Mutual recognition of funds: SFC and FCA sign addendum in preparation for Brexit

On 12 September 2019, the Securities and Futures Commission (SFC) and the UK’s Financial Conduct Authority (FCA) published an addendum to the Memorandum of Understanding (MoU) entered into between the parties in October 2018. The MoU established a bilateral framework for public retail funds to be distributed to investors in each other’s jurisdiction under a streamlined process, as summarised in our October 2018 article.

The addendum has been signed to ensure that the UK-Hong Kong mutual recognition of funds arrangement will continue to operate in a smooth manner after the UK leaves the European Union.

The addendum removes the reference in the MoU to UCITS as a collective scheme authorised in accordance with European Parliament directives, and amends the definition of ‘UK UCITS’ to a collective investment scheme which is authorised as a UK UCITS by the FCA.

The addendum will enter into force on the date European Union laws cease to have direct effect in the UK. The UK is currently scheduled to leave the European Union on 31 October 2019.