SC LIBERALISING UNIT TRUST FRAMEWORK TO ENABLE RETAIL FUND PARTICIPATIONS

KUALA LUMPUR, Dec 21 -- The Securities Commission Malaysia (SC) is liberalising the unit trust fund framework to enable retail funds to invest in and offer a wider range of investment instruments and activities.

In a statement today, the regulator said amendments in the guidelines on unit trust funds would take effect on March 1, 2022. 

“The key amendments to the enhanced guidelines include expanding the list of permissible investments by unit trust funds, enhancing the operational processes in managing a fund and providing further clarity on existing requirements for market participants. 

“Other measures include allowing unit trust funds to undertake more activities for the purpose of efficient portfolio management,” it said.

SC said risk management requirements at enterprise and fund levels had also been strengthened, including the requirement for fund information to be made available on the management companies’ websites.

“Consequential amendments to the guidelines on private retirement schemes and guidelines on exchange-traded funds will also be implemented with appropriate modifications,” it said.

It said amendments to the guidelines took into account its findings following an extensive benchmarking exercise and feedback received from the public consultation process. 

“Additionally, the SC has engaged with key stakeholders to ensure a seamless implementation of the amendments,” it said.

It said the liberalisation would enable management companies to develop more innovative products whilst ensuring adequate investor protection.

“The new framework will also support an investment ecosystem that is more diversified and provide a catalyst for product offerings as part of the wealth management solution to meet investors’ retirement objectives, including the offering of wealth decumulation products.

“The liberalisation is also in line with the Capital Market Masterplan 3’s aspiration to become a capital market that is relevant, efficient and diversified in the next five years, benefitting each and every stakeholder,” it said.

Chairman Datuk Syed Zaid Albar said the enhancements would enable retail funds to offer more diverse offerings to meet the demand and risk appetites of a wide range of investors.

“This will encourage the growth and development of unit trust management companies and also enable investors to rebalance their short and long term objectives with more diversified investment offerings,” he said.

He said more importantly, the enhancements would bridge the regulatory gap between domestic and international offerings and allow local funds to remain competitive in the face of a rapidly evolving market environment.

According to SC, unit trust funds continued to be the largest component of the Malaysian collective investment scheme industry. 

As of Oct 31, there were 39 locally-incorporated management companies approved to offer 734 unit trust funds with a total net asset value (NAV) of RM551.36 billion.

-- BERNAMA