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Hong Kong regulator to amend rules for mutual funds

Hong Kong's Securities and Futures Commission, or SFC, is seeking public input on proposed rule amendments for regulated unit trusts and mutual funds in order to address risks posed by financial innovation and fast-moving market developments.

The proposed amendments include strengthening requirements for management companies, trustees and custodians, providing greater flexibility and enhanced safeguards for funds' investment activities and introducing new fund types, the regulator said.

The proposal to update the regulatory regime is part of SFC's strategy to ensure that the rules governing public funds remain robust and aligned with international standards. It is seeking comments on the proposed amendments on or before March 19, 2018.

Unit trusts and mutual funds constitute a large portion of the financial products authorized by the SFC for offering to the Hong Kong public. As of Sept. 30, there were 2,188 public funds authorized by the SFC, representing 79% of all SFC-authorized collective investment schemes. There were 753 Hong Kong-domiciled funds and their AUM amounted to US$151 billion.