The advisors include Da Cheng International Asset Management, Essence Asset Management, GF International Investment Management and BEA Union Investment Management.
The former three firms are subsidiaries of their respective mainland parents while BEA Union is a joint venture between the Bank of East Asia and Germany’s Union Asset Management.
The four firms received approval on 17 October, according to a statement from Amac.
Last month, the association announced that firms advising on SAR-listed stocks tradeable via the mainland-Hong Kong Connect are required to register with the Amac.
Setting up a firm in Hong Kong and holding licenses issued by the Securities and Futures Commission on advising on securities (type 4) and asset management (type 9) are the prerequisites for a firm to obtain Amac registration. The firms with the mentioned licenses are typically asset managers.
Amac registration enables a firm to be a qualified advisor to mainland institutions on Hong Kong equity investments, portfolio allocation and risk control. The onshore institutions that may require the service include mainland asset managers without research coverage of the Hong Kong stock market.
Rex Lo, managing director for business development at BEA Union Investment, told FSA that he believes the mainland financial regulators want tighter control of advisors involved in the Connect programme.
Rex Lo, BEA Union Investment
“It is a soft approach of the mainland regulators to monitor firms that provide services onshore yet out of its own jurisdiction,” said Lo.
The registration requirement is an extension of the regulator’s new guidelines, which aim to increase scrutiny of the mainland fund industry, he added.
“As the regulator reckons the channel connecting the mainland and Hong Kong stock markets is becoming more popular as a mid- or long-term allocation, they want to regulate this part of cross-border flows by logging the activities reported by the advisors,” he said.
In fact, advisories for Hong Kong equities have existed for years. But there is a “missing link” in monitoring this particular part of the industry, said Lo, adding that the registration rule will help mainland asset managers find the more qualified advisors.
“The request for such registration clears up the grey area of whether a firm is a legitimate advisor or not,” he continued.
He believes foreign asset managers of a certain scale and research coverage for the asset class will welcome the idea.
