Media Releases
Published Date: 01 September 1999

MAS Issues Guidelines on Cash Rebates and Soft Dollar Commissions for Unit Trust Managers

Singapore, 1 Sep 1999 - The Monetary Authority of Singapore (MAS) today issued guidelines on the practice of receiving soft dollars by unit trust managers, while prohibiting their retention of cash rebates. The objective of the guidelines is to raise the standard of disclosure and professionalism in the unit trust industry. MAS said the guidelines are consonant with international practices.

The guidelines define soft dollars to include research and analyses services, data and quotation services and computer hardware and software. MAS said that the receipt of soft dollars would be allowed if three conditions are met:

  • the goods and services received would assist in the management of the unit trust;
  • transactions are executed on the best available terms; and
  • the manager does not engage in unnecessary trades in order to qualify for soft dollars.

Under the guidelines, managers are required to disclose their practice on soft dollars in the unit trust prospectus, and provide a description of the soft dollars received in the fund's semi-annual report to unitholders. The guidelines also prescribe the records which unit trust managers have to keep for soft dollars received.

On the measure to prohibit the retention of cash rebates, MAS said that this is aimed at improving the transparency on the remuneration of unit trust managers. Managers can no longer retain cash rebates that enable them to charge ostensibly low fees.

Unit trust managers will be given 6 months to comply with these guidelines.

The new guidelines on soft dollar commissions and cash rebates are outlined in Practice Direction No 8 to the Handbook on Unit Trusts.