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18 July, 2
The Securities and Futures Commission (SFC) of Hong Kong announced that it had signed a Memorandum of Understanding (MOU) with the Autorité des Marchés Financiers (AMF) of France on mutual recognition of funds (MRF) between Hong Kong and France.
The MOU allows eligible Hong Kong funds and French UCITS funds to be distributed to retail investors in France and the public in Hong Kong respectively, through a streamlined authorisation process. The types of funds currently covered are equity funds, bond funds and mixed funds.
The MOU also stipulates a mechanism for regular dialogue and regulatory cooperation between the SFC and the AMF. Cooperation includes, amongst other things, consultation, exchange of information, cross-border supervisory on-site visits of covered management companies and matters of mutual supervisory interest, such as regulatory developments. However, the MOU states that this does not include enforcement actions which are covered by the International Organisation of Securities Commissions' Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information.
This is the first such arrangement between Hong Kong and a member of the European Union, and is part of Hong Kong's continuous development as an international asset management centre. The SFC entered into MRF arrangements with the Financial Market Supervisory Authority of Switzerland late last year and the China Securities Regulatory Commission in 2015.
The SFC has issued a circular (also attached as Appendix B-I to the MOU) covering, amongst others:
- general principles on which the MRF operates;
- types of eligible French covered funds and eligibility requirements for authorisation in Hong Kong;
- application process for authorisation in Hong Kong; and
- regulatory requirements applicable to French covered funds, including operational and ongoing requirements, as well as requirements regarding sale and distribution, offering documents, advertisements and ongoing disclosure.
Further guidance is provided in the frequently asked questions regarding the MRF scheme and the information checklist for application for authorisation of French funds under the MRF scheme. The SFC has also updated the Guide on Practices and Procedures for Application for Authorisation of Unit Trusts and Mutual Funds.
The AMF has issued a similar circular (attached as Appendix B-II to the MOU) regarding the requirements for Hong Kong covered funds and the application process for authorisation in France. A new form of confirmation is provided for confirmation to the SFC of the authorisation of a Hong Kong covered fund by the AMF.
For further information, please contact:
William Hallatt, Partner, Herbert Smith Freehills
William.Hallatt@hsf.com
