Attempts made to improve investment service quality, boost investor protection

In order to improve the quality of investment services within the domestic market of financial instruments and strengthen investor protection, the Bank of Lithuania has prepared guidelines on a common definition of European Money Market Funds, which have been approved by the Supervisory Service of the Bank of Lithuania. The Supervisory Service also approved guidelines on preparation of Key Investor Information Document and provision of information contained in this document.

The key purpose of the guidelines on a common definition of European money market funds is to attract market participants’ attention to the definition which is common across Europe, and ensure that it provides clarity and also improves investor protection   A common definition of money market funds is expected to provide a more detailed understanding of the distinction between funds which operate in a very restricted fashion and those which follow a less restricted approach. European market funds are split into two categories:  short-term money market funds and money market funds.
The following entities are subject to requirements set in the Bank of Lithuania’s document prepared according to the guidelines of the European Securities and Market Authority (ESMA): managers of harmonised collective investment undertakings, harmonised investment companies the management of which has not been transferred to a management company, and, as amended, to managers of special collective investment undertakings and special investment companies the management of which has not been transferred to a management company.

The major purpose of the guidelines on preparation of Key Investor Information Document and provision of information contained in this document is to explain main aspects of the preparation of key investor information document and help management companies to properly implement respective legal requirements. The document also includes examples of good practice and ways to achieve the regulation purpose of the document for investor information to be clear and simple.  Also, it specifies factors that have to be taken into account when selecting scenarios for operational results of structural collective investment undertakings, provides advice, and offers the ways for these scenarios to be presented to investors. Attached is a sample key investor information document.

The two documents approved by the Supervisory Service have complemented legal acts adopted by the Board of the Bank of Lithuania on 12 July 2012, which establish more favourable conditions for investment activities and provision of information.

The guideline is available on the Bank of Lithuania‘s website (Lithuanian only).

Palanga Credit Union requested to comply with prudential requirements

The Supervisory Service of the Bank of Lithuania instructed Palanga Credit Union to ensure compliance with prudential requirements by 31 December 2012 and notify the Bank of Lithuania of the progress made once a month (by the 10th each month). 

In its review of Palanga Credit Union’s operations the Supervisory Service noted that the credit union took actions needed to eliminate legal violations and operational drawbacks detected during its inspection and specified in the inspection report of 8 February 2012. But, according to the reports of 30 June 2012, the credit union failed to comply with some prudential requirements.