Bangkok, 15 March 2021 – The Securities and Exchange Commission (SEC) is seeking public comments on the principles and proposed regulations related to adding risk management policy and liquidity management tools of mutual funds to allow asset management companies to enhance the efficiency of their liquidity risk management process and diversify their liquidity management tools in line with international standards. The proposed regulations aim to strengthen protection and maintenance of investors’ interest. Prior to this hearing, on 5 March 2021, the SEC discussed the principles and the proposed regulations in this matter at a joint meeting with chairmen and chief executive officers of asset management companies.
The
spread of COVID-19 pandemic since March 2020 has resulted in severe volatility
in debt and equity markets around the world, and consequently stimulated
investment outflows from mutual funds and affected the stability of the global
financial system. Due to this circumstance, international regulators have
decided to issue liquidity measures.
Realizing
the importance of liquidity risk management process of mutual funds, the SEC
encourages asset management companies to strengthen the efficiency of such
process. This includes establishing a clear risk management policy and measures,
designing mutual funds according to the investment policy, assets to be
invested, payment period, investors’ expectation regarding unit selling, risk
monitoring throughout the scheme term, obtaining diverse liquidity management
tools, and stress test on liquidity risk according to international standards. On
20 October 2020, the Capital Market Supervisory Board Meeting No. 17/2563
passed a resolution approving in principle the proposed regulations. Later, on
5 March 2021, to promote sustainability of the investment management business,
the SEC held a joint meeting with chairpersons and chief executive officers of
asset management companies to discuss and share views on business development
and the board of directors’ roles are responsibilities regarding liquidity risk
supervision.
Now, the SEC is proposing to revise regulations related to liquidity risk
management and liquidity management tools of mutual funds to enhance the liquidity
risk management standards of asset management companies, ensure fairness for
all investors, and reduce the possibility of systemic risk and stability risk
of mutual funds.
The
consultation paper on the principles and proposed regulations related to
liquidity risk management and liquidity management tools is available at https://www.sec.or.th/TH/Pages/PB_Detail.aspx?SECID=704 . Stakeholders and interested parties are
welcome to give comments and suggestions via the website or email: pornpong@sec.or.th , pisut@sec.or.th or supisara@sec.or.th . The public hearing ends on
10 April 2021.