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SEC releases rules for ASEAN advisor pass

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Photo: ASEAN Secretariat

THE Securities and Exchange Commission (SEC) has released the proposed guidelines to implement the ASEAN Capital Markets Forum (ACMF) Pass, which seeks to allow the free movement of investment advisers within the Association of Southeast Asian Nations (ASEAN).

In a draft circular posted on its Web site last week, the SEC said the guidelines will cover professionals in the Philippines and other ASEAN countries who signed the memorandum of understanding (MOU) on the ACMF Pass.

The Philippines, along with Malaysia, Singapore, and Thailand, signed in October the MOU that will facilitate cross-border movement of investment advisers. The issuance of an ACMF pass is set to fast-track registration and remove additional licensing requirements among the signatory countries.

The ACMF Pass forms part of the ASEAN Capital Market Professional Mobility Framework, which is scheduled to be implemented on January 2019.

Qualified professionals, known as recognized representatives, include the sales personnel of a broker dealer recognized by the SEC, a certified investment solicitor licensed by the commission, and other professionals that may be determined eligible in the future.

The products that professionals can give advice on include “shares, bonds and units of collective investments schemes including units of real estate investment trusts and units of infrastructure funds,” according to Section 5 of the proposed guidelines.

The recognized representative will then be allowed to issue or promote research analyses or reports regarding products in the capital markets, as well as give general investment advice.

However, they will be prohibited from “giving advice to investors by considering investor’s investment objective, financial situation and particular needs,” and “soliciting for sales of the capital market products set out in Section 5,” as per Section 7 of the draft circular.

The proposed guidelines state that the recognized representative must be part of a licensed firm in the host jurisdiction, while not necessarily requiring them to be full-time employees of the firm.

“A Recognized Representative may be attached to more than one Licensed Firm at the same time; the attached Licensed Firm is obliged to monitor the conduct of the Recognized Representative and ensure that he complies with the Host Jurisdiction’s laws and regulations when performing activities under the Framework in the Host Jurisdiction,” according to Section 9 of the proposed guidelines.

The ACMF Pass will be valid for two years, after which the recognized representative may renew the document for each succeeding year.

Should a recognized representative violate the laws and regulations of a host jurisdiction, the host regulator will take regulatory action, with the assistance of the adviser’s home regulator.

The SEC is accepting comment on the proposed rules until Dec. 7. — Arra B. Francia