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The Securities and Futures Commission (SFC) today announced the launch of new initiatives to further enhance the authorization process for new fund applications (Revamped Process) and for new Mandatory Provident Funds (MPF) and Pooled Retirement Fund (PRF) products.
Both initiatives will be implemented on 9 November 2015 for a six-month pilot period after which refinements may be made before the initiatives will be adopted as policy.
Under the Revamped Process, new fund applications will be bifurcated into two streams, namely "Standard Applications" and "Non-standard Applications", with a view to promoting fund providers’ self-compliance and reducing the overall processing time without compromising investor protection (Note 1).
Under this approach, "Standard Applications" will be fast-tracked with an aim that SFC authorization (if granted) will be given on average between one to two months from the take-up date of the applications. "Non-standard Applications" will be processed under an enhanced process with an aim that SFC authorization (if granted) will be given on average within two to three months from the take-up date of the applications.
In formulating the Revamped Process, advice from a technical working group comprising industry stakeholders had been taken into account in devising a set of minimum disclosure requirements for offering documents and compiling a streamlined New Information Checklist (Notes 2 & 3).
"An authorization process that is more efficient and focuses more on key risks can meet the fund providers’ wish to reduce the ‘time to market’ of their funds for public offering," the SFC’s Executive Director of Investment Products, Ms Julia Leung said.
"To achieve this, we need applicants to provide proper and quality submissions at the time of application and throughout the application process in a timely manner," she added.
Separately, a six-month application lapse policy will be applied to applications for new MPF and PRF products seeking SFC authorization following consultations with the Mandatory Provident Fund Schemes Authority (MPFA) and key industry stakeholders. This will bring the authorization process of these products in line with the six-month application lapse period currently applied to other SFC-authorized investment products in order to enhance the overall efficiency of the authorization process (Notes 4 & 5).
Notes:
- The SFC today issued a Circular entitled "Launch of pilot revamped fund authorization process" containing further background information and details on the Revamped Process to be adopted by the SFC in processing new fund applications and the associated transitional arrangements. Application for any new sub-fund under an existing SFC-authorized umbrella fund that is more simple in nature and is managed by an existing SFC-approved investment manager will in general be processed under the "Standard Applications" stream. More details regarding the criteria applicable to Standard Applications are set out in the Circular.
- The technical working group comprising representatives from relevant asset management industry participants was established in June this year.
- The minimum disclosure requirements for offering documents (which forms part of the Guide on Practices and Procedures for Application for Authorization of Unit Trusts and Mutual Funds issued by the SFC in support of the Revamped Process) and the streamlined New Information Checklist, which were published today, are available on the SFC’s website.
- MPF applications should only be submitted for SFC authorization following approval in principle from the MPFA. For further details regarding the six-month application lapse policy to be applied to MPF and PRF products, please refer to SFC’s Circular issued today entitled "Application lapse policy".
- On 1 January 2014, the SFC adopted a revised application lapse policy to applications seeking authorization of various SFC-authorized investment products (namely, unit trusts and mutual funds, investment-linked assurance schemes, unlisted structured investment products and real estate investment trusts). Under this policy, if, for any reason, six months have elapsed from the take-up date and no authorization has been granted, applications for authorization of these products will lapse subject to the SFC’s right to grant an extension at its sole discretion.
