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Asia Region Funds Passport: managed investment schemes in the Asian Century

Asia Region Funds Passport: managed investment schemes in the Asian Century

May 8, 2014 3:00 PM | Posted by Michael Lawson, Janine Ding | Print this page

On 16 April 2014, the APEC consultation paper on the Asia Region Funds Passport (Passport) was released by a working group consisting of Australia, Korea, New Zealand, Singapore, Thailand and the Philippines. This follows the signing of a formal Statement of Intent by the four initial members (being Australia, New Zealand, South Korea and Singapore) on 20 September 2013.

The Passport introduces a new streamlined regulatory framework to facilitate the distribution of eligible 'collective investment schemes' to retail investors in passport member countries, and will allow Australian fund managers to benefit from the growing funds market in Asia.

In our view, the success of the Passport will depend on its ability to reconcile the different regulatory regimes between the Passport members, provide a high degree of investor protection and attract participation by other countries in the Asia-Pacific region.

The Consultation Paper sets out the rules and processes developed by the Passport members to govern the operation of the Passport. The Passport is modelled on the Directive on Undertakings for Collective Investment in Transferable Securities (UCITS), which has dominated the European and Asian funds management scene to date.

In our recent submission to the Financial System Inquiry (FSI), we emphasised the need for the FSI to take into account the Passport given its heavy reliance on domestic regulation and enforcement. Relevant considerations for the FSI may include:

  • the impact of the Passport arrangements on Australian regulators; 
  • the types of eligible funds Australia will nominate to participate in the Passport regime;
  • the licensing and operation requirements Australia will impose on those funds as the 'home' jurisdiction;
  • domestic investor protection issues for Australia as the 'host' jurisdiction, including disclosure, marketing and distribution; and
  • any domestic reform required to implement the Passport regime.

Submissions are due 11 July 2014.

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