Malaysia’s retail unit trust sector gets a boost

Added 22nd July 2016

Malaysia’s Securities Commission (SC) is shortening the time it takes to get non-complex retail unit trusts to market.

Malaysia’s retail unit trust sector gets a boost

Key changes include an expedited approval process for non-complex retail unit trust funds and removing the need for prospectuses to be renewed on an annual basis.

The Federation of Investment Managers Malaysia and the wider industry have supported the SC’s view that unit trust issuers ought to be provided greater flexibility in offering funds to investors.

The commission added that investors stand to benefit from this new process as issuers will be able to refocus their efforts on bringing more product offerings to the market in a shorter time.

The changes will come into effect on 15 August 2016.

Complex vs non-complex

Complex funds that would be subject to the standard authorisation process include:

  • feeder funds,;
  • funds-of-funds;  
  • funds that can invest in derivatives (other than for hedging purposes), warrants and convertibles (other than those capable of being converted into new shares), and structured products; and
  • cross-border funds that can be offered in a foreign jurisdiction under an arrangement between the SC and the securities regulator in that foreign jurisdiction.

Anything not covered above would be deemed non-complex and eligible for the expedited authorisation process.

Authorisation period

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.

Prospectus

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 prospectuses 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.

According to the SC, 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.

Wholesale changes

The move follows similar changes to the country’s wholesale products authorisation regime that came into effect in 2015. 

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About Author

Kirsten Hastings

Senior Reporter

Kirsten is a senior reporter for International Adviser, covering global news stories about the financial services industry. She joined Last Word Media in October 2015 after two years working as a reporter covering the staffing and recruitment industry. Kirsten has a Masters in Financial Journalism from the University of Stirling. 

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