The Asia Region Funds Passport (ARFP) is scheduled to be implemented on May 27 this year, making cross-selling of public funds possible in South Korea, Australia, Japan, New Zealand and Thailand.
The Financial Services Commission announced on Jan. 20 that it is revising subordinate provisions of the Capital Markets Act in accordance with the memorandum of cooperation of the ARFP. The purpose of the revision is to clarify the qualifications of cross-sellable funds and procedures for their registration in South Korea and to prepare investor protection measures such as a duty to report.
The five countries officially launched the ARFP at the APEC Finance Ministers’ Meeting held in September 2013. The European Union launched a similar scheme dubbed UCITs in as early as 1985 to standardize local public funds, unify local fund markets and accelerate the growth of the local asset management market. At the end of 2018, UCITs funds added up to more than 9 trillion euro to account for 61 percent of all investment funds in Europe.
Public funds registered in South Korea and satisfying certain equity capital and asset management requirements can be registered as ARFP funds. Every ARFP fund registered in Australia, Japan, New Zealand or Thailand can be sold in South Korea simply by securities report submission. Such funds will become available at banks and securities companies in South Korea with the same investor protection provided as public funds raised in the country.
“The ARFP will contribute to the growth of the member countries’ asset management markets by standardizing and unifying Asian public fund markets to the point of achieving an economy of scale,” the commission explained, adding, “South Korean asset management firms will be able to find more opportunities abroad and investors will be able to invest in more foreign funds with more safety.”