Hong Kong’s securities regulator has proposed sweeping rule changes to give retail investors broader access to private credit markets and allow fund managers greater flexibility in using derivatives – part of a push to align the city’s fund regime with global standards and enhance its competitiveness as an international financial hub.
The Securities and Futures Commission (SFC) on Wednesday launched a three-month public consultation on proposed amendments to the Code on Unit Trusts and Mutual Funds, which governs how authorised funds are structured and operated.
“The proposed amendments are aimed at ensuring SFC regulation of our mutual fund sector is in line with international standards, promoting product innovation and enhancing the competitiveness of Hong Kong as an international financial centre,” said Christina Choi Fung-yee, the SFC’s executive director of investment products, in an interview.
“We want the rule changes to attract more fund managers from the US and Europe to bring their fund products to Hong Kong, while also allowing retail investors to have more product choice,” she added.
Under the proposal, unlisted mutual funds would be allowed to invest up to 50 per cent of their assets in private credit or other illiquid assets, up from the current cap of 15 per cent. The move follows a February decision that gave listed closed-end funds the freedom to invest in private equity and alternative assets without limit.
“These measures would enable retail investors to access private credit, so as to allow them to have more choice of investment,” Choi said.