Reforms seen to boost fund management industry

THE BANGKO SENTRAL ng Pilipinas (BSP) on Thursday said it is pursuing several reforms, including a simplified licensing framework for unit investment trust funds (UITFs) to support the fund and asset management sector.

The central bank will continue supporting the fund management industry as trusts play an “important role” in management of money supply, BSP Governor Felipe M. Medalla told the Fund Managers Association of the Philippines (FMAP) on Thursday.

“One way of doing so is through our Trust Business Model initiative, wherein we pursue several reforms that enable fund managers to enhance their operations and realize their goals,” Mr. Medalla said.

“This includes the introduction of a simplified licensing framework for unit investment trust funds (UITFs) and the approval of the simplification of passing requirements for the UITF Certification Program,” he said.

The BSP, in its Manual of Regulations for Banks, defines UITFs as an open-ended trust funds that could be in peso or other acceptable currency. These are operated and administered by a trust entity. These could include money market funds, bond funds, balanced funds, and equity funds, among others.

The central bank’s Trust Business Model Initiative includes policy reforms that seek to rationalize the operations of trust entities to boost the sector.

The first phase of the initiative involved the reduction in the minimum required amount for investment management accounts, as well as the expansion of financial instruments suitable for commingled funds.

The second phase was designed to amend seven areas of rules on UITFs and personal management trusts.

The latest amendments to UITF regulations were made via a circular last September 2022, wherein the central bank required trust entities to secure its approval or notify it before creating selected kinds of UITFs.

The changes cover the licensing framework on the creation of UITFs and amendments to their features; definition of fund classifications; distribution of income for distributing funds; enforcement actions; and other provisions on the administration of UITFs.

BSP Circular 1152 also provided definitions for additional types of UITFs namely money market, fixed income, multi-asset, equity, and distributing funds.

“We hope that through these reforms, the BSP will be able to assist organizations like FMAP to further their vision of being catalysts of change in the industry and upholding the interests of many Filipinos,” Mr. Medalla said. —