The Bangko Sentral ng Pilipinas (BSP) has released proposed new rules for the minimum disclosure requirements of unit investment trust funds (UITF) particularly on the selection of benchmarks.
The draft circular, currently being circulated among banks and market players, covers the guidelines on the performance measure for UITFs. These guidelines will help investors make informed financial decisions.
The proposed UITF disclosure rules is part of three additional issuances that BSP are drafting for the general guidelines of the trust industry.
The BSP earlier this year released two other circulars for feedback. The latest proposed circular has a feedback deadline of October 4.
BSP Governor Benjamin E. Diokno said in August that trust corporations and banks’ trust units have a common practice of using benchmarks in measuring the performance of their UITFs.
The guidelines in the selection of the appropriate benchmarks will aid existing UITFs, participants and respective investors in fairly assessing the performance of UITFs vis-à-vis benchmarks, said Diokno.
So far, the BSP is planning to release five new trust regulations to encourage trust industry growth. About three are in draft form and two are about ready to be released as regulatory issuances.
Diokno has said that the trust business has recovered from the adverse effects of the COVID-19 pandemic, with 30 trust entities reporting assets under management (AUM) of P4.6 trillion as of end-March, up by 41.3 percent year-on-year. The growth in the AUM is primarily driven by UITFs which grew by 59 percent year-on-year as of end-March.
The BSP is engaging its so-called “Trust Business Model Initiative” which are policy reforms that are in two phases. This is to rationalize the operations of trust entities for a more responsive trust sector.
The first phase involved the reduction in the minimum required amount for investment management accounts and the expansion of financial instruments allowed for commingled funds.
The second phase has seven areas that will be amended, particularly rules on UITFs and personal management trust. Five of the seven areas will come out this year, while two more issuances are scheduled for release in 2022.