SINGAPORE: When Singapore financial services firm Chocolate Finance suspended instant withdrawals earlier this week, some customers were concerned if their funds were safe, and what would happen if the company were to collapse.

On online forums and social media, users highlighted that – unlike for bank deposits – money placed with such investment platforms is not covered by the Singapore Deposit Insurance Corporation's (SDIC) Deposit Insurance Scheme.

The SDIC scheme insures Singapore-dollar deposits of up to S$100,000 per customer held at full bank or finance companies in Singapore. Foreign currency deposits and investment products such as the ones offered by Chocolate Finance, are not insured by SDIC.

Chocolate Finance, which is licensed by the Monetary Authority of Singapore (MAS), emphasised that its customers’ funds are safe and held separately by custodians. It also said it was normal and aligned with industry standards for withdrawals to take a few days, when it comes to fund management models such as Chocolate Finance's.

What are the requirements for investment platforms?

Any company that wants to manage funds needs a capital markets services licence from regulator MAS, because fund management is a “regulated activity” under the Securities and Futures Act 2001.

MAS considers factors such as the fitness, track record and management expertise of applicants, as well as business plans and projections.

Companies also need at least two directors, one of whom must be a resident in Singapore. The firm’s chief executive officer needs to have at least 10 years of relevant experience, and be a Singapore resident.

Two full-time, Singapore-based individuals must also be appointed for each regulated ...