The Securities and Futures Commission (SFC) today launched a three-month consultation on proposed amendments to the Code on Unit Trusts and Mutual Funds (UT Code), which will align Hong Kong’s regulatory regime for SFC-authorised funds with the latest international regulatory standards and broaden product offerings for investors (Notes 1 and 2).
Key revisions to the UT Code include allowing an alternative approach for managing derivative investments in retail funds (Note 3), updating requirements for fund liquidity risk management, and enhancing the requirements for money market funds. Once implemented, the proposals will not only drive fund market growth but also strengthen the resilience of the city’s asset management sector.
“These enhancements reflect the SFC’s firm commitment to advancing the public fund market through robust regulations and reinforcing Hong Kong’s position as a leading international asset and wealth management centre,” said Ms Christina Choi, the SFC’s Executive Director of Investment Products. "We are dedicated to ensuring our regulatory regime remains competitive globally by fostering product innovation and upholding investor protection."
The SFC will adopt a step-by-step approach to facilitate new fund offerings for retail access to private markets, first, by admitting listed closed-ended alternative assets funds (Note 4), and then by allowing, on a case-by-case basis, greater flexibility for SFC-authorised unlisted funds to invest a larger portion in illiquid assets, subject to robust safeguards on the fund’s overall liquidity risk management (Note 5).
The SFC also proposed consequential amendments to relevant provisions of the SFC Code on MPF Products, the Code on Pooled Retirement Funds, the Code on Investment-Linked Assurance Schemes and the Code on Real Estate Investment Trusts.
The public is invited to submit their comments to the SFC on or before 21 January 2026 via the SFC website (www.sfc.hk), by email to utc-consultation@sfc.hk, by post or by fax to 2877 0318.
Notes:
- The Securities and Futures Ordinance empowers the SFC to authorise collective investment schemes (CIS). The UT Code establishes guidelines for the authorisation of CIS by the nature of mutual funds or unit trusts for offering to the public in Hong Kong (ie, SFC-authorised funds).
- Unit trusts and mutual funds constitute a large portion of the financial products authorised by the SFC for offering to the Hong Kong public. As of 30 June 2025, there were 2,424 funds authorised by the SFC, representing 80% of all SFC-authorised CIS.
- The SFC proposes to accept the Value-at-Risk (VaR) approach alongside the existing net derivative exposure limit, which will allow fund managers greater flexibility in using derivatives and align with the practices in major fund jurisdictions.
- The SFC issued a circular in February 2025 to clarify the requirements for listed closed-ended alternative asset funds, which enables retail investors to gain exposure to private markets, including high-quality underlying assets and fund managers with good track records, etc.
- The UT Code allows investments by unlisted retail funds in illiquid assets, including private market assets, up to 15% of a fund’s net asset value.
