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Hong Kong, UK ink MRF agreement

The new link adds to Hong Kong's existing funds-related agreements with China, Switzerland and France.

The UK’s Financial Conduct Authority (FCA) and Hong Kong’s Securities and Futures Commission (SFC) have signed a deal that will allow eligible Hong Kong public funds and UK retail funds to be distributed in each other’s market through a streamlined process, as reported by FSA‘s sister publication, Investment Adviser.

The memorandum of understanding sets up a framework for the exchange of information, regular dialogue and regulatory cooperation in relation to the cross-border offerings.

The SFC has signed other mutual recognition of funds (MRF) agreements with China, Switzerland and France.

Choice and diversification

Andrew Bailey, chief executive of the FCA, said: “We are very pleased to have agreed this framework, which paves the way to offering consumers greater choice and diversification in their investments.

“It reflects the UK’s commitment to open financial markets supported by effective regulation, which delivers equivalent outcomes. We will continue to work closely with the SFC, both in connection with cross-border funds offerings and in a wider areas of mutual benefit.”

His Hong Kong counterpart, SFC chief executive Ashley Alder, added: “This new cooperation framework with the FCA will not only bring benefit to the asset management industries in the UK and Hong Kong, but also offer investors in both markets more investment choices.

“Equally important, expanding the mutual recognition of funds framework is consistent with our strategic goal of positioning Hong Kong as an international asset management centre.”

Eligibility criteria

Funds applying for authorisation in either market must fall within one or more than one of the following types:

  • General equity funds, bond funds and mixed funds;
  • Feeder funds;
  • Fund of funds;
  • Index funds; or
  • Passively-managed, index-tracking exchange-traded funds (ETFs).

Other types of funds may be considered in future.

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