The Financial Services Council (FSC) has commissioned research to measure the dollar-benefit of the so-called Asian passport which would allow Australian fund managers to market funds from a single Asia-Pacific vantage point.
The FSC’s director of policy Martin Codina said research into savings and benefits of the plan would be ready by November.
The passport is a bid to cut costs and help expand the pool of funds managed by Australia’s fund managers.
He said many Australian fund managers currently set up offices in Europe so they can export their products and services through a structure available there known as undertakings for collective investment in transferable securities (UCITS).
“What that research will look at is, what are the cost savings involved in terms of offering those funds across borders, and what are the savings in terms of no longer having to replicate those funds in Europe in order to create a UCIT-equivalent that can be offered back into the region.”
“That is the path a lot of members have taken,” Codina said.
“We use the analogy of miners having to ship their resources to Europe so they can sell them to Asia. That’s effectively what our industry is having to do.”
Codina said it would be difficult to quantify the benefits without the detailed research, however he said even a portion of the Europe-based business would have a positive impact.
“We’re not advocating that Australia will become the dominant fund management centre in Asia; what we’re saying is a passport allows Australia to compete on a level playing field by opening markets to Australian fund managers that currently aren’t available to them.”
Codina said the vast majority of FSC members support the move.
“There is very strong support for the development of a passport but, similarly, recognition that this is a long-term objective. In isolation, a passport isn’t a silver bullet for Australian fund managers.”
The Asia-Pacific Economic Co-operation group, which meets later this year, is believed to be set to approve a pilot passport program for 2012.
Asked whether the pilot program remained on track for 2012, Codina said: “We believe it is. Put it this way, we haven’t heard otherwise.”
Australia currently has bilateral agreements with some Asian nations, and Codina said: “The most advanced examples are ones that Australia is a party to, but even they contain some limitations that a passport would enhance.”
