The Hong Kong Securities and Futures Commission recommends optimizing retail fund regulations to enhance global competitiveness.

On October 22, the Hong Kong Securities and Futures Commission launched a three-month consultation on proposed amendments to the Code on Unit Trusts and Mutual Funds ("Unit Trust Code"). The proposed amendments aim to align the regulatory regime for approved funds in Hong Kong with the latest international regulatory standards, and broaden the product choices for investors. It is reported that unit trusts and mutual funds account for the majority of financial products approved by the Hong Kong Securities and Futures Commission for sale to the Hong Kong public. As of June 30, 2025, there were a total of 2424 funds approved by the Commission, accounting for 80% of all approved collective investment schemes. According to the information, the key revisions to the Unit Trust Code include the acceptance of alternative standards to regulate the investment of derivative instruments in retail funds; updating the provisions on fund liquidity risk management, and enhancing the regulatory requirements for money market funds. Once implemented, these proposals will promote the development of the fund market and strengthen the resilience of the asset management industry in Hong Kong. The Commission proposes to accept the risk value (Value-at-Risk) calculation method in addition to the current net exposure limit for derivative instrument risk. This will allow fund managers to use derivative instruments more flexibly and align with the practices in major fund jurisdictions. Ms. Choi Fung Yee, Executive Director of the Investment Products Division of the Hong Kong Securities and Futures Commission, stated: "These optimization measures demonstrate the Commission's commitment to promoting the development of the public fund market with a robust regulatory framework, as well as consolidating Hong Kong's position as a leading international asset and wealth management center. We will continue to promote product innovation while safeguarding the interests of investors to ensure that our regulatory regime maintains a competitive edge globally." The Securities and Futures Commission will progressively facilitate the sale of new funds to allow retail investors to participate in the private placement market. Initially, listed closed-end alternative asset funds will be allowed to enter the market, followed by permitting non-listed funds approved by the Hong Kong Securities and Futures Commission to invest more flexibly in a higher proportion of low-liquidity assets on a case-by-case basis, provided that the fund has robust safeguards in place for overall liquidity risk management. It is also proposed to make corresponding revisions to the relevant provisions of the Codes on Mandatory Provident Fund Products, Funds Retirement Schemes, Investment-Linked Assurance Schemes, and Real Estate Investment Trusts.