Hong Kong SFC to implement measures to streamline Hong Kong retail fund regime codes, effective in November

The Securities and Futures Commission (SFC) will implement a number of proposals set out in its consultation conclusions published on 7 October to enhance the regulatory regime for SFC-authorised retail funds in Hong Kong. The regulatory enhancements to the Code on Unit Trusts and Mutual Funds are scheduled to take effect in November 2026, underscoring the SFC's commitment to investor protection and aligning Hong Kong's regulatory framework with international standards. Specifically, the introduction of a Value-at-Risk (VaR) calculation methodology for managing derivative risk exposure of retail funds will help support more diversified fund strategies, thereby enriching the choice of retail products. Other facilitation measures include streamlining the requirements for accepting management companies and feeder funds, providing greater operational flexibility for fund managers. At the same time, strengthened liquidity risk management and safeguard measures for money market funds will also enhance the resilience of Hong Kong retail funds amid rapidly changing market conditions. The SFC said that respondents to the consultation generally supported the proposals and considered that the relevant amendments would enhance the competitiveness and attractiveness of Hong Kong's retail fund regime. After considering the comments received and further engagement with the industry, the SFC will adopt the proposals with appropriate amendments or clarifications. Christina Choi, Executive Director of the SFC's Investment Products Division, said that these enhancement measures will strengthen investor protection and help advance Hong Kong's retail fund regime to keep pace with the times, ensuring it remains competitive to keep abreast of evolving market demands. The SFC will continue to seize opportunities arising from product innovation to consolidate Hong Kong's position as a leading international asset and wealth management centre. Corresponding amendments to the Code on Pooled Retirement Funds, the SFC Code on MPF Trillions of Products, the Code of Practice for Issuance of Investment-linked Assurance Schemes and the Code on Real Estate Investment Trusts will also be implemented. The four revised codes will be gazetted on 16 October 2026 and take effect on 1 November 2026. Existing SFC-authorised funds will generally be given a 12-month transitional period from the effective date of the revised Code on Unit Trusts. The same implementation timetable will also apply to the revised Code on Pooled Retirement Funds, the SFC Code on MPF Trillions of Products, the Code of Practice for Issuance of Investment-linked Assurance Schemes and the Code on Real Estate Investment Trusts. The SFC said that to assist the industry in transitioning to the new requirements, it will publish supplementary guidance, frequently asked questions and revised templates in due course.