11.1 Circular 1152 and Fund Creation Framework

Why Circular 1152 sits at the center of Module 3

Module 3 — Regulations & Operations (about 20% of the TOAP UCP Qualifying Exam) expects you to know more than product labels. You must understand how a trust entity (TE) legally creates, amends, and reports Unit Investment Trust Funds under Bangko Sentral ng Pilipinas (BSP) rules.

BSP Circular No. 1152, Series of 2022 (issued 5 September 2022, Monetary Board Resolution No. 1218 dated 18 August 2022) amended Sections 403 and 414 and Appendix 134 of the Manual of Regulations for Banks (MORB) and parallel MORNBFI provisions (405-Q, 414-Q, Appendix Q-87). The circular’s own subject line states the package: Amendments to the Regulations on Unit Investment Trust Funds (UITFs).

What Circular 1152 changed, in exam-usable form:

Chapters 7–8 already taught classifications. This section teaches how a TE is allowed to put a new fund on the shelf—the gate every product later sold by CUSP personnel had to pass.

Competence prerequisite before any creation path

Section 414 framing is blunt: a TE may create, administer, and manage UITFs only if it has the competence and the appropriate processes, systems, and infrastructure to administer and market UITFs and manage related risks. It must also maintain a sound client suitability assessment process and adequate risk disclosure to clients.

Creation is therefore not a marketing wish list. It is a governance + prudential + operational readiness exercise supervised by the board and BSP.

Two creation paths: memorize the fork

A TE authorized to perform trust functions may create one or more UITFs subject to prior approval by, or notification to, the Bangko Sentral.

Path A — Creation requiring prior BSP approval

A TE that intends to create a UITF that falls under any of the following categories for the first time shall secure prior approval from BSP:

1. Fixed income fund
2. Multi-asset fund
3. Equity fund
4. Fund-of-funds
5. Feeder fund
6. Multi-class fund
7. Distributing fund

Memory hook: The “first-time restricted seven” = everything except pure money market, plus the structural features (FoF, feeder, multi-class, distributing).

Once the TE already has an existing UITF of the same category previously approved by BSP, later same-category funds shift to the notification path (Path B).

Qualification requirements for prior-approval applicants

A TE seeking approval must:

1. Satisfy applicable prudential criteria under the licensing framework
2. Implement adequate risk management practices
3. Demonstrate operational readiness (personnel, IT systems, policies and procedures, etc.) to manage the UITF it intends to create

Application package (exam-level list)

Within ten (10) banking days from board of directors’ approval of the authority to create the UITF(s), the TE submits to the appropriate BSP supervising department documents that include, among others:

Prior-approval creation is treated as a permissible activity subject to a Type “B” License under the applicable licensing section.

Path B — Creation requiring notification only

A TE that intends to create:

• a money market fund, or
• a fund under the same category as an existing UITF of the TE that was previously approved by BSP,

shall notify BSP prior to offering the new fund to the public (notification path—not a silent launch).

Notification must also be filed within ten (10) banking days from board approval of creation, with a lighter but still formal package (notification letter, application form, secretary’s certificate, joint compliance certification, board-approved Plan Rules and sample KIIDS). For the TE’s initial money market fund, operational readiness documents similar to the prior-approval path are also required.

Notification creation is a Type “C” License activity. BSP reserves the right to issue a notice of objection within sixty (60) calendar days from receipt of the notification.

Processing fee: P25,000 (and the PERA exception)

Upon filing an application for a UITF requiring prior Bangko Sentral approval, the TE is charged a non-refundable processing fee of P25 Thousand (P25,000) for each such UITF. Assessment and collection follow BSP fee guidelines.

Critical exception: Creation of a PERA UITF requiring prior BSP approval is exempted from that processing fee.

Exam traps:

• Fee applies to prior-approval creations, not as a universal tax on every notification-only money market follow-on.
• Fee is per UITF requiring prior approval.
• PERA exemption is explicit—do not invent other exemptions on exam day.

Launching period: one year or lose the permission

Circular 1152 is strict on time-to-market after regulatory clearance:

Consequences of missing the window:

• Prior-approval path → automatic revocation of BSP approval
• Notification path → notification is considered “withdrawn”

The TE must inform BSP in writing of the actual launch date of a UITF. Launch is a reported event, not an informal branch rollout.

Worked timeline (prior approval)

1. Trust committee designs a first-time equity UITF.
2. Board approves authority to create (Day 0).
3. Package filed with BSP by banking day 10.
4. TE pays P25,000 (not a PERA fund).
5. BSP issues approval letter; TE receives it on 15 March 2025.
6. Fund must launch by 15 March 2026 or approval is automatically revoked.
7. TE writes BSP with the actual launch date when the fund opens.

Worked timeline (notification — second money market fund)

1. TE already runs an approved peso money market UITF.
2. Board approves a second money market UITF (different brand name, same category).
3. Notification package filed within 10 banking days.
4. One-year launch clock runs from BSP’s receipt of the notification letter.
5. BSP may object within 60 calendar days; TE still must launch within the one-year window if the notification remains effective.

Conversion and reclassification

Converting a UITF to another fund category, or amending an existing fund so it is reclassified into a new category, is not a free internal label change. It is subject to the same creation requirements—prior approval or notification—as applicable under Items “a” or “b” of the Circular 1152 creation framework.

If you turn a money market fund into an equity fund in substance, you are not “amending a fee schedule”; you are entering the creation / reclassification gate.

What sales staff must still remember

CUSP personnel do not file Type B applications—but they sell products that exist only because someone did. Exam and mystery-shop integrity still require:

1. Selling only board-approved, properly licensed/notified funds on the shelf.
2. Using current Plan Rules / KIIDS, not draft decks for unapproved categories.
3. Never promising that “BSP already approved” a product that is still in notification or pre-launch limbo.
4. Understanding that first-time multi-class or distributing features are approval events, not casual brochure upgrades.

Exam traps for creation framework

1. Listing money market as always prior-approval — money market is the classic notification category (unless other rules force a different treatment; teach Circular 1152’s notification list).
2. Forgetting the “first time” qualifier — the seven categories need prior approval when first created by that TE; same-category follow-ons notify.
3. Mixing launch clocks — approval clock starts on TE receipt of approval letter; notification clock starts on BSP receipt of notification.
4. Charging P25,000 to every fund including PERA prior-approval — PERA prior-approval creation is fee-exempt.
5. Assuming silent board approval is enough — packages must reach BSP within 10 banking days.
6. Ignoring Type B vs Type C — prior approval = Type B; notification = Type C in Circular 1152’s licensing mapping.

One-liner to memorize

Circular 1152 creation fork: first-time fixed income / multi-asset / equity / FoF / feeder / multi-class / distributing → prior BSP approval + P25,000 (PERA exempt); money market or same-category follow-on → notify BSP; launch within 1 year or lose the permission.