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Monday, March 3, 2008

SC Issues Guidelines To Boost Unit Trust Industry

The Securities Commission (SC) today issued a set of revised and new guidelines to facilitate continued growth and enhance competitiveness of the unit trust industry.

In addition to the Guidelines on Unit Trust Funds (UTF Guidelines) which have been revised to streamline with international standards, the SC also issued new guidelines to enhance disclosure requirements of unit trust prospectuses to enable investors to make informed investment decisions.

The new Prospectus Guidelines for Collective Investment Schemes act as a single source of reference for disclosure requirements for unlisted unit trust funds, as well as listed funds such as real estate investment trusts, exchange traded funds and closed-end funds.

According to the SC, the revised UTF Guidelines provide greater flexibility in structuring innovative products that would appeal to Malaysian and foreign investors, and offer greater flexibility for fund managers to enhance returns to investors.

A notable amendment to the UTF Guidelines is the relaxation of transaction in derivatives for investment purposes, it said in a statement.

"The relaxation allows unit trust funds to have higher exposure in derivatives, subject to clear disclosures on the risks involved," the SC said.

The revision also provides for greater relaxation on securities lending provisions and removal of the requirement to seek SCs approval for foreign markets, it said.

This is subject to the foreign market meeting certain criteria, it added.

To ensure remaining unit holders interest are not affected as a result of large disposals of assets to meet large repurchase requests, unit trust funds are now allowed to borrow cash to meet repurchase requests, the SC said.

Where applicable, the revised UTF Guidelines have also changed prescribed limits with prudential limits, it added.

The guidelines are a follow-up on the announcement by SC chairman Datuk Zarinah Anwar on Feb 26, 2008, to promote a more vibrant unit trust industry, which recorded a 39 percent growth in net asset value and 26 percent growth in the number of funds in 2007.

Both guidelines, which come into effect from today, are available at .

Date: 03 Mar 2008
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