The Hong Kong Securities and Futures Commission has finalized reforms to its regulatory regime for authorized retail funds following its 2025 consultation, adopting the proposals with modifications and clarifications. The revised Code on Unit Trusts and Mutual Funds will introduce a Value-at-Risk approach alongside the existing net derivative exposure approach, giving eligible funds greater flexibility to use derivatives while strengthening liquidity risk management and money market fund safeguards in line with updated international standards. The changes will also streamline management company acceptability and feeder fund requirements, providing fund managers with greater operational flexibility. Consequential amendments will apply to the codes governing pooled retirement funds, Mandatory Provident Fund products, investment-linked assurance schemes and real estate investment trusts. The five revised codes will be gazetted on Oct. 16, 2026, and take effect on Nov. 1, 2026. Existing authorized funds will generally receive a 12-month transition period, and the commission plans to issue supplementary guidance, frequently asked questions and revised templates.
Hong Kong Securities and Futures Commission finalizes retail fund reforms introducing a VaR option and stronger liquidity safeguards
The Hong Kong Securities and Futures Commission has finalized retail fund reforms introducing a Value-at-Risk option for derivatives and stronger liquidity and money market fund safeguards. The revised rules also streamline management company and feeder fund requirements. They take effect on Nov. 1, 2026, with a general 12-month transition period for existing authorized funds.