SC Issues Guidelines to Boost Unit Trust Industry

3 March 2008

The Securities Commission (SC) today issued a set of revised and new guidelines to facilitate continued growth and enhance competitiveness of the unit trust industry.

In addition to the Guidelines on Unit Trust Funds (UTF Guidelines) which have been revised to streamline with international standards, the SC also issued a new guidelines to enhance disclosure requirements of unit trust prospectuses to enable investors to make informed investment decisions.

The new Prospectus Guidelines for Collective Investment Schemes act as a single source of reference for disclosure requirements for unlisted unit trust funds, as well as listed funds such as real estate investment trusts, exchange traded funds and closed-end funds.

Meanwhile, the revised UTF Guidelines provide greater flexibility in structuring innovative products that would appeal to Malaysian and foreign investors, and offer greater flexibility for fund managers to enhance returns to investors.

A notable amendment to the UTF Guidelines is the relaxation of transaction in derivatives for investment purposes. The relaxation allows unit trust funds to have higher exposure in derivatives, subject to clear disclosures on the risks involved.

The revision also provides for greater relaxation on securities lending provisions and removal of the requirement to seek SC’s approval for foreign markets. This is subject to the foreign market meeting certain criteria.

To ensure remaining unit holders’ interest are not affected as a result of large disposals of assets to meet large repurchase requests, unit trust funds are now allowed to borrow cash to meet repurchase requests. Where applicable, the revised UTF Guidelines have also changed prescribed limits with prudential limits.

The guidelines are a follow-up on the announcement by the SC Chairman Dato’ Zarinah Anwar on 26 February 2008 to promote a more vibrant unit trust industry, which recorded a 39 per cent growth in NAV and 26 per cent growth in the number of funds in 2007

Both guidelines, which come into effect on 3 March 2008, are available here.


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