New regulatory guidelines will allow pension funds to double their US dollar-denominated assets by next year, but industry insiders say it may might lead to a reduction in portfolio holdings for some.
That’s because some funds already hold more than the proposed limit, due to different regulatory rules that are in the process of adjustment.
The Bank of Jamaica, BOJ, recently raised the allowable limit for local pension funds holding US assets from 5.0 per cent to 10 per cent by April 2021. The increase will be done in two phases.
Some funds already hold up to 20 per cent of their portfolios in US assets, based on an earlier guideline set a decade ago by a separate regulator, the Financial Services Commission, or FSC.
Conroy Rose, CEO at VM Pension Management Limited, explained that the FSC limit was set in 2007 when investments regulations were being enacted. FSC is the regulator for securities dealers and the private pension market, whereas the Bank of Jamaica, as the monetary authority, has primacy over the foreign exchange market and foreign currency-related transactions.
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