The Hong Kong Securities and Futures Commission (SFC) has launched a three-month consultation on proposed amendments to the Code on Unit Trusts and Mutual Funds to align the regime for SFC-authorised retail funds with updated international standards and broaden the range of products available to investors. The package focuses on alternative approaches to derivatives risk management, updated liquidity risk management requirements and enhanced rules for money market funds. Key proposals include accepting a Value-at-Risk approach alongside the existing net derivative exposure limit, and a step-by-step approach to enable new fund offerings that provide retail access to private markets. This would start with admitting listed closed-ended alternative asset funds, followed by case-by-case flexibility for SFC-authorised unlisted funds to invest a larger portion in illiquid assets, subject to robust safeguards around overall liquidity risk management. The SFC also proposed consequential amendments to related provisions in the SFC Code on MPF Products, the Code on Pooled Retirement Funds, the Code on Investment-Linked Assurance Schemes and the Code on Real Estate Investment Trusts. Comments are due by 21 January 2026.
Hong Kong Securities & Futures Commission 2025-10-22
Hong Kong Securities and Futures Commission launches consultation on Unit Trusts and Mutual Funds Code changes including a VaR derivatives option and stronger liquidity standards
The Hong Kong Securities and Futures Commission has initiated a consultation on proposed amendments to the Code on Unit Trusts and Mutual Funds to align with international standards and expand retail fund offerings. Key proposals include adopting a Value-at-Risk approach for derivatives risk management and enabling retail access to private markets through new fund offerings. The consultation also suggests changes to related codes, including those on MPF Products and Real Estate Investment Trusts.