ANGARA TO COMPLETE RP'S CYCLE OF FINANCIAL REFORMS
WITH COLLECTIVE INVESTMENT SCHEMES

Senator Edgardo J. Angara today said that in order to complete the cycle of banking and financial reforms, it is imperative to establish a comprehensive regulatory framework for all forms of Collective Investment Schemes and enable the Philippine capital market to develop.

A collective investment scheme, also know as a mutual fund, is a way to invest money with others to participate in a wider range of investments than feasible for small individual investors. Under this scheme, the group of investors share the costs and benefits of an investment.

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.

"As such, there are differences in regulatory requirements and taxation among the different forms of CIS, even though the investment products they offer to the public are essentially the same," said Angara who chairs the Senate Committee on Finance.

He added, "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. This explains the success of CIS in these countries. It is about time the Philippines follows suit."

Angara cited that the current 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 chaired 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 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.