The Asia Region Funds Passport (“Passport”) Joint Committee (“JC”) has decided that the Passport will launch on 1 February 2019.
This was agreed at the fifth face-to-face meeting of the JC in Auckland, New Zealand on 19 and 20 September 2018.
The meeting was hosted by the Financial Markets Authority of New Zealand (Chair) and attended by representatives from Thailand (Deputy Chair), Australia, Japan and the Republic of Korea. Representatives from the Monetary Authority of Singapore, and Securities and Futures Bureau of Chinese Taipei attended the meeting in an observer capacity.
Implementation Progress
Japan, Thailand and Australia have completed preparations for implementation and the Republic of Korea and New Zealand are well advanced in the legal and regulatory requirements required in their respective jurisdictions.
A number of funds have used the pilot process to obtain registration in their Home Economy and this has helped improve efficiency and effectiveness in relation to dealing with these applications. However, Host Economy arrangements have not yet been fully tested.
Ahead of 1 February 2019 operators may continue to consider how the Passport arrangements will apply in each economy and prepare to make applications. Passport regulators will continue to assist operators in this period by providing information and clarification on the regulatory requirements in their jurisdictions. Applications from prospective passport funds in their Home Economies may be made but funds will not be registered before 1 February. After 1 February, applications can be made by passport funds to Host Economies to allow cross-border offers.
Regulators may continue to deal with a fund on a pilot-like basis for the period up to and beyond 1 February. Host Economy requirements and processes will also continue to be tested and refined over this period to ensure they are practicable.
Now that the commencement date has been announced, the JC encourages industry to collaborate and engage across the region on operational and practical aspects of offering passport funds. Each JC member will work with their local industry to facilitate this.
The JC welcomed the Industry Day event arranged by the New Zealand Financial Services Council that is to be held on 21 September 2018 in Auckland. Over 70 stakeholders are expected from around the region. They will hear from JC members and industry about opportunities and drivers for success relating to the Passport.
The JC has published the Annual Implementation Report for 2017 – 2018.
New member initiatives
The JC considered further initiatives to extend the Passport to new economies and noted continuing discussions in a number of economies in the region who have the potential to join as participants.
Passport guidance
As legislation has been drafted and administrative arrangements put in place, some additional clarity can now be provided about the laws that will apply in each economy to incoming passport funds.
The JC has revised the published guidance and it is available on the ARFP website.
The revised guidance updates some key Host Economy regulatory matters applicable to passport fund operators seeking entry to Host Economies.
Tax reference group
The JC heard a presentation from Australian Treasury on behalf of the tax reference group. The presentation reiterated the objectives of the group. These are to support information sharing and cooperation but do not include harmonization of tax arrangements between economies.
Case studies showing the operation of New Zealand tax laws were discussed, and the JC noted similar material was being prepared by other members of the tax reference group to ensure clarity and provide a basis for any bilateral discussions that may be appropriate.
The reference group is examining what information could be published in time to support the launch in February.
Next Meeting
The next face-to-face meeting of the JC is planned to be held in Seoul, the Republic of Korea in April 2019.
Background
The Passport will enable cross-border offerings of managed funds to retail investors while maintaining appropriate investor protections. It was established through the APEC Finance Ministers’ Process.
In June 2016, Australia, Japan, the Republic of Korea, New Zealand and Thailand entered into a memorandum of co-operation (“MoC”). The JC was established under the MoC to oversee the effective implementation and operation of the Passport.
The Passport aims to provide significant benefits to investors through enabling greater fund choice, while maintaining effective legal and regulatory arrangements for investor protection.
It is also intended to strengthen the capacity, expertise and international competitiveness of the funds industry and financial markets in the region.
20 September 2018