The Securities and Futures Commission of Hong Kong (the “SFC”) and the Commission de Surveillance du Secteur Financier (the “CSSF”) signed on 15 January 2019 a Memorandum of Understanding concerning Mutual Recognition of Covered Funds (“MRF”) between both countries.
In relation to MRF, the SFC issued on 28 February 2020 an updated circular, guidance notices, application forms, checklists and FAQs (notably regarding the application procedures for investment funds under the revamped authorization process).
The main changes that were made by the updates are the following:
- Key facts statements (“KFS”) templates have been updated. It is now required to include risks regarding renminbi shares and specific disclosures regarding the use of derivatives.
- It is no longer possible to follow the standard application process under the “revamped authorization process” for Luxembourg UCITS that invest more than 50% of their NAV in derivative instruments or funds that use guaranteed features. In this case, the non-standard application process has to be used in Hong Kong.
- If a previously authorized UCITS changes after its authorization and, as a result, no longer meets the eligibility criteria, the SFC must be informed as soon as possible.
- The SFC removed the possibility to prepare a long-form audit report. It is now mandatory to use the SFC specific report.