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WSE puts forth proposals for OFE reform , Advisory and Opinions - EquitiesPoland.pl
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Advisory article

WSE puts forth proposals for OFE reform

WSE operator GPW proposes liberalizing investment limits for private pension funds OFE on corporate bonds, mortgage bonds, cash loans, investment funds and other instruments, introducing new instruments to the catalogue of possible investments as well as introducing an external benchmark, a statement published on GPW website shows.


Following is a list of proposals based on the material published by GPW:


1. Revision of investment limits (liquidation of limits or raising caps) on:


a) corporate bonds,

b) mortgage bonds,

c) cash loans,

d) closed-end and open-end investment funds,

e) other instruments with risk profile appropriate for future pensioners.


2. Enabling OFE to invest in local government bonds.


3. Allowing OFE to lend securities for short-sale.


4. Allowing OFE to take advantage of cash loans/credits for investment on financial markets.


5. Allowing OFE to use derivatives in order to manage risk (under appropriate supervision).


6. Increasing the limit of foreign investment to 30% as of 2015 (Poland`s draft reform assumes 2016). The catalogue of instruments could exclude foreign Treasury bonds.


7. Allowing OFE to invest in Exchange Traded Funds.


8. Allowing OFE to invest in SME and fledgling companies, in particular:


a) NewConnect-listed firms,

b) firms from private equity and venture capital portfolios,

c) start-ups (as co-owner),

d) firms from crowdfunding / private market platforms.


9. Introducing an open catalogue of instruments into which OFE are allowed to invest; the list could be extended on a motion from a given OFE, subject to approval from the financial market regulator.



Additional proposals include:


1. Setting an external investment benchmark based, among others, on: broad index WIG and a corporate bonds index calculated on the basis of Catalyst-listed bonds.


2. A significant reduction of maximal distribution fee.


3. Pegging PTE`s management fees to their results versus the benchmark.


4. Facilitating asset and premiums transfer among OFE.


5. Enabling OFE to run subfunds with varying risk level and allowing clients to choose among the subfunds.


6. Increasing the attractiveness of voluntary pension schemes (the third pillar of the pension system) by such measures as: expanding the list of persons eligible for participation in the schemes, lifting or scrapping the cap on premiums paid into the third pillar and creating tax incentives for employers who establish employee pension plans as well as uniform tax incentives for clients of IKE and IKZE optional pension schemes.


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