Friday, September 5, 2014

ASEAN Collective Investment Scheme (CIS) Framework

Fund managers based in Singapore, Malaysia and Thailand can offer collective investment schemes (‘CIS’) constituted and authorized in their home jurisdiction directly to retail investors in the other two ASEAN countries under a streamlined authorization process under the Memorandum of Understanding on Streamlined Authorization Framework For Cross-border Public Offers of ASEAN Collective Investment Schemes (‘ASEAN CIS framework’).
A CIS operator who intends to offer a CIS in a host jurisdictions under the ASEAN CIS Framework must be approved by its home regulator for offer to the public in the home jurisdiction. The home regulator must also assess the CIS to be suitable to be an ASEAN CIS (a ‘qualifying CIS’). Only after this suitability has been confirmed, can the CIS operator apply to the host regulator for the qualifying CIS to be approved for public offer in the host jurisdiction. Once it is approved, the ASEAN CIS may be sold through local distributors who are local intermediaries licensed in that host jurisdiction.

The CIS operator, the trustee / fund supervisor and the custodian must meet specific requirements under the Standards of Qualifying CIS. Similarly, the qualifying CIS’s underlying investments may only consist of the eligible assets such as transferable securities, money market instruments, deposits, units in other CIS and financial derivatives. The different investments must not exceed specified thresholds.

With the Qualifying CIS having to first go through the approval process of the host regulator before being able to offer in the host jurisdiction, it was not specified whether a Qualifying CIS approved in one jurisdiction will be approved in another jurisdiction. For example, the documentation requirements and format will be different between two jurisdictions. Furthermore, the lack of standardization and reporting in home and host jurisdictions will result in duplication.

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