The regulator said the changes – contained in a consultation paper – were designed to ensure Singapore’s collective investment scheme rules keep pace with product innovation and regulatory developments in “major fund jurisdictions”.
The proposals, which will also be applied to investment in funds through unit-linked insurance products, include:
• Introducing a list of permissible investments and accompanying criteria to enhance clarity in the application of the liquidity and diversification limits.
• Strengthening safeguards on the use of financial derivatives through prescription of counterparty limits and acceptable forms of collateral used to mitigate counterparty risks.
• Introducing additional guidelines on the use of the commitment approach and Value-at-Risk (VaR) method for calculating exposures to financial derivatives.
• Establishing new investment guidelines for funds seeking to track indices, introducing principles for the naming of funds and requirements to standardise the methods used for calculating performance fees where the fund manager decides to impose such fees.
• Enhancing existing guidelines on funds’ securities lending activities through comprehensive requirements on the counterparty, custodian and the use of collateral
In devising the proposed rules, MAS said it had: “Sought to balance the need to keep pace with international developments in fund management with that of ensuring that the guidelines continue to afford investors confidence in the regulatory framework for Singapore retail funds.”
