Rules amended to widen funds' investment in derivatives
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Thailand's Securities and Exchange Commission has amended the rules governing mutual funds, private fund for retail investors and provident fund, to allow them to invest in derivatives and structured notes (SN).
Vorapol Socatiyanurak, SEC Secretary-General, revealed that the Capital Market Supervisory Board approved the revisions which will put Thailand's rules on par with international standards.
The revisions include expanding underlying assets of derivatives and SN to cover all investible assets as well as revising SN definition and underlying assets in the category of credit risk to comply with international standards. Besides, pre-approval requirement for investment in SN will be removed.
In addition, the funds investing in complex derivatives and SN will be required to employ Value-at-Risk (VaR) approach in determining global exposure to better reflect market risk. Also, the funds must run stress test and back test along with disclosing information on VaR in prospectus and semi-annual report or annual report.
“The above revisions will support the funds' investment strategy in derivatives and SN, which will not only widen investment channels for the funds, but also provide investors with greater investment choices. The SEC views that regulatory development will boost the competitive edge of Thai capital market and the industry, responsive to global changes and connectivity.”
