Hong Kong SFC Streamlines UCITS Fund Approvals

by Mary Swire, Tax-News.com, Hong Kong

05 April 2007

Hong Kong's Securities and Futures Commission has simplified the authorisation of European UCITS III funds with new measures streamlining the processing of funds of funds, guaranteed funds and index funds.

The SFC first issued a set of Interim Measures (Note 2) to facilitate the processing of UCITS III fund applications in Hong Kong on 31 March 2005. The SFC is the first regulator in Asia to have issued measures to enable UCITS III funds to be processed. As a result of the SFC’s proactive measures, over 1,300 UCITS III funds have become SFC-authorised funds.

UCITS stands for Undertakings for Collective Investment in Transferable Securities. Such funds fall under a set of regulations issued by the EU Commission that govern publicly available funds domiciled in the EU member states.

Since the issue of the Interim Measures, the SFC has received a growing number of authorisation applications for UCITS III funds with special features. These specialised UCITS III funds have been considered and authorised by the SFC on a case-by-case basis. To facilitate the processing of future authorisation applications, streamlined measures have now been devised based on the principles adopted in the Interim Measures and the SFC’s experience in authorising various specialised UCITS III funds.

Under these streamlined measures, the SFC will accept and process applications for authorisation in respect of UCITS III funds from Luxembourg, Ireland and the UK with special features that fall under Chapter 8 of the Code on Unit Trusts and Mutual Funds (Code) on the basis that, in substance, these funds already comply with the Code. The relevant disclosure and other requirements in the Code for various special features are also set out in the streamlined measures to facilitate the authorisation process. To date, UCITS III funds seeking SFC authorisation have primarily come from these three jurisdictions and UCITS III funds domiciled in other jurisdictions will continue to be considered on a case-by-case basis.

“This is another market-facilitating measure taken by the SFC," commented Alexa Lam, the SFC’s Executive Director of Intermediaries and Investment Products.

Investors will benefit from having more investment choices from a large array of funds authorised by the SFC under the streamlined measures,” Lam added.

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