BSP seeks to streamline UITF rules
THE BANGKO SENTRAL ng Pilipinas (BSP) seeks to streamline the requirements of Ficreation by the nancial institutions of unitary investment funds (UITF).
“The proposed show streamlines the process of establishing UITF as well as changes to the characteristics of an UITF,” BSP Deputy Governor Chuchi G. Fonacier said in a Viber message.
Relevant stakeholders have until 23 June to submit their comments on the new rules to the BSP.
Once the circular is approved, PASB will grant affected financial institutions a six-month transitional period to adjust their policies and processes related to UITFs.
The BSP, in its Banking Regulation Manual (MORB),Fines UITF as an indefinite trust fund which may be denominated in peso or other acceptable currency. These are operated and administered by a fiduciary entity. These could include money market funds, bond funds, balanced funds, and equity funds, among others.
Before this draft circular, the MORB did not specify the preconditions for the creation of UITF. Financial institutions are required to obtain the approval of the Monetary Council to engage in fiduciary activities in accordance with Republic Law 8791 or the General Banking Law of 2000.
The proposal stated that a trusted entity wishing to create an UITF must obtain “authority to administer a particular class and / or structure of an UITF from the BSP”.
“Such authority must be obtained by prior approval or notification to the BSP,” says the draft circular.
The project says that institutions that have previously deployed UITFs will only need to give a written notification to the PASB if they create new ones, while those doing so for the first time will need to get the bank’s go-ahead signal. central.
The central bank said the documentary requirements when requesting to set up an UITF will include a written request for permission to set up the fund within 10 days of the approval of the fund. FiBoard of directors of the company; a copy of the resolution of the board of directors; and certiFication of the chief executive officer officer (CEO) and chief compliance officer attesting that the funds offered meet the minimum standards set by the BSP.
Financial institutions will also be required to submit sample key information and investment reporting, as well as business documents containing their marketing, fund management and risk management policies, as well as investment plans and activities. training for marketing staff.
“A request for authorization to create an UITF which turns out to be accompanied by incomplete documentary requirements must be returned,” said the draft circular.
Meanwhile, for the written notification, the documentary requirements will include the resolution of the board of directors of the financial institution on the establishment of the UITF and the certification of its CEO and compliance officer on the compliance of the new UITF the prudential criteria of the BSP.
The proposed rules also give the central bank the power to suspend or limit a financial institution’s ability to engage in new UITF activities if they fail to comply with the central bank’s disclosure rules. and risk management.
To obtain central bank approval for an UITF, bank fiduciary entities and others FiFinancial institutions should not have any oversight issues over investor protection and should implement adequate risk management practices as prescribed by the BSP. The investment products they provide must also meet the central bank’s minimum standards for client disclosure and suitability assessment.
The BSP will charge a processing fee of P 10,000 for requests for new UITFs. Financial institutions are required to launch these UITFs within six months of central bank approval.
The draft circular also includes a section on minimum disclosure obligations which requires Fifinancial institutions to provide their clients with relevant information on UITFs, including the expected frequency of income distribution and the return on distribution. – LWT Noble