Amendments to the Code on Collective Investment Schemes

Singapore, 22 December 2006...The Monetary Authority of Singapore (MAS) issued amendments to the Code on Collective Investment Schemes (Code) to give fund managers greater operational flexibility while safeguarding investors' interest. 

2   The amendments are as follows:

(i) Revise the method of calculating exposure of a scheme to a single party
To overcome the limitations posed by the current single party limit of 10% of the deposited property of a scheme, MAS has introduced a single group limit ^[1] which is set at 20% of the deposited property of a scheme.

(ii) Allow Singapore-constituted schemes to invest in financial derivatives as an asset class, subject to safeguards
Since March 2005, UCITS III schemes^[2], which can invest in financial derivatives as an asset class, have been offered in Singapore. Singapore-constituted schemes are now allowed to use financial derivatives in their investment strategies subject to (a) managers ensuring that the risks related to such financial derivatives are duly measured, monitored and managed; (b) exposure to financial derivatives should not exceed 100% of the deposited property of a scheme at any time; and (c) adequate disclosure in the prospectus for investors to make informed investment decisions.

3   In finalising the amendments, MAS considered feedback received from its public consultation, put out in May 2006, and discussions with fund managers.  The amended Code and MAS' response to the feedback received from the public consultation are available on MAS' website (Click here to view  (231.2 KB)).

4   MAS will continue to engage industry players and review our regulatory regime to keep pace with market developments and international practices.

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^[1] The single group limit is defined as the limit on exposure of a scheme to a group of related companies (a group is defined as a company, its subsidiaries, fellow subsidiaries and its holding company).  A single issuer limit of 10% of the deposited property of a scheme (single issuer limit) is retained.  For schemes tracking a benchmark, the single issuer limit for each reference benchmark security may be the higher of 10% of the deposited property of the scheme or the benchmark weight of the security, with an allowance of a two percentage points overweight above the benchmark weight.

^[2] A UCITS is an undertaking for collective investment in transferable securities, the EU equivalent of unit trusts that can be offered freely through the European Union if it is authorised by a Member State.