Groups seek changes in PERA rules

MANILA, Philippines - The Investment Company Association of the Philippines (ICAP) is seeking corrections in the implementing rules and regulations (IRR) of the Personal Equity and Retirement Account (PERA) Act of 2008.

ICAP is the trade organization representing the mutual fund industry and it is a member of the Financial Executives of the Philippines (Finex). The Finex in turn is part of the technical working group (TWG) formulating the IRR.

In a letter to Francis Lim, president of the Philippine Stock Exchange (PSE) and TWG chairman, the ICAP said the IRR should allow investment company advisers (ICAs) to assume both roles of a PERA Administrator and Investment Manager.

“PERA administration and investment management are roles that are similar in nature and function as what ICAs presently do for their mutual fund companies which they manage, as well as for thousands of clients, both individuals and corporations, which invest in the mutual funds. Several ICAs, in fact, simultaneously administer and manage the investment activities of a number of mutual funds. ICAs, licensed as such by the SEC (Securities and Exchange Commission), have the operational and technical capabilities to support and perform these administration and investment activities required by the PERA Law,” ICAP said.

ICAP chairman Fernando Jose Sison III and ICAP president Karen Liza Roa were the signatories to the letter.

They further explained that ICAs are subject to high qualifications and strict regulations and oversight. They operate under three laws, namely: the Corporation Code of the Philippines, the Investment Company Act, and the Securities Regulation Code under the watchful eyes of the Securities & Exchange Commission.

“Furthermore, ICAs are required to apply with the SEC for a license to act as such, and to renew such license annually,” the two ICAP officials added.

Sison is the head for mutual funds of the Bank of the Philippines Islands (BPI), while Roa heads the Philam Asset Management Inc., a member of the Philippine American Life and General Insurance Co. (Philamlife).

Earlier, the Investment House Association of the Philippines (IHAP) expressed similar misgivings with the present draft of the IRR.

They were protesting a plan to disallow non-trust entities, such as investment houses, investment company advisors, insurance companies and stock brokerages, in participating as administrator and investment manager in the PERA Law.

Roberto Juanchito T. Dispo of the First Metro Investment Corp. (FMIC) said that the administrator and investment management of PERA are roles that are similar in nature and function as what they do for their non-PERA clients.

He said that there are many investment company advisers who manage the investment activities of some of the largest and reputable mutual funds, and they certainly have the operational and technical capabilities to support these investment activities.

The controversial provision being noted by Dispo is under rule 3.A of the PERA Law, regarding the entities qualified to be an administrator.

The argument is that non-trust entities can be administrators but that the invesment managers and product provider must obtain a trust license from the Bangko Sentral ng Pilipinas (BSP).

The PERA will establish a legal and regulatory framework for voluntary personal retirement plans, comprised of voluntary personal savings and investments, and promote capital market development and savings mobilization, contribute to long-term fiscal sustainability through long-term financing.