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ARFP receives first fund application

The fund passport scheme is also expected to include South Korea as a participating member by April.
Silver fern in black and white sign of Newzealand

The Asia Regional Fund Passporting (ARFP) scheme has received its first application from a New Zealand manager for a mutual fund to be distributed under the programme, according to the ARFP report.

The ARFP programme connects the fund markets of Australia, Japan, Korea, New Zealand and Thailand.

The application comes after the scheme went live in February, with Australia, Japan and Thailand being the first to be ready to receive registration applications for both outbound and inbound passport funds. New Zealand gave the greenlight for applications in August after it completed the legal and regulatory requirements for ARFP implementation in July.

New Zealand’s Financial Markets Authority (FMA) is now reviewing the application, said Joanne Davis-Calvert, FMA’s head of policy and governance, in the report. However, she did not name the fund manager.

“I am very pleased to note that one application for registration as a passport fund has been received by the FMA and is in the course of being reviewed. I am optimistic that in the coming period additional applications will be made in other passport economies,” Davis-Calvert said in the report.

Korea follows

Korea now stands as the only ARFP signatory that has not completed preparations to accept inbound and outbound registrations.

However, the country’s Financial Services Commission (FSC) announced that it expects to be able to accept fund registrations by April next year, according to a statement from the regulator.

The regulator said that its proposal to revise the Financial Investment Services and Capital Markets Act for the implementation of the ARFP was passed at the National Assembly on 31 October.

“The government expects that the ARFP will help diversify portfolios for investors and increase competitiveness for fund managers,” the FSC said.

Making it more accessible 

Separately, the ARFP report noted that it will consider revising regulations to make the scheme more accessible to fund managers.

For example, the ARFP joint committee said it will consider lowering the AUM requirement for each fund to $350m from $500m to be more consistent with other passporting schemes globally and to reduce barriers to entry.

The scheme is also encouraging other Asian countries to join by inviting non-member representatives to attend joint committee meetings in an observer capacity. Observers during the most recent meeting in October held in Singapore included representatives from Singapore, Malaysia, Taiwan, Hong Kong and the Philippines, the report noted.

Australia has also separately undertaken initiatives to promote the ARFP. In September, it held a technical workshop in Bandar Seri Begawan to provide information about the ARFP to delegates from Brunei, Vietnam and the Philippines.

“The challenge for the local industry is to engage with the initiative and consider the opportunities that it presents individual fund managers, investors and the capital markets more broadly,” FMA’s Davis-Calvert said.

“Only through continuing effort to promote the ARFP in the Asia region can its potential be achieved in the long term,” she added.

Another passporting programme, the Asean Collective Investment Scheme, connects the markets of Singapore, Malaysia and Thailand.

Although launched in 2014, the programme has not gained traction, with only seven fund managers joining the programme. The challenges in the Asean CIS include lack of interest, as fund managers prefer the feeder fund route, as well as the difficulty of getting authorisation for a fund to be sold under the scheme.

In a move to attract more asset managers to participate in the programme, regulators involved in the Asean CIS have made revisions to the scheme last year. These include shortening the time-to-market for the launch of the fund and giving participating fund managers more flexibility to delegate the investment management of a fund by increasing the proportion of the fund’s assets that can be sub-managed by a manager to 100% from the previous 20%.

Part of the Bonhill Group.