Kuala Lumpur, 19 July 2016
SC Introduces Initiatives to Enhance Competitiveness, Improve Efficiency of Unit Trust Industry

The Securities Commission Malaysia (SC) today announced new initiatives to enhance the competitiveness and efficiency of the Malaysian unit trust industry.

Amendments to the relevant guidelines reflecting these initiatives will take effect on 15 August 2016. Key changes include an expedited approval process for non-complex[1] retail unit trust funds to reduce time-to-market and removing the need for prospectuses to be renewed on an annual basis for greater operational efficiency.

As part of SC’s efforts to continuously improve approval and authorisation processes for greater market efficiency without compromising investor interest, the SC liberalised the authorisation regime for wholesale products, including wholesale funds, with the Lodge and Launch framework in 2015. Applying the same principle of regulatory proportionality, the SC will now introduce an expedited authorisation process for non-complex funds that will reduce time to market.

Consultations with the industry and Federation of Investment Managers Malaysia have supported the SC’s view that unit trust issuers ought to be provided greater flexibility in offering funds to investors while empowering the industry to be more responsible by encouraging self-discipline and market discipline. Investors also stand to benefit from this new process as issuers are able to refocus their efforts into bringing more product offerings to the market in a shorter time.

Currently, the authorisation period for retail unit trust funds can take up to three months as the 15 business days authorisation process only begins after all complete information is received. With the expedited framework, applications for non-complex retail funds will receive authorisation from the SC within 10 business days after submission. Applicants are responsible for ensuring that applications are complete and accurate at the time of submission and the SC will authorise their funds based on such representations. The existing authorisation framework will continue to apply for all other types of retail funds.

In addition to enhancements in the approval process, the 12-month validity period for prospectuses will also be removed. Issuers no longer need to reissue and reprint the prospectus on an annual basis and will benefit from savings on reissuance costs.  The amendments will enable issuers to only provide updates on changes in the prospectuses via notifications, supplementary prospectuses or where appropriate, replacement prospectuses. This will also help ensure that changes are highlighted to investors and they receive such information expeditiously. Certain information previously disclosed in prospectuses such as information on fund performance will be reflected in the Product Highlights Sheets that are provided for investors to enable them to make an informed investment decision.

The relevant guidelines namely Guidelines on Unit Trust Funds, Prospectus Guidelines for Collective Investment Schemes and Guidelines on Sales Practices of Unlisted Capital Market Products as well as a series of FAQs, including how the expedited authorisation process works, are available here for reference.