In a comment letter, the fund membership company described the initiative as “timely and exciting” but offered solutions to a number of “operational, implementation and tax issues” it says will affect long term viability.
Among the suggestions is a reduction of operational challenges such as investment restrictions and disclosure requirements, and the removal of “duplicative or conflicting” delegation rules that “unnecessarily restrict” access to portfolio management.
It also recommends that the six countries comprising the initiative form a “college or group of representatives from member economies” to help resolve differences in implementation as it reached completion.
It also emphasised the need for the initiative to “ensure tax neutrality and tax certainty for funds across jurisdictions” by giving passported funds equal tax treatment and ensuring clarity over the tax consequences of a fund portfolio investment.
The ARFP scheme comprises six participating Asia-Pacific Economic Countries, and aims to account for differences among member economies, while ensuring adequate investor protection, fostered competition and deeper financial markets.
In a similar manner to UCITS in Europe, the ARFP will allow fund managers operating in a passport member economy to offer their funds in other passport member economies under a streamlined authorisation process.
The initiative is set to be implemented in early 2016.
Centralised management
Chief executive at ICI Global Asia-Pacific, Qiumei Yang, said ARFP coincided well with the strong growth of the fund industry in the region.
“To be globally competitive and successful, fund firms are increasingly centralising management resources and research systems, and the “passport concept” of allowing a single fund structure to be offered efficiently across all six economies will benefit both fund sponsors and fund investors,” he said.
“The changes we recommend will help make the passport more economically and operationally feasible.”
ICI Global is the international arm of the Investment Company Institute and serves a fund membership that includes regulated funds publicly offered to investors in jurisdictions worldwide, with combined assets of $1.5trn.
