SFSA Outlines the Rules of the Game

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    Stockholm (NordSIP) – The team of fund-selection experts that was assembled last year at the Swedish Fund Selection Agency (SFSA), aka Fondtorsnämnden (FTN), is starting to produce its first results. On 17 February, the agency published a partial draft of the procurement material that will be used in its upcoming fund searches. As the design and scope of the exercise are slowly taking shape, asset managers who aspire to secure a spot on the Swedish premium pension fund platform should pay attention.

    The documents revealed at this point include Procurement Guidelines that provide useful background information and definitions; some general Exclusion grounds and mandatory requirements; a Fund Specification form; and an example Request for Proposal questionnaire.

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    The process described in the guidelines appears straightforward. It is evident that transparency is of utmost importance to the SFSA. The agency intends to conduct each search in a similar systematic and logical manner, following a strict and well-communicated timeline. As to the common exclusion and inclusion criteria that all applicants will be subject to, these reflect the current best-practice approach, offering end investors a minimum safety threshold.

    Perhaps of particular interest to NordSIP’s readers, several sustainability-related provisions are included in the requirements document. It becomes clear that only funds classified under Article 8 or 9 according to the EU Sustainable Finance Disclosure Regulation (SFDR) will be considered by SFSA. All fund managers on the platform are expected to be UN PRI signatories. They should also certify that they have processes in place to identify and assess if portfolio holdings are associated with violations of any of the ten principles of the UN Global Compact, the OECD Guidelines for Multinational Enterprises, and the UN Guiding Principles on Business and Human Rights (UNGPs). The managers should also be able to accommodate several norm-based exclusions.

    Long-term shareholder engagement is another priority, according to the document. All aspiring asset managers should be able to certify that they have developed an engagement policy that describes how they integrate shareholder engagement into their investment strategy.

    To get a proper glimpse of the type of information fund managers would be expected to provide once the race begins in earnest, it is worth reading through the RFP example included in the newly published package. The forty-page-long questionnaire might strike some as daunting, yet it is a necessary step in the agency’s ambition for maximum clarity.

    There is also a brief window of opportunity, until 10 March, to send in written comments and questions on the procurement material to the SFSA. It is worth noting that these will be treated in accordance with the Swedish principle of public access to documents, i.e., they are subject to disclosure upon request.

    Image courtesy of Gerd Altmann from Pixabay
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