As Shenzhen-Hong Kong Stock Connect launches, the SAR inks an agreement with Switzerland as well

28 December 2016

Hong Kong’s SFC and the Swiss Financial Market Supervisory Authority have signed a memorandum of understanding that will enable cross-border retail sales of funds between the two jurisdictions.

Investment funds partner Jeremy Lam commented on the development in Fund Selector Asia: “What is interesting now is rather than simply adding Switzerland to the list of regimes where [the SFC authorises a fund for sale in Hong Kong], what they’ve now issued is an arrangement which is basically mutual.”

Currently, there is a well-established process for recognised jurisdiction schemes in Europe that allows the distribution of Ucits funds in Hong Kong, but not the other way around, he said.

In the case of Switzerland, there is no existing channel under which a Hong Kong-domiciled fund could be sold to the retail public in Switzerland and vice-versa. The move suggests that SFC is now looking at entering into schemes that are mutually beneficial rather than making Hong Kong just a distribution hub, where offshore funds are authorised to be sold to the retail public, he added.

There will not be a sudden rush of cross-border funds going from Hong Kong to Switzerland and vice-versa. Just like the Hong Kong-China MRF, which took two years of discussion, it is something that will evolve over time, Jeremy concluded.

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