transparent disclosure of valuation arrangements, including the role of third-party valuation providers, the FMC's involvement in the valuation process and the valuation methodologies applied to fund assets.
Implication for FMCs
MAS expects valuation methodologies to be capable of withstanding scrutiny in periods of market stress and for assets where observable market prices are unavailable. FMCs managing private credit, digital asset, tokenised or other illiquid strategies should ensure that valuation methodologies, governance arrangements and supporting documentation are sufficiently robust to support independent and defensible valuation outcomes.
The Information Paper also makes clear that reliance on third-party valuation providers does not absolve FMCs of responsibility for understanding, challenging and overseeing the valuation process.
5. Strategic Takeaways and Next Steps for FMCs
Viewed alongside MAS's information paper on Risk Management Practices for Fund Management Companies (also published on 29 May 2026), the Information Paper reinforces MAS's broader focus on governance, operational resilience and investor protection. Together, the two papers signal a sustained period of heightened supervisory scrutiny of FMCs' investment process controls. MAS expects FMCs to maintain robust valuation frameworks, supported by independent oversight, comprehensive policies and procedures, effective price validation controls and appropriate valuation methodologies, particularly for illiquid and complex assets.
What FMCs should do now
FMCs should consider:
Conducting a gap analysis of their valuation framework and controls against the practices highlighted in the Information Paper.
Reviewing valuation policies, methodologies, fair value assessment processes and price validation controls to ensure they remain fit for purpose and aligned with actual practice.
Strengthening independent oversight, particularly in relation to hard-to-value assets, valuation models and third-party valuation providers.
Preparing for supervisory scrutiny, on the basis that MAS is likely to use the Information Paper as a benchmark in future inspections and thematic reviews.
We would be pleased to discuss how the expectations set out in the Information Paper apply to your business and to assist you in reviewing your valuation policies and procedures and their alignment with MAS's supervisory expectations.
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