The securities regulators of Singapore, Malaysia and Thailand released full details of the Asean CIS framework yesterday, thereby initiating launch of the first of Asia’s three fund passport schemes.
In itself that represents real progress, given that the Asean scheme was the last of the three passport initiatives to be officially unveiled in October last year, as reported. At that point implementation had been mooted for the first half of this year.
Speculation had been mounting that the Asean passport framework would be unveiled this quarter. The Asean Capital Markets Forum (ACMF) confirmed yesterday that the framework was now operational across member jurisdictions.
It means that fund managers can now apply for authorisation. How long that will take was not confirmed, and there is no indicative timing on when the first fund will be launched, although market speculation is that the first passportable Asean funds will be live by January 1 next year.
The three regulators – Malaysia’s Securities Commission (SC), the Monetary Authority of Singapore (MAS) and Thailand’s Securities and Exchange Commission (SEC) – jointly published a handbook yesterday to provide guidance to fund managers on the operational aspects of the framework.
This outlines procedural matters such as qualification criteria, application requirements and right of refusal by the host regulator; ongoing notification and disclosure requirements; and national regulations regarding the approval process, including differences in the laws of participating jurisdictions.
It breaks out the regulations of the three markets separately, with instructions on how to apply for authorisation in each market, including application forms.
It also outlines approval processes and fees, details on breaches, appointment of local intermediaries and representatives, compensation where valuation errors happen, terminations and withholding tax considerations.
To download a copy of the handbook, please click here.
In a telling statement, Lee Boon Ngiap, assistant managing director for capital markets at MAS, said: “We look forward to the participation of more Asean jurisdictions in this framework over the coming years.”
The Asean passport plan had initially included Indonesia, the Philippines and Vietnam, although these nations are yet to be included in the programme.
This April, both the Philippines and Thailand joined the consultation process for the Asia Region Funds Passport scheme, as reported. The ARFP initiative was formulated at the Apec finance ministers meeting in Bali in September 2013 between Australia, New Zealand, Singapore and South Korea. Its launch is not due until 2016.
On the Asean scheme, Lee added: “Retail investors in Asean will benefit from an increase in the choice of funds for investment with the launch of the Asean CIS Framework. Fund managers in an Asean country will have a direct and efficient route to offer their funds to retail investors in other Asean countries.”
The SEC’s secretary-general, Vorapol Socatiyanurak, noted that implementation of the framework for both retail and non-retail investors “opened the door for more business opportunities by the private sector and offered a new range of products for investors to diversify their portfolios”.
The chairman of Malaysia's SC, Ranjit Ajit Singh, noted this announcement was a step towards the integration of Asean capital markets in line with the objectives of the Asean Economic Community 2015.
"Asean has one of the highest saving rates in the world which can be re-invested in the region to generate returns and contribute to the region's future growth prospects," he added.
Separately, the Monetary Authority of Singapore published a new chapter 10 in its Code on Collective Investment Schemes on how to implement the framework in the city-state. To view the revised code, please click here.