TO eliminate existing differences in regulatory and tax treatment for more uniform levels of protection to investors, leaders of the House of Representatives are pushing for bills seeking to establish a single and comprehensive regulatory framework for all forms of Collective Investment Schemes (CIS).
House Committee on Economic Affairs Chairman Nationalist People’s Coalition Rep. Arthur Yap of Bohol said House Bill 69 filed by PDP-Laban Rep. Joey S. Salceda of Albay, Committee on Ways and Means vice chairman, and House Bill 2510 filed by Liberal Party Rep. Dakila Cua of Quirino, Committee on Ways and Means chairman, aim to balance the interests of the investors, by incorporating mechanisms that would safeguard the public interest, as well as recognize the interests of the other parties involved in the CIS industry.
“This proposed measure will prevent regulatory arbitrage, which is unfavorable to the growth of the industry and result in uneven levels of protection to the investing public,” Yap said.
For their part, Salceda and Cua said the passage of this measure will provide more investment opportunities for the middle- to low-income individuals in CIS, giving them access to the capital markets, reap the benefits thereof, including diversification and better returns for investments.
With this measure, Salceda said investments will double within six years, or reach at least P3 trillion.
“Establishing a comprehensive regulatory and tax framework for all CIS products will eventually lead to a more competitive environment for the CIS industry and provide enhanced and uniform levels of protections to the investing public,” he said.
A collective investment scheme as defined under the bill is any arrangement whereby funds are solicited from the investing public for purpose of investing, reinvesting and/or trading in securities or other assets.
The measure also seeks to promote investor protection by applying high governance standards in the establishment, management and operation of collective investment schemes and the registration and sale of CIS securities.
Currently, a number of countries, including the United Kingdom, Japan, Australia, Korea and Singapore, have adopted a single law to regulate all types of collective investment schemes.
In the Philippines, various laws govern investment companies (mutual funds), unit investment trust funds (UITFs) and separate account funds (the units of which are sold as part of variable unit linked insurance products).
Yap, meanwhile, has created technical working group to consider the measures.
“Once passed, it will promote investor protection by ensuring high governance standards in the registration, management, operation and sale of CIS securities, which is now roughly around P1.6 trillion. Broken down to P750 billion in UITF, including assets under management, around P280 billion in mutual funds and P414 billion in collected premiums for variable life. These investments have yearly increments in the total amount of P200 billion,” he added.
Meanwhile, Salceda reminded the industry players that “these funds have social costs. They were earned by the working families, some have to go abroad and suffer the social consequences of undergoing actual separation from their families, some even lead to more painful separation of couples. Treat these funds sacred.”
He added that industry players should find commonality in optimizing the returns for the benefit of the ordinary working families by protecting them from fraud and sudden market shifts and observe a prudent man’s rule in managing these investments.