The Securities and Exchange Commission (SEC) is aiming to create internationally consistent standards for Islamic mutual funds in order to increase options for investors and expand the Muslim investor base.
To achieve such goals, the Stock Exchange of Thailand (SET) is now conducting a public hearing for Islamic mutual funds to build confidence in investing in such funds, the regulator said in a statement yesterday.
"The SEC recognises the importance of developing Islamic financial markets and Islamic mutual funds in Thailand. Therefore, the SEC has a plan to drive the development and promote the growth of Islamic mutual funds," the statement noted.
As part of the plan, the SET is attempting to improve the regulations supporting Islamic mutual funds to build confidence in investment by setting standards for the establishment, management and disclosure of information for Islamic mutual funds.
The Capital Market Supervisory Board under the SEC at its meeting last Friday approved such principles, it added.
Following the approval, the SEC is open to hearing opinions on the principles and draft relevant announcements by prescribing principles for Islamic mutual funds.
According to the regulator, Islamic mutual funds must invest in assets that comply with Islamic principles.
"They can make direct investments in assets as specified by the committee or syariah [Islamic law] advisor, or invest in assets that are constituents of the index that follow Islamic principles. The indexer must be reliable and internationally recognised," read the statement.
Moreover, a qualified syariah committee or advisor must be established in order to set guidelines or policies for property selection in accordance with Islamic principles in the case of direct investment in assets specified by the board or syariah advisor.
Funds must disclose information that is useful for making investment decisions, such as criteria or guidelines for selecting assets, as well as a list of committees or advisors and symbols.
"For mutual funds with a policy focusing on investing in Islamic principles established before the new regulations come into effect, the new regulations must be complied with within 180 days from the date the new regulations come into force," said the statement.
The SEC published the hearing documents on its website. Parties can respond to them until May 24.