The Development of the Collective Investment Schemes Industry in Emerging Markets 2005 to 2007

The Development of the Collective Investment Schemes Industry in Emerging Markets 2005 to 2007 Final Report EMERGING MARKETS COMMITTEE OF THE INTERNATIONAL ORGANIZATION OF SECURITIES COMMISSIONS DECEMBER 2009 2 CONTENTS Executive Summary 3 A. The Questionnaire 3 B. The Respondents 3 C. General Findings 4 D. Future Surveys 7 Participating Regulatory Authorities 9 Section I Background to CIS Market Development 10 I.1 Macroeconomic and Securities Markets Indicators 10 Section II Current State of the CIS Industry 13 II.1 Size of CIS Industry 13 II.2 CIS Asset Managers 15 Local managers, foreign managers and joint ventures 15 Bank owned and non-bank owned CIS asset managers 16 Market Share held by to CIS asset managers 17 II.3 Custodians 17 II.4 Products 18 II.5 Investors 20 II.6Distribution Channels 21 II.7Fees and Expenses 22 Section III Regulatory Framework of the CIS Industry 23 III.1 CIS Supervisory Laws 23 III.2 Regulations and Policy for CIS Asset Managers 24 Ownership of fund managers 24 Personnel with special responsibility 25 Conduct of Business 25 III.3 Regulation of CIS Products 26 III.4 Promotional Material 27 Section IV Status of Opening up of CIS Industry 29 IV.1 Capital Investment 29 IV.2 CIS Asset Managers 30 Annex 1 Tables of Reponses 31 Annex 2 The Questionnaire 61 . 3 Executive Summary A. The Questionnaire This report from the Emerging Markets Committee (EMC) of the International Organization of Securities Commissions (IOSCO) presents the results of a wide ranging survey of collective investments schemes (CIS) and the regulation that applied to them in emerging markets between the years 2005 and 2007. The survey took the form of a questionnaire entitled "Survey on the Development of Collective Investment Schemes (CIS) Industry in Emerging Markets" which was sent to all members of the IOSCO EMC1. Building on conclusions drawn from previous reports, the questionnaire placed special emphasis on mapping the commercial CIS industry in each jurisdiction. Thus, in addition to questions on regulation and supervision of the industry, Sections I and II of the questionnaire required respondents to provide a wide range of both general market data as well as information on the structure and characteristics of the CIS market. For most Section I and Section II questions, respondents were asked to provide data for each of the years 2005, 2006 and 2007. The section numbers used throughout the report correspond to the sections of the questionnaire. B. The Respondents The regulatory authorities in the following 31 jurisdictions replied to the questionnaire2: Argentina Hungary Poland Barbados India Romania Brazil Israel Slovenia Bulgaria Jordan South Africa Chile Korea Sri Lanka China Lithuania Thailand Chinese Taipei Malaysia Tunisia Colombia Morocco Turkey Croatia Nigeria Vietnam Czech Republic Oman FYR of Macedonia Pakistan Whilst this is not as many as the 42 jurisdictions that took part in the first survey of this kind published in December 2006 it is an improvement on the 25 jurisdictions that took part in the second survey, published in December 2007. These 31 jurisdictions make up 38.75% of the EMC membership however their total GDP accounts for 74.81% of the total GDP of EMC members3. As these figures suggest, most of the larger and 1 A copy of the questionnaire is attached to the report as Annex 2. The questionnaire was prepared for Working Group 5 by the Chinese Securities Regulatory Authority (CSRC). This report was prepared by the Israel Securities Authority. 2 The names of the 31 regulatory authorities that replied to the questionnaire are recorded in the List of Respondent Regulatory Authorities at the end of this Executive Summary. 3 Based on data supplied by the respondents and (for other EMC members) GDP figures for 2007 published by the World Bank. 4 more developed CIS markets in the EMC are represented in the results. Clearly a survey of the regulation, organization and market trends in economies representing nearly three quarters of the GDP in the EMC is of great significance and the information provided by the respondent regulatory authorities and set out in this report is a valuable source of data. Another positive point is that the respondents were drawn from all of the IOSCO Regional Committees providing a welcome variety of geographic location. The table below illustrates more fully the breakdown of the respondents by region. Regional Committee No. of Respondents % of Regional Committee % of total GDP of Regional Committee4 Africa/Middle East 7 35.00% 49.70% Asia/Pacific 9 56.25% 89.94% European 10 41.67% 50.96% Inter-American 5 25.00% 78.33% C. General Findings The goal of the