Reporting of pricing errors of UCITS schemes

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Authored by: Eve Leung and Maggie Choi

On 30 November 2021 the Hong Kong Securities and Futures Commission (SFC) issued a new Ongoing Compliance Form for Reporting Pricing Errors of UCITS schemes (Form) with a view to streamlining and standardising the processing of reporting pricing errors of UCITS schemes to the SFC. The SFC has updated Q4 and issued new Q4A of the FAQs on Post Authorisation Compliance Issues of SFC-authorised Unit Trusts and Mutual Funds to explain its requirements. The Form is also applicable for reporting pricing errors of any overseas-domiciled scheme which is authorised under any mutual recognition of funds arrangements between Hong Kong and an overseas jurisdiction.

The Form is split into two parts:-

Part A (to be submitted by the manager upon the discovery of the pricing error)

This part requires general information on the nature and discovery of the error, the affected scheme(s) and the impact on Hong Kong investors.

Part B (to be submitted by the manager to report the final compensation arrangements and/or remedial measures)

This part requires further details of the error, including the reasons and parties responsible for the error, compensation to Hong Kong investors and the scheme(s), and the remedial measures. The manager is also required to provide prescribed confirmations including ones in respect of compliance with 10.2, 10.2A and 10.2B of the Code on Unit Trust and Mutual Funds and that the depositary and the home regulator (if the error is required to be notified to the home regulator) do not have any further comment on the error and the remedial measures.

The Form has to be signed by a senior-ranking executive of the management company (or an appropriate person designated by the senior-ranking executive) with overall responsibility for the reporting of the error to the SFC.

The SFC may require the submission of further information on a case-by-case basis.