Singapore has taken up the debate around the viability of an Asian fund passport. The Monetary Authority of Singapore is inviting comments on requirements and product restrictions for collective investment schemes to be mutually recognised (the MAS request can be found here).

A lawyer familiar with the proceedings says it is very early days, and that the consultation does not mean that Singapore is officially supporting an Asean funds passport. The Investment Management Association of Singapore is encouraging industry comments; Mike Seng at Imas can be contacted by email.

Australia has thrown its weight behind the idea of creating a funds passport throughout the region, as a way of helping its fund-management industry become more relevant in the rest of the time-zone.

But authorities in Hong Kong, Taiwan, Korea and Japan have been cool on the idea. And it’s not clear that authorities in other members of the Association of Southeast Asian Nations (Asean) will want to let in Singapore-authorised funds, given the much wider scope of product available in the Lion City.

However, it is the first official Asian-government initiative to take the idea seriously. It fits in with a trend among regulators, including those in Hong Kong, to promote locally domiciled products in order to boost their domestic funds industries.

The passport idea was originated in Europe, where the Ucits code of conduct allows a product authorised in one market, and that meets certain criteria, to be marketed in multiple jurisdictions.

Ucits is so successful it has become a de-facto standard in Asia as well, with regulators in Hong Kong, Singapore, Taiwan and Korea often willing to allow such products to be marketed onshore.

For fund-management companies, the Ucits system is a blessing because they can create one product for many markets, creating scale. Although some firms might welcome a very liberal Asian funds passport, given the region’s diversity of regulation and operational requirements, they are likely to oppose a system that requires them to duplicate what they already do out of Luxembourg or Ireland.

Getting Hong Kong and Singapore to mutually recognise funds would create a true regional passport, although the day these two rival hubs come to such an agreement is far off.

The MAS project is looking at key features of a passportable fund, the proposed requirements of the fund’s manager (or “collective investment schemes operator”, in legalese), requirements for trustees and custodians, operational requirements and product restrictions. The MAS is inviting comments this week.