The Securities and Exchange Commission (SEC) has changed its mutual fund rules to allow investment in derivatives and structured notes (SNs), in line with international standards.
SEC secretary-general Vorapol Socatiyanurak yesterday said the Capital Market Supervisory Board approved revising investment rules for mutual funds, private funds for retail investors and provident funds to support the funds' investment in derivatives and SNs.
The revisions include expanding underlying assets of derivatives and SNs to cover all investable assets as well as revising the SN definition and underlying assets in the category of credit risk to comply with international standards. Pre-approval requirements for investment in SNs will also be removed.
In addition, funds investing in complex derivatives and SNs will be required to employ a Value at Risk (VaR) approach in determining global exposure to better reflect market risk.
The funds must also undergo stress tests and back tests along with disclosing information on VaR in prospectuses and semi-annual and annual reports.