Thai SEC Relaxes Derivatives Investment Of Mutual Fund For AIs
Vorapol Socatiyanurak, SEC Secretary-General revealed that the Capital Market Supervisory Board has approved the relaxation on rules applicable to mutual funds for AIs (institutional and high net worth investors). The relaxed rules allow funds to invest in derivatives without investment limit to offer more investment choices and bestow investors’ investment experiences. Apart from investment limit, however, the mutual funds must comply with derivatives investment rules and be managed with due care for the benefit of investors. Maximum limit of derivatives investment must be set and clearly stated in the prospectus together with proper risk management for derivatives investment. In addition, stress test must be conducted while contingency plan must also be prepared. Mutual funds for AIs setting maximum limits of derivatives investment exceeding 100% of NAV will be classified as high risk products and subject to additional regulations to mitigate risk of misselling; for instance, description of the worst case scenario for investment loss must be provided and records on giving advices to clients must be kept.