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Thai Regulator Increases Flexibility for Asset Managers

Somruetai Noppornprom

Thailand’s Securities and Exchange Commission (SEC) released a notification that allows mutual funds to invest in other mutual funds under management of the same asset management company up to three tiers.

The regulator stated that the new rules would support the development of investment types and strategies that are more versatile in response to investor demands while maintaining preventive measures on conflicts of interest. The SEC believes that the new rules would result in more flexibility for asset management companies and will enable them to manage their asset allocation more effectively.

The revised rules also protect the best interest of investors by prohibiting collection of redundant fees, prohibiting the exercise of the voting rights of the invested funds, providing correct and complete information for investment decision making, and disclosing information in the fund scheme and prospectus, according to the SEC. 

Previously, asset management companies established mixed funds with more diversified asset allocations to meet investor demands and to improve efficiency for managing assets of different classes.

Somruetai Noppornprom, counsel for Hunton Andrews Kurth, told Global Trading, “It [the revised rules] benefits asset management companies who act in that capacity for multiple funds to diversify by investing in other mutual funds they managed, where the investment is structured through another mutual fund they manage, while expanding the investment pool.”

The revision of the investment rules has undergone public consultation in which most respondents agreed with the guidelines proposed by the SEC. 

The new rules do not apply to certain mutual funds, including property funds or infrastructure funds, according to Noppornprom. The revised regulations came into force on 1 January 2022.