Hong Kong SFC concludes consultation on asset management regulation

Hong Kong SFC

The Securities and Futures Commission (SFC) has today released consultation conclusions on proposals to enhance asset management regulation and point-of-sale transparency. The SFC also launched a further consultation on disclosure requirements applicable to discretionary accounts.

The SFC will implement the enhancements to the Fund Manager Code of Conduct (FMCC) with certain modifications and clarifications.

To address conflicts of interest in the sale of investment products, the SFC will also implement the proposed approach to govern the use of the term “independent” by intermediaries and to enhance disclosure of trailer fees, commissions and other monetary benefits.

These enhancements ensure our regulations are properly benchmarked to evolving international standards and strengthen Hong Kong’s position as a major asset management centre,” said Mr Ashley Alder, the SFC’s Chief Executive Officer. “The approach we have adopted to address conflicts of interests and incentives is calibrated to Hong Kong’s current market conditions.

We will however actively consider the merits of pay-for-advice models in light of local and international market and regulatory developments,” he added.

The revised FMCC will become effective 12 months after it is gazetted and the amendments to the Code of Conduct will become effective nine months following gazettal. The SFC will publish frequently asked questions to provide further guidance to the industry on the implementation of the proposals.

Further, the SFC has commenced a two-month consultation on the proposed requirements for disclosure of monetary and non-monetary benefits by licensed or registered persons to discretionary account clients.

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