BSP lowers minimum opening amount for investment management activities

The Bangko Sentral ng Pilipinas’ (BSP) policy-setting Monetary Board has lowered the minimum account opening amount for investment management activities from P1 million to any lower amount, subject to a floor of P100,000.

The BSP defines an “investment management activity” as any activity where a trust entity called the investment manager binds itself to manage investible funds or any investment portfolio on behalf of clients with the primary objective of achieving financial returns.

In a statement, the central bank said the lowering of the minimum opening amount for investment management activities aims to expand the investment opportunities of the public by reaching markets that may not have been able to open investment management accounts (IMAs) due to the high entry requirement.

“Through our forthcoming issuance, we hope that more savers will transition into investors,” said BSP Governor Benjamin Diokno.

“This is in line with the goal to make financial services more accessible to the public,” Diokno said.

Another feature of the new policy that is the reduction of the required investment of each IMA in a commingled fund from P1 million to P100,000, according to the BSP.

The central bank defines “commingling” as the act of combining funds from multiple IMAs for the sole purpose of investing in qualified assets.

The BSP said the policy amendment is aimed at increasing the participation of retail investors in the securities markets through IMAs.

Further, commingled funds can now invest in a wider range of financial assets, which includes exchange-traded equities and fixed income securities and commercial papers registered with the Securities and Exchange Commission and securities issued by banks incorporated in the Philippines, the central bank said.

Likewise, corporate accounts can now participate in commingled funds, it added.

The BSP noted that trust entities are expected to have the operational capability to manage accounts participating in commingled funds and are required to fully disclose to clients the risks associated with the same.

This includes the risk that assets in a commingled fund may not, at times, be easily divested at favorable market prices, it said.

“As always, we aim to strike a balance between liberalization and prudence. There are more changes in trust regulations in the pipeline and we hope that the industry will welcome these changes as well,” Diokno said. — Ted Cordero/RSJ, GMA News