“Change and resilience”: the SFC’s keynote messages for fund managers

On 7 June 2021, Ms Julia Leung, the Deputy Chief Executive Officer and Executive Director, Intermediaries, of the Securities and Futures Commission (SFC), gave the keynote address at the Hong Kong Investment Funds Association’s annual conference.

Ms Leung noted the highs and lows of 2020, citing as a high the “spectacular performance” of Hong Kong’s asset and wealth management industry: “asset managers’ annual net profits were up 72% and hedge funds’ soared over 400%”.

According to Ms Leung’s speech, below is an outline of some of the developments we can expect in the months ahead:

• Liquidity risk management: The SFC is “about to wrap up a thematic inspection” of fund managers’ liquidity risk management. We can anticipate that the SFC will issue a report with a summary of findings. This follows a circular of 2019 which highlighted deficiencies or inadequacies noted by the SFC in fund managers’ liquidity risk management practices: Managing the liquidity risk of funds.
• Hybrid working arrangements: The SFC anticipates that hybrid working arrangements are likely to remain with us for some time. The SFC plans to provide more guidance on “our expectations and share examples of good practices for remote work access, information security, BCPs and staff conduct”.
• Sustainable finance: The SFC, together with other IOSCO members, is exploring “a pathway to making sustainability-related disclosures mandatory for corporates and asset managers”. In addition, the SFC consulted last year on proposals to require fund managers to include climate-related risks into investment and risk management processes and make appropriate disclosures. The SFC’s consultation conclusions will be published in due course. In the meantime here is a link to our bulletin: SFC consultation on changes to the fund manager code in relation to climate-related risks.
• Wealth Management Connect: Ms Leung commented that we are “now in the home stretch” for the launch of the Wealth Management Connect scheme which will expand sales of investment products to the Greater Bay Area. Ms Leung noted that whilst Hong Kong banks have traditionally distributed products in a face-to-face environment, the scheme will require a shift to online platforms and mobile apps.

Ms Leung concluded her speech by noting that “change is the only constant” and urging the audience to “go green, go tech and stay resilient”.

The full text of Ms Leung’s speech is available on the SFC’s website: Change and resilience: Fund management in the new normal.