Press Release
July 27, 2009

Urges for the passage of Collective Investment Schemes

Senator Edgardo J. Angara today said that the Banks panel is set to complete the country's cycle of financial reforms[1] by tackling the Collective Investment Schemes bill which he filed in order to establish a comprehensive regulatory framework for all forms of Collective Investment Schemes.

"The worldwide trend in the regulation of collective investment schemes (CIS) is to have single law to regulate all types of CIS. Countries such as the United Kingdom, Japan, Australia, Korea and Singapore have adopted this approach. In the Philippines however, investment companies (mutual funds) and unit investment trust funds (UITFs), the most common forms of CIS, are still governed by varying laws and regulations," said Angara who chairs the Senate Committee on Finance.

He added, "As such, there are differences in regulatory requirements (regulatory arbitrage) and taxation among the different forms of CIS, even though the investment products they offer to the public are essentially the same."

Angara cited that this regulatory arbitrage gives rise to an uneven playing field which will prove unfavorable to the growth of the industry. More importantly, such regulatory arbitrage will result in uneven levels of protection to the investing public.

The senator, who formerly chairs the Senate Committee on Banks, Financial Institutions and Currencies, filed SB 1181 which proposes to establish a comprehensive regulatory framework for all forms of CIS that seeks to eliminate existing differences in regulatory treatment.

He shared that this bill seeks to balance the interests of the investors, by incorporating mechanisms that would safeguard the public interest, at the same time recognizing the interests of the other parties involved in the CIS industry, by giving them flexibility to expand their CIS businesses.

"With the passage of this bill, it is anticipated that even middle to low income individuals will explore more investment opportunities in CIS, thereby gaining access to the capital markets. The economy, in turn, is expected to benefit greatly from an expanded capital base," added Angara.

Other financial reforms in Angara's agenda include the Bangko Sentral ng Pilipinas charter amendments and the Corporate Recovery and Insolvency Act. (30)


[1] This financial reform laws include the Credit Information System Act (CISA), the Personal Equity and Retirement Account (PERA) Law and most recently the Philippine Deposit Insurance Corporation charter amendments.

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