The Asia Region Funds Passport (“Passport”) Joint Committee (“JC”) held its fourth face-to-face meeting in Sydney Australia on 25 and 26 April 2018, hosted by the Australian Securities and Investments Commission. The meeting was attended by representatives from Australia (Chair), Thailand (Deputy Chair), Japan, Republic of Korea and New Zealand. The JC was pleased to welcome representatives from the Monetary Authority of Singapore, the Securities and Exchange Commission of the Philippines and the Securities and Futures Commission of Hong Kong, who attended the meeting in an observer capacity.
The Passport is intended to provide significant benefits to investors through more fund choice, while maintaining effective legal and regulatory arrangement for investor protection. It is also intended to strengthen the capacity, expertise and international competitiveness of financial markets and the funds industry in the region.
Implementation Progress
The participating economies have progressed with legal and regulatory requirements in their respective jurisdictions. Japan and Thailand have completed their preparation. In Australia legislation is before Parliament. In the Republic of Korea there has been consultation on the required legislation and it is expected to be put before National Assembly by June 2018. In New Zealand, the Passport Rules are in the course of being incorporated into legislation.
A piloting process is underway to test arrangements. A number of fund managers and service providers are participating in the pilot with regulators. The pilot is expected to include making and considering applications and getting legal and tax advice.
The pilot process is expected to run until July 2018. The formal commencement of the Passport is expected to occur in around August 2018, once the JC has considered the results of the pilot. The JC will make a separate announcement about commencement.
The Chair of the JC, Mr Geoff McCarthy of the Australian Securities and Investments Commission, said:
“It is pleasing to see the efforts being put into ensuring the successful operation of the Passport. Before formal commencement the JC wants to consider the experience from the piloting process testing the arrangements with real funds.”
Industry outreach
The JC discussed strategies to continue to closely engage with industry throughout the region to ensure that the Passport would meet industry needs.
The JC welcomed the Industry Day event arranged by the Australian Securities and Investment Commission that is to be held on 27 April in Sydney. Over 90 stakeholders are expected from around the Region, who will hear from JC members and industry about opportunities and challenges including on taxation, streamlining of regulation and the opportunities for service providers.
New member initiatives
The JC considered further initiatives to extend the Passport across the region 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 been revising the published guidance and will publish an updated version in coming months.
Tax working group
The JC heard a presentation from the Tax working group. The presentation gave additional clarity around taxation applying in relation to incoming passport funds in Australia. Cameos showing the operation of Australian tax laws were discussed, and the JC noted similar material was being prepared by other members of the Tax working group to ensure clarity and provide a basis for any bilateral discussions that may be appropriate.
Next Meeting
The next face to face meeting of the JC will be planned for September – October 2018 in New Zealand.
Background
The Passport is a multilateral framework to facilitate cross-border offerings of a variety of fund structures to retail investors while maintaining appropriate investor protections. It was established under the auspices of the APEC Finance Ministers’ Process.
In June 2016, Australia, Japan, 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.
26 April 2018