UCITS III to Extend to Singapore

Herbie Skeete

Handbook of World Stock & Commodity Exchanges Handbook

11 April 2005

The Monetary Authority of Singapore has announced that it is working closely with the fund industry to facilitate the offer of UCITS (Undertakings in Collective Investments in Transferable Securities) III funds in Singapore. MAS has informed market practitioners of the requirements for the transition of existing UCITS I funds to the UCITS III regime, and has commenced the processing of such applications. UCITS I funds are domiciled in the European Union and have been offered in Singapore since February 2003. The EU Commission, which oversees offers of UCITS, has issued Directives to require all UCITS I funds to be converted to UCITS III funds by 2007. Under these Directives, UCITS III funds can invest in a wider range of asset classes as compared to UCITS I funds. The Directives also introduce requirements for proper risk management and control by fund management companies of UCITS III funds. Fund managers who wish to offer UCITS III funds (which may be new funds or converted from existing UCITS I funds) in Singapore only need to satisfy the following MAS' requirements:

provide evidence that the applicant fund has been authorised as a UCITS III fund in its home jurisdiction;

provide documentation of the applicant fund's risk management process filed with the home regulator where the fund intends to use or invest in financial derivative instruments. Where available, provide evidence that the risk management process has been approved by the home regulator; and

include enhanced risk disclosures of the expanded investment scope of the applicant fund in its prospectus and other marketing materials.

To provide further guidance to the fund industry, MAS will issue a "practice note" on the transition of UCITS I funds and the application for new UCITS III funds to be offered in Singapore. In the second half of this year, MAS will also study if there is a need to expand the investment scope of Singapore-constituted funds to align with that of UCITS.