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Hong Kong and Netherlands sign MRF agreement

The Securities and Futures Commission (SFC) and the Dutch Authority for Financial Markets (AFM) have entered into a memorandum of understanding (MoU) on mutual recognition of funds (MRF).

The agreement means that eligible Hong Kong Collective Investment Schemes (Cis) and Dutch Undertakings for Collective Investment in Transferable Securities (Ucits) can be distributed in each other’s market subject to case-by-case authorisation.

It marks the first time that recognised Dutch funds will be able to seek authorisation from the SFC for sale in Hong Kong, according to an SFC circular issued on 15 May.

“This new framework with the AFM will open up opportunities for the asset management industries in both markets and provide investors in Hong Kong and the Netherlands with more investment choices,” said Ashley Alder, the SFC’s  chief executive officer, in a joint statement with his Dutch co-signatory, Gerben Everts.

He added that the Hong Kong financial regulator will continue to expand its MRF arrangements with other jurisdictions.

Hong Kong has previously signed similar MRF agreements with mainland ChinaSwitzerland and the UK. Most recently, it signed an MoU with Luxembourg that agreed a process to reduce the timeline for approvals of cross-border fund authorisation.

The latest MoU establishes a framework for exchange of information, regular dialogue as well as regulatory cooperation for the cross-border distribution of eligible Hong Kong Cis and Dutch Ucits.  The arrangement also applies to the authorisation process for other qualified European Union Ucits managed by Dutch fund managers.

Dutch funds applying for SFC authorisation have to be general equity, bond, mixed funds or index funds (excluding exchange-trade funds). Once authorised, the funds can only be distributed in Hong Kong by SFC licensed intermediaries, according to the SFC circular.

The SFC and the AFM may consider extending the MRF to include other types of funds in the future within the MoU, according a concurrent AFM circular.

“This newly established bridge between the Netherlands and Hong Kong constitutes an important stepping stone for the Dutch asset management industry seeking to develop activities in Asia,” said Everts, board member of the AFM in the statement.

Part of the Mark Allen Group.