The new Guidelines replace the Guidelines on Restricted Investment Schemes and the provisions on wholesale funds in the Guidelines on Unit Trust Funds (UTF Guidelines), which have been rationalized and streamlined to make it easier for fund managers to offer wholesale and retail products.

With the introduction of the Wholesale Funds Guidelines, fund managers now need to refer to only one set of guidelines for wholesale products; while unit trust management companies would have to refer to the UTF Guidelines for retail products.

The Wholesale Funds Guidelines was developed to enable fund managers to meet the more complex requirements of sophisticated or professional investors, like high net worth investors and institutional investors.

As wholesale funds can only be offered to qualified investors and not the general public, the Wholesale Funds Guidelines does not prescribe any quantitative requirements or restrictions on investments of the fund.

In addition, new flexibilities have been introduced in the Wholesale Funds Guidelines. These include easing the restriction on leverage; expanding the list of qualified investors; removing the limits to the number of investors; and relaxation of certain administrative requirements.

To safeguard the interest of investor, provisions on disclosure in the information memorandum and on reporting to investors have been enhanced. Fund managers are required to provide clear disclosure to investors and comply with the minimum content requirement of the information memorandum. The frequency of reporting to investors has also been increased to a quarterly basis from the previous annual basis.

In addition, fund managers managing wholesale Islamic funds must comply with the Guidelines on Islamic Fund Managementand the resolutions of the SC’s Shariah Advisory Council.

The SC has also amended the UTF Guidelines to remove all provisions relating to wholesale funds, and to provide further clarification and greater flexibility to certain rules. The amendments include allowing fund managers to use futures contract for hedging purposes; place deposits with, and borrow from, foreign financial institutions to improve efficiency in relation to foreign investments; and obtain short-term bridging facility for trade settlement purposes.

Additionally, the UTF Guidelines have been amended to include provisions on corporate governance; facilitate improvements in registration and lodgement of deed; and to require monthly reporting to the SC.

The Wholesale Funds Guidelines which comes into effect on 18 February 2009, and amendments to the UTF Guidelines, are available here.