News & Insights

Mutual recognition of funds: Hong Kong and Thailand

On 20 January 2021, the Securities and Futures Commission (SFC) and Thailand’s Securities and Exchange Commission (SEC) signed a Memorandum of Understanding concerning mutual recognition of Covered Funds and Covered Management Companies and related Cooperation (MoU)establishing a bilateral framework for mutual recognition of publicly offered funds (MRF) between Thailand and Hong Kong. On the date of signing the MoU, the SFC and SEC each issued a circular on MRF (SFC Circular and SEC Circular).

The MRF allows for eligible Thai collective investment schemes (CIS) approved by the SEC (Thai Covered Funds) and Hong Kong CIS authorized by the SFC (HK Covered Funds) to be approved and authorized (as applicable) under a streamlined vetting process and distributed in each other’s jurisdiction, subject to specific requirements prescribed by each jurisdiction.

Eligible types of funds

At the moment, only the following types of Thai Covered Funds and HK Covered Funds are eligible:

a)general equity funds, bond funds and mixed funds;
b) unlisted index funds;
c) passively managed index tracking exchange traded funds (ETF) including physical gold ETFs; and
d) feeder funds, where the underlying fund is not itself a feeder fund and falls within one of the fund types above.

The relevant fund’s net exposure resulting from derivative investment must not exceed 100% of its net asset value.

Accessing Hong Kong

To access the Hong Kong market, the Thai Covered Fund must be approved by the SEC for public offering in Thailand. It must be managed by a Thai management company with the relevant licence from the Ministry of Finance to manage CIS under Thai law. Any investment delegates must be operated in a jurisdiction with an acceptable inspection regime – the list is available here: The management company must also appoint a firm in Hong Kong to serve as its Hong Kong representative. The eligibility requirements and other requirements applicable to the Thai Covered Fund and Thai management company are set out in the SFC Circular.

Accessing Thailand

In order to enjoy a streamlined process of SEC approval under the arrangement, a HK Covered Fund must be authorized by the SFC and managed by a Hong Kong management company licensed to conduct Type 9 regulated activity (asset management). Any investment delegates must be based in a jurisdiction recognized by the SEC. The management company must also appoint a Thai representative. Specific eligibility requirements and other requirements applicable to the HK Covered Fund and Hong Kong management company are detailed in the SEC Circular.


The MRF scheme arrangement is expected to be implemented within six to twelve months and the SFC and SEC will publish separate announcements informing the industry of the effective implementation of the arrangement.

In addition, the two regulators have agreed to expedite the approval process of a local feeder fund investing in an MRF-eligible Thai or Hong Kong master fund. The SFC has issued FAQson this topic.

The MRF with Thailand is the latest addition to the suite of MRF schemes already in place between Hong Kong and other markets. The full list of the SFC’s mutual recognition of funds arrangements is available here:

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