The Securities and Futures Commission (SFC) and the Securities Commission Malaysia (SC) today entered into a Memorandum of Understanding (MoU) to strengthen cooperation and information exchange to facilitate an expanded mutual recognition of funds (MRF) scheme and a simplified dual Initial Public Offering (IPO) listing framework, marking a new milestone in the connectivity between Hong Kong and Malaysian capital markets (Note 1).
The MoU expands the range of investment products eligible under MRF (Note 2) and establishes a simplified framework for dual IPO listings between the two markets.
Ms Julia Leung, the SFC’s Chief Executive Officer (CEO), and Dato' Mohammad Faiz Azmi, the SC Chairman, signed the MoU in the presence of The Honourable Christopher Hui, Secretary for Financial Services and the Treasury of the HKSAR Government, Tan Sri Johan Mahmood Merican, Secretary General of Treasury, Ministry of Finance Malaysia, Datin Paduka Azalina Adham, SC Managing Director, and Dr Kelvin Wong, the SFC’s Chairman, in Kuala Lumpur, Malaysia.
A delegation of 33 Hong Kong industry leaders stood witness to the signing, representing a broad spectrum of asset managers, market makers and investment banks. This delegation – which includes the chairpersons of the Hong Kong Investment Funds Association and the Chinese Asset Management Association of Hong Kong – brought together asset managers whose collective portfolios represent over 80% of the total market capitalisation of the Hong Kong exchange traded funds and leveraged and inverse products market.
The SFC’s Chairman Dr Kelvin Wong remarked, “For decades, Hong Kong and Malaysian capital markets have benefitted from a productive regulatory partnership anchored in mutual trust and a firm commitment to evolving with market needs. Our markets are well placed to complement each other as vital financial gateways connecting global capital respectively with the Chinese Mainland and Southeast Asia. We will continue to strengthen our partnership to drive shared prosperity.”
“This MoU signifies a substantive step in our regulatory cooperation with Malaysia to broaden cross-border investment channels and choices for investors in both markets,” said Ms Julia Leung, the SFC’s CEO. “It also underscores our shared commitment to promote market development and diversification in Asia through enhanced connectivity, robust regulatory standards and strong investor protection.”
The SC Chairman Dato' Mohammad Faiz Azmi said the MoU marks a significant milestone in strengthening capital market connectivity between Malaysia and Hong Kong. “This MoU establishes a practical framework to facilitate greater cross-border investment, broaden access to our respective capital markets and enhance investment opportunities for issuers and investors in both jurisdictions. By supporting more cross-border listings and product availability, it creates new opportunities for investors and intermediaries in both jurisdictions, while deepening financial linkages and investment activity between Malaysia and Hong Kong,” he said.
Further details of the MRF scheme are set out in the SFC’s circulars issued today (Note 3), and the SC’s Guidelines for the Offering, Marketing and Distribution of Foreign Funds (Note 4).
To facilitate the cross-listings of equity securities, The Stock Exchange of Hong Kong Limited has today added Bursa Malaysia Securities Berhad (Note 5) to the list of Recognised Stock Exchanges.
Notes:
- The MoU serves as an updated cooperation framework following the two regulators’ Declaration on Mutual Co-operation on Development of Islamic Capital Market and Islamic Collective Investment Schemes on 9 November 2009, which established a framework for the mutual recognition of Islamic funds for public offering in both markets.
- The eligible product scope is expanded to include non-Islamic exchange traded funds and leveraged and inverse products, and real estate investment trusts.
- The SFC today issued two circulars to provide details on the MRF scheme: “Mutual Recognition of Funds (MRF) between Malaysia and Hong Kong” and “Cross-listings of Malaysian Real Estate Investment Trusts in Hong Kong”.
- The Guidelines for the Offering, Marketing and Distribution of Foreign Funds has been updated to include specific requirements on the MoU, particularly to paragraph 3.01(a), Appendix I – Part 1, and Appendix 5.
- Bursa Malaysia Securities Berhad is a stock exchange established under the Securities Commission Malaysia Act 1993 and supervised by the Securities Commission Malaysia.
