The Securities and Futures Commission of Hong Kong is consulting interested parties about its proposals for the regulation of the asset management industry, with 'investor protection' and point-of-sale disclosure in mind.

The SFC formulated the proposals after looking at the policies of other regulators around the world, also taking into account the observations and views of Hong Kong's powerful business lobby.   

It proposes to make changes to its Fund Manager Code of Conduct (FMCC) and the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct).

The main planned changes to the FMCC are in respect of securities lending and repurchase agreements, custody of fund assets, liquidity risk management, and the disclosure of debt by fund managers. The regulator wants to change the Code of Conduct to offset the conflicts of interest that might occur in the sale of investment products and force intermediaries to disclose more things at the point of sale by:

restricting an intermediary from representing itself as 'independent' or using any term(s) with a similar inference if that intermediary receives commission or other monetary or non-monetary benefits or has links or other legal or economic relationships with product issuers that are likely to impair its independence; and

requiring an intermediary to disclose the range and maximum dollar amount of any monetary benefits received or receivable that are not quantifiable prior to or at the point of sale.

Interested parties are invited to submit their comments to the SFC on or before 22 February 2017.