Investment funds head Jeremy Lam was recently interviewed by Ignites Asia, a Financial Times publication, discussing a new streamlined process that will halve fund approval times in Hong Kong.
Jeremy commented: “The streamlined process for standard applications is designed for asset managers adding a new sub-fund to an authorised Hong Kong fund umbrella, given that the use of derivatives is for hedging purposes only, and there is no change in key personnel.”
Finalising the approval of a new fund in the shorter time frames will still be dependent on asset managers’ timely replies to the regulator. Under the newly revamped process, managers will be expected to respond within a set timeline when receiving questions from the SFC, and the streamlined framework will work only if managers are able to do that, Jeremy said.
It has been the case that some managers have left it up to the SFC to determine whether elements of an application comply with regulations, causing lots of back and forth, but this is no longer going to be applicable. Before you give that certification, you better be absolutely sure that what you are certifying is correct. I think it is going to be quite interesting to see how the industry works with its legal advisors in getting to that position,” he said.
The new approach to the fund approval process may therefore mean that asset management companies have to spend more time at the initial application stage to ensure that the application is compliant. Managers will need to be far more organised and understand what has been certified in the first place. They will also have to put procedures in place internally to monitor that this remains ongoing, true and accurate, and will have to notify h the SFC when this is not the case, Jeremy concluded.