The Bangko Sentral ng Pilipinas (BSP) is allowing trust corporations to sell and distribute unit investment trust funds (UITFs) through third parties such as individual and institutional agents.
BSP Governor Benjamin E. Diokno said this policy will enable agents to “bring products closer to investors.”
“At the same time, it is an opportunity for the industry to grow assets under management through partnerships with distributors. More products in the market will also bode well for capital market development,” said Diokno.
The Monetary Board approved the move as part of financial inclusion efforts by “broadening access points” to more financial products and services.
It is also part of BSP reforms to grow the trust industry. “Along this line, the BSP is set to revamp the regulatory framework for trust, investment management and other fiduciary accounts by clearly laying out the expectations for the different activities performed by trust entities and streamlining regulatory requirements,” said the BSP.
Before Circular No. 1097 (“Guidelines for the Distribution of Unit Investment Trust Funds of Trust Corporations; and Amendments to the Regulations Governing the Establishment of Branches and Marketing Offices of Trust Corporations”) was approved, trust corporations can only distribute UITFs in their main branches or offices.
The circular, signed on September 21, has widened the channels used by trust corporations to sell their products. The new rules however have “stringent qualification standards” to qualify as distributors, said the BSP.
“Individual agents and employees of institutional agents are required to meet the qualifications for UITF marketing personnel in existing regulations while institutional agents must be reputable and duly licensed by appropriate regulatory agencies to distribute financial products,” the BSP said.
These qualification standards are based on governance mechanisms and due diligence requirements under the existing outsourcing framework for BSP-supervised institutions, the BSP added. “These ensure that trust corporations will only tap entities that have a sound understanding of UITFs and are well-regulated and have the necessary infrastructure to distribute UITFs.”