In a move to provide more protection to retail investors in Singapore, the Monetary Authority of Singapore (MAS) has proposed amendments on the guidelines for the unit trust industry.
The MAS said that the proposed amendments to the Code on Collective Investment Schemes, which is commonly known as unit trusts, “aim to provide clarity and to increase the flexibility for managers in managing their funds”.
It will also “enhance protection for investors,” it added.
The proposed changes will include strengthening of measures on the use of financial derivatives through prescription of counterparty limits, as well as the acceptable forms of collateral used to mitigate counterparty risks.
MAS also proposed the introduction of principles for the naming of funds, setting up new investment guidelines for funds looking to track indices, and introduced new requirements to standardize the methods used for calculating performance fees.
The Code prescribes best implementation in the operation, marketing and management of collective investment schemes (CIS) authorized under Singapore’s Securities & Futures Act.
Since the issuance of the Code in May 2002, the MAS has made several amendments in 2002, 2005 and 2006 to address the feedback from various fund management industries.
As the pace of product development increased in recent years, MAS is now undertaking a comprehensive review of the Code. The proposed changes will also be implemented to local funds offered through an investment-linked life insurance policy.
Additionally, interested parties may give their comments and views on the proposals contained in the consultation paper by June 25.
As a transitional measure, MAS also proposed to give approved trustees and fund managers of CIS three months to comply with the amended Code.