MAS amends code on Collective Investment Scheme

The key changes include strengthening of core investment requirements, introduction of new guidelines, and enhancing security for investor protection.

The Monetary Authority of Singapore (MAS) has issued the revised Code on Collective Investment Schemes (Code), together with its response to public feedback received from its public consultation on proposed amendments to the Code released in May 2010.

Included in the changes are:

Strengthening Core Investment Requirements

• Introducing a list of permissible investments for funds
• Strengthening safeguards on the use of financial derivatives and counterparty requirements
• Enhancing guidelines on securities lending activities
• Enhancing requirements for funds investing in structured instruments

Introducing New Guidelines for Certain Fund Categories

• Establishing new guidelines for funds which track an index
• Introducing the concept of weighted portfolio maturities for money market funds

Other Safeguards to Enhance Investor Protection

• Standardising the methods used to calculate any performance fees imposed
• Introducing principles on the naming of funds
• Prohibiting the use of simulated past performance data

MAS believes that the revisions provide greater clarity and increase the flexibility for fund managers in managing their funds, while enhancing safeguards for retail investors.

MAS will continue to engage industry players and ensure that the regulatory regime for funds keeps pace with product innovation and industry developments, as well as regulatory developments in major fund jurisdictions.

The revised Code will come into effect on 1 October 2011 and will apply to all authorised schemes other than structured product funds. In view of industry’s feedback that structured product funds have customised structures which require time and potentially higher costs to unwind, MAS will allow such funds to comply with the revised Code by 1 April 2012 or be grandfathered. Structured product funds that are grandfathered may not take in new subscription monies from retail investors on or after 1 April 2012.

MAS will recognise a new foreign scheme if, amongst others, it is subject to investment guidelines which are substantially similar to those set out in the revised Code.