Hong Kong’s Securities and Futures Commission proposes new rules amid rising China players in fund industry
The SFC wants new rules to reduce risks and strengthen regulation of fund industry, which is flooded with mainland newcomers
The Securities and Futures Commission has proposed a number of rules on fund houses and their custodians to address risks posed by financial innovation and strengthen regulation in Hong Kong’s fund industry which is flooded by newcomers, according to a consultation paper issued by the regulator on Monday.
The commission will collect views over the next three months until March 19 on a number of proposed changes to the Code on Unit Trusts and Mutual Funds for the 2,188 funds it has authorised.
The consultation paper follows October’s implementation of a range of new “manager in charge” regulations that required firms to hire SFC-licensed professionals for senior management roles in eight key areas at brokerages, fund management companies and financial advisory firms.
Hong Kong has seen waves of mainland Chinese investors and professionals buying into local financial firms and joining the fund industry in the recent years, many of whom lacked experience in the financial field outside the mainland.
According to the SFC, 13 per cent of local brokerages, fund houses and financial advisers are now owned by mainland shareholders, overtaking US investors who were previously the largest group of non-Hong Kong owners of local firms.
Monday’s proposed rules focused on strengthening operational requirements for fund management companies, trustees and custodians.
