MAS issues consultation paper on Code of Collective Investment Schemes

On May 17, the MAS issued a consultation paper on the Code of Collective Investment Schemes. The paper focuses on investment guidelines and on ensuring that the regulatory regime for CIS keeps pace with product innovation and industry developments, as well as regulatory developments in major fund jurisdictions.

The proposed amendments include:

1. Introducing a list of permissible investments and accompanying criteria to enhance clarity in the application of the liquidity and diversification limits
2. Strengthening safeguards on the use of financial derivatives through prescription of counterparty limits and acceptable forms of collateral used to mitigate counterparty risks. 
3. Introducing additional guidelines on the use of the commitment approach and Value-at-Risk (VaR) method.
4. Enhancing existing guidelines on funds’ securities lending activities through comprehensive requirements on the counterparty, custodian and the use of collateral.
5. 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. 
6. Modifying existing operational requirements, including allowing the sending of accounts and annual reports to unitholders by electronic means.

Comments are due to MAS by 25 June 2010.

For further information please use the following link CIS Consultation Paper