Asian platform likely for domestic financial products

Sebi working with other countries' regulators for uniform standards in region; could be reality by FY15; has already signed pacts with 27 European regulators

India's securities market regulator is in talks with Asian peers to develop uniform standards for launching financial products in the region.

The move will help domestic financial services tap investors in Singapore, Hong Kong and Australia. Similarly, local investors could see more investment options from major Asian financial firms.

According to sources, the Securities and Exchange Board of India (Sebi) and other Asian securities regulators are in talks to devise a framework, termed Asian passport, expected to be finalised before the end of this financial year.

This mechanism is expected to be formulated along the lines of the Undertaking for the Collective Investment in Transferable Securities (UCITS) in Europe, invented mainly for retail investors. UCITS works as an investment fund, taking money from investors and investing these in a basket of professionally managed funds.

ASIAN EXCHANGE PROGRAMME

• Sebi to finalise guidelines for exchange of financial products with Asian regulators
• Known as passporting, the exchange could help tap markets like Singapore and Hong Kong which have large investor base
• Guidelines expected to be out by the end of the year
• Passporting framework to be similar to the European UCITS concept
• Sebi's second big attempt at collaboration with international regulators

Singapore, Hong Kong and Australia are likely to be part of this arrangement. This would be the second instance where Sebi would look at enhanced collaboration with international markets.

Last month, it had signed bilateral memoranda of understanding with 27 European regulators for the marketing and sale of alternative investment funds (AIFs).

The agreement will enable Indian fund managers to manage and market AIFs in the EU region and for EU fund managers to be able to tap Indian markets.

Supervisory cooperation
This agreement came three years after the European Council adopted a EU Alternative Investment Fund Managers Directive, requiring adequate supervisory cooperation arrangements between regulatory authorities.

Similarly, the Asian arrangement would lay down a framework for the design, launch and marketing of products in the respective countries.

Sectoral entities are looking at this as an opportunity to expand the reach of Indian financial products.

"The respective regulators would now be under a uniform regulation and this would facilitate the exchange of technology and expertise about financial products," said one who did not wish to be named.

Market experts see this as a way to widen the investor base for Indian products.

"There is a good demand for Indian investment funds in Singapore and Hong Kong, which have a high number of foreign portfolio investors and non-resident Indians.

With strong marketing and awareness, these products can find a good footing in Asian markets," said Tejesh Chitlangi, partner at IC Legal.

An Asia Region Fund Passport (ARFP), recommended by the Australian Financial Centre Forum, and involving the economies of the Asia-Pacific Economic Co-operation, is also in the works. However, it is unlikely that India could be a part of the Asia Region Fund Passport, as it is not yet a member of the forum, said experts.