From 1 July 2007, Dubai International Financial Centre (DIFC) Islamic funds can be distributed directly into Malaysia thereby offering investors access to a variety of funds available in the jurisdiction. This milestone is made possible by the new Securities Commission (SC) guidelines that take effect on that date to facilitate the offering, marketing and distribution of foreign funds directly into Malaysia.
Under these guidelines, funds from or listed in recognised jurisdictions i.e. foreign jurisdictions recognised by the SC under the guidelines to distribute funds in Malaysia, can now be offered directly into Malaysia. DIFC became the first recognised jurisdiction following the signing of a mutual recognition arrangement between the SC and the Dubai Financial Services Authority on 27 March 2007.
The list of recognised jurisdictions is set to expand with the signing of future mutual recognition agreements by the SC. Prior to this, local investors would have to invest in a feeder fund in Malaysia to gain exposure to foreign funds.
The new guidelines complement the reciprocal liberalisation initiatives set in mutual recognition agreements, which would also benefit local unit trust management companies. The mutual recognition arrangement also allows Malaysian manufactured funds to be offered and distributed in recognised jurisdictions.
In addition, the guidelines include provisions on the eligibility, duties and responsibilities of local fund distributors in marketing and distributing the foreign funds to Malaysian investors.
Foreign funds are defined as collective investment schemes that are constituted or incorporated in a jurisdiction other than Malaysia and includes, among others, retail unit trust funds or mutual funds, real estate investment trusts or private funds whether unlisted or listed on an exchange.
The Guidelines for the Offering, Marketing and Distribution of Foreign Funds in Malaysia are available here.