The Securities and Futures Commission (SFC) will expedite the processing of applications from simple investment funds by launching the Fund Authorisation Simple Track (FASTrack) on 4 November 2024.
Under FASTrack, the SFC aims to grant fund authorisations within 15 business days after receiving complete and quality submissions from applicants (Notes 1 and 2). The new approach will cover simple funds from jurisdictions which have mutual recognition of funds (MRF) arrangements with the SFC (Notes 3 and 4).
As the regulatory regimes of MRF jurisdictions provide comparable investor protection to that of Hong Kong and the SFC has entered into cooperation arrangements with their home regulators, the SFC considers it appropriate to streamline the authorisation process of eligible funds. These include equity, bond and mixed funds, among others (Note 5).
“As part of our dedication to deepen and broaden the capital market, FASTrack would be a boon for both asset managers and investors, as it will provide more clarity and certainty for fund launches in Hong Kong and also broaden product choices without compromising protection for investors,” said Ms Christina Choi, the SFC’s Executive Director of Investment Products. “This will also enhance the city’s appeal to overseas and Mainland funds, thus strengthening its competitiveness as a premier asset management hub.”
The SFC will monitor the operation of FASTrack during a six-month pilot period ending 4 May 2025 and refine it as appropriate before formal adoption. It also issued today a pamphlet setting out the new features and a circular explaining the new authorisation process.
Notes:
1. Under FASTrack, the typical processing timeline will consist of “5+10” business days: the SFC will take up an application of a new simple fund from an MRF jurisdiction meeting the relevant criteria within five business days after receiving it, followed by granting authorisation within 10 business days from the take-up date.
2. The SFC currently processes new fund applications under a two-stream approach for standard and non-standard applications. In the past five years (2019 – 2023), the average processing time for standard and non-standard applications was less than 1.5 months and 2.5 months respectively. These fall within the SFC’s target processing time which is on average one to two months for standard applications and within two to three months for non-standard applications.
3. Funds offered to the public in Kong Kong are subject to the SFC’s prior authorisation, unless one of the exemptions under section 103 of the Securities and Futures Ordinance applies.
4. Currently, the SFC has entered into MRF arrangements with Australia, France, Luxembourg, Mainland China, Malaysia, the Netherlands, Switzerland, Taiwan China, Thailand and the United Kingdom.
5. Other eligible funds under FASTrack include exchange-traded funds or unlisted index funds tracking an index adopted by other existing SFC-authorised fund(s) or a plain vanilla index, feeder funds (where the underlying master fund is eligible for FASTrack), non-derivative funds and funds without novel features.
