The four initial signatories to the Asia Region Fund Passport (ARFP) have issued proposed arrangements for the scheme, and the Philippines and Thailand have joined the consultation, indicating their intent to participate.
Interestingly, the Philippines is not known to have joined the proposed Asean passporting scheme, although it has been mooted as a potential member down the line.
The countries in question have until July 11 to consult on the model set out in a document issued yesterday.
On the release of the consultation, John Brogden, CEO of the FSC, noted growing support for ARFP. “The Philippines and Thailand have joined the passport, and we expect other countries will follow,” he says.
This appears to vindicate the optimism of various market participants that the number of ARFP signatories could expand to eight by the launch date, targeted for 2016.
Japan would be the most significant addition if other Asia Pacific Economic Cooperation (Apec) countries were to join the scheme. The recently signed free trade agreement between Australia and Japan may boost the chances of that happening.
Brogden points to the opportunity for Asian countries in terms of funds activity. “[The region] has 60% of the world’s population but only 12% of the worldwide funds under management. There is significant potential for Asia to increase its share.
At the Apec finance ministers’ meeting in Bali last September, four countries – South Korea, New Zealand, Singapore and Australia − agreed to develop a pilot of the passport. Since September, governments and industry have been working in Asia to expand the list of Apec economies prepared to join the pilot.
Countries that have signed up for ARFP will have the opportunity to develop a common set of regulations. Once operational, the passport will permit investment funds domiciled in one country to be sold directly to retail investors in participating jurisdictions, and vice versa.
Finance ministers from Australia, Korea, New Zealand and Singapore had signed a statement of intent last September, committing to consult on the detailed rules that would be necessary to implement the passport. This was proposed in the framework document issued at the time.
That commitment has resulted in the new consultation document, which relates to the initial operation of the passport arrangements. The arrangements are expected develop over time subject to the agreement of the countries involved.
For example, at a later stage there might be scope to consider harmonising or recognising regulation in the passport economies in relation to additional subject matters such as certain disclosure requirements.
Detailed in the consultation are: the objectives that have guided the development of the proposed arrangements; the substantive requirements that will apply to use the passport; the procedural requirements for passport funds; and processes relating to the supervision of passport funds and the enforcement of the passport arrangements.