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Fund managers back bill on collective invest scheme

MANILA, Philippines - The Fund Managers Association of the Philippines (FMAP) is supporting the enactment of a law that would eliminate existing differences in regulatory and tax treatment for all investment schemes to ensure uniform levels of protection for investors.

FMAP president Deanno Basas said the quick passage of the Collective Investment Schemes (CIS) law would play an important role in the development of the country’s capital market and at the same time safeguard the interests of industry stakeholders particularly the investors.

“The proposed CIS law will enable all participants to play a key role in the development of the capital market, and FMAP, as an organized body, will take part in that process,” Basas said.

According to him, the industry is ready for more asset management products, such as hedge funds and alternative investments.

“Despite the relatively limited products that the private fund and trust management space in the Philippines is offering, the industry has continued to grow, and there is still too much potential for expansion. I believe that we can offer more products to our clients and hedge funds and alternative space are possible growth horizons,” Basas added.

He explained the industry understands the concern of regulators that the domestic market might not be as matured as that of the country’s counterparts.

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“However, this is two-pronged, and the market’s development may be hindered if we do not educate them. If we can educate our customers about these more sophisticated financial products, then we can help in the maturity of the domestic market and give them a wider range of choices,” he said.

Rep. Arthur Yap, who heads the House committee on economic affairs, said the proposed legislation would “prevent regulatory arbitrage, which is unfavorable to the growth of the industry and results in uneven levels of protection to the investing public.”

Yap said having a CIS law becomes imperative with the economic integration of the 10 member-states of the Association of Southeast Asian Nations (Asean).

“As we find our place in Asean, we will have to work on this. And with more foreign direct investments in the coming years – a critical issue is financial integration and what it means for the country,” Yap added.

Earlier, Albay Rep. Joey Salceda said he expects CIS investments to double within the next six years to at least P3 trillion with the enactment of the law.

A collective investment scheme as defined under the bill is any arrangement whereby funds are solicited from the investing public for the purpose of investing, reinvesting and/or trading in securities or other assets.

The measure also seeks to promote investor protection by applying high governance standards in the establishment, management and operation of collective investment schemes and the registration and sale of CIS securities.

The United Kingdom, Japan, Australia, Korea and Singapore have adopted a single law to regulate all types of collective investment schemes while the Philippines has various laws govern investment companies (mutual funds), unit investment trust funds (UITFs) and separate account funds.

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