ASEAN’s CIS fund passport scheme goes live

27 August 2014   Category: News, Asia, Global, Malaysia, Singapore, Thailand   By Daniel Shane

ASEAN’s Collective Investment Schemes (CIS), the cross-border fund passporting framework that includes Singapore, Malaysia and Thailand, is now operational, financial regulators in the countries confirmed.

The initiative, which allows fund managers operating in the three nations to distribute fund products across borders to retail investors via a streamlined process, marks the first successful launch of a regional passport scheme.

The CIS was first announced via a memorandum of understanding between regulators in the countries in October last year.

On its website, the ASEAN Capital Markets Forum (ACMF) this week posted a handbook for fund managers on the framework, providing guidance on application procedures, the use of local distributors, and the remittance of funds. A statement from ACMF did not indicate when the first products under the scheme would likely be launched.

Lee Boon Ngiap, assistant managing director (capital markets) at the Monetary Authority of Singapore, said that he was looking “forward to the participation of more ASEAN jurisdictions” in the scheme over the coming years.

“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,” Mr. Lee continued.

Datuk Ranjit Ajit Singh, chairman of Securities Commission Malaysia, said that the CIS would play a significant role in the integration of ASEAN’s capital markets and the formation of the ASEAN Economic Community by next year.

“ASEAN has one of the highest savings 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. “Under this initiative, investors and fund managers can benefit and leverage off one of the most dynamic regions of the world, with a combined GDP in excess of US$2.4 trillion.”

The CIS is the first of three competing fund passporting frameworks to go online in the region. The Asian Region Funds Passport (ARFP) scheme, also announced last year, currently has the participation of Australia, New Zealand, Singapore and Korea. In April 2014, Philippines and Thailand became part of the consultation process to join the framework.

In addition, Hong Kong and mainland China will at some point in the future launch their mutual fund recognition programme, which will allow for the cross-border distribution of fund products between the two jurisdictions.

In a recent report, Citi Securities and Services noted the possibility of the former two frameworks at some stage merging into one, particularly given Singapore’s participation in both. “Singapore has a foot in two camps. How this will work is not clear,” the report read. “Will Singapore seek to have two distinct schemes or to bring them together? Some hope the APEC and ASEAN schemes will be complementary and possibly link together in the future, believing that the region is too small to sustain both schemes.”