CMAC acts to regulate collective investment schemes

In order to develop the capital market and diversify investments within the securities market in the country, the Capital Markets Advisory Council (CMAC) has drafted a law on Collective Investment Schemes (CIS). Under the draft law, CMAC seeks to apply high governance standards in the establishment, sale, management and operation of CIS in order to protect the interests of the investing public. “This legislation aims at facilitating investors in collective investment schemes to operate in a regulated environment and to secure protection of their investments,” Robert Mathu, CMAC Executive Director said at a validation workshop on Thursday at CMAC premises. A CIS is an arrangement that enables a number of investors to pool their resources and have them professionally managed by an independent manager. The collected resources may be invested in bonds and equities quoted on a stock exchange, but depending on the type of scheme, they may be wider. The law, which was drafted in collaboration with the National Bank of Rwanda, also aims at creating confidence among the investors who may put their money in CIS. This becomes the fourth law to be drafted by CMAC since its inception on January 31, 2008. It is also seen as a big boost towards CMAC’s objective of developing an organised and regulated securities market. “The Council is responsible for among other things to develop legislations required for the operations of securities market,” Mathu told a gathering of stakeholders from different institutions. This draft law comes at a time government is planning to liberalise the collective investment schemes in the country in order to raise public savings and also create investment funds. The Ministry of Finance and Economic Planning is targeting Rwf60 billion of savings this year and expect the CIS to act as a major intermediary between the savings vehicles like Savings and Credit Co-operative (SACCOs), Social Security Funds and the investors. Government is targeting a Gross National Savings (GNS) level of 18.4 percent by 2012 from the current 12.6 percent. The capital market advisory council is also planning to tap on CIS funds as it seeks to increase liquidity on the Rwanda over the (OTC) Counter market. The OTC market is currently dominated by government treasury bonds and only one corporate bond with one equity cross listing from Kenya Commercial Bank (KCB). Ends

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CMAC acts to regulate collective investment schemes