The Securities and Futures Commission (SFC) will implement proposed measures to bolster Hong Kong’s regulatory regime for SFC-authorised retail funds, as set out in its consultation conclusions paper published today (Note 1).
Scheduled to take effect in November 2026, the regulatory enhancements to the Code on Unit Trusts and Mutual Funds (UT Code) underscore the SFC’s commitment to protecting investors and aligning the city’s regulatory framework with international standards (Note 2).
Specifically, the introduction of Value-at-Risk (VaR) approach for retail funds’ derivative exposure management would support broader fund strategies to enrich retail product offerings. Other facilitative measures include streamlined requirements for management company acceptability and feeder funds, which provide managers with greater operational flexibility. At the same time, improved safeguards for liquidity risk management and money market funds help enhance the resilience of Hong Kong retail funds in a dynamic and fast-changing market landscape.
Respondents to the consultation generally supported the proposals and considered that the amendments would enhance the competitiveness and appeal of the city’s retail fund regime (Note 3). Having considered the feedback received and conducted additional industry engagement, the SFC will adopt the proposals with appropriate modifications and clarifications.
"These enhancements will strengthen investor protection and help position Hong Kong’s retail fund regime for the future, ensuring that it remains competitive to keep in step with evolving market needs," said Ms Elisa Ng, the SFC’s Executive Director of Investment Products. "The SFC will continue to harness opportunities from product innovation to cement Hong Kong’s status as a premier international asset and wealth management centre."
Consequential amendments to the Code on Pooled Retirement Funds (PRF Code), SFC Code on MPF Products (MPF Code), Code on Investment-Linked Assurance Schemes (ILAS Code) and the Code on Real Estate Investment Trusts (REIT Code) will also be implemented. These four revised codes will be gazetted on 16 October 2026 and become effective on 1 November 2026.
A 12-month transitional period from the effective date of the revised UT Code will generally be provided for existing SFC-authorised funds. This implementation timetable will also apply to the revised PRF Code, MPF Code, ILAS Code and REIT Code.
To facilitate the transition towards the new requirements, the SFC will publish supplementary guidance, frequently asked questions and revised templates in the near future.
Notes:
- On 22 October 2025, the SFC issued a Consultation Paper on Proposed Amendments to the Code on Unit Trusts and Mutual Funds. The consultation ended on 21 January 2026.
- Key amendments include introducing the VaR approach alongside the existing net derivative exposure approach, enhancing liquidity risk management requirements to align with updated international standards, and strengthening requirements for money market funds.
- The SFC received 16 written submissions, including from asset managers, industry associations and professional firms.
