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Deacons’ 7th Annual Investment Products And Regulatory Forum.

1 June, 2015

 

On 21 May 2015, Hong Kong’s financial services industry gathered for Deacons’ 7th Annual Investment Products and Regulatory Forum, held at the Hong Kong Convention and Exhibition Centre. This year the conference was a full day event. The morning session focused on investment management issues whilst the afternoon session addressed hedge fund and private equity fund concerns.

 

Below is a brief overview of the day’s proceedings. 

 

Keynote Address

 

This year Ashley Alder, Chief Executive Officer of the Securities and Futures Commission, opened the forum with a keynote address. In his speech, after sharing his thoughts on global issues of relevance to the asset management industry, Mr. Alder addressed the development of more local headline initiatives such as the Mutual Recognition of Funds, Shanghai-Hong Kong Stock Connect, and the proposed Shenzhen-Hong Kong Stock Connect. He also focused on the ongoing development of Hong Kong as the Asian asset management centre.

 

Panel Discussion: Regulatory Risk Mitigation

 

A panel discussion on regulatory risk mitigation was moderated by Deacons Partner Jane McBride. The panellists comprised: Richard Harris (CEO, Port Shelter Investment Management), Florence Chan (Head of Compliance, Asia Pacific ex-Japan, Natixis Global Asset Management L.P.) and Paul Smith (President & CEO, CFA Institute). The panel discussed the fee structure points raised in the SFC’s recent Asset Management Report and SFC ongoing licensing risk mitigation strategies.

 

Panel Discussion: Investment Management Business Trends

 

A panel discussion on investment management business trends was moderated by Deacons’ Partner Alwyn Li. The panellists comprised: Machiuanna Chu (Partner, Corporate Commercial, Deacons), John Siena (Associate General Counsel, Brown Brothers Harriman & Co.), Scott McLaren (Head of Hong Kong, Brown Brothers Harriman (Hong Kong) Limited) and Kevin Tong (Partner, Corporate Finance, Deacons). The panel discussed recent M&A activities focusing on the acquisition of SFC licensed corporations including common regulatory and commercial issues. Next, the panel gave an overview on setting up note programmes in Hong Kong. Finally, the panellists discussed the custodian’s roles and obligations under UCITS V, and the latest trends in accessing the China market through QFII / RQFII and Stock Connect.

 

Interview: Meet The Regulator – The Way Forward For Investment Products

 

Deacons’ partner Jeremy Lam led a discussion with Julia Leung (Executive Director, Securities and Futures Commission) on the way forward for investment products.

 

Julia Leung confirmed that the official announcement of the Hong Kong / PRC mutual fund recognition agreement was imminent. Just how imminent became clear the following day!

 

Ms. Leung encouraged managers to be ready for rapid implementation of the agreement, which will come into force on 1 July 2015.

 

Ms. Leung pointed to the increasingly rapid pace of change in the PRC, particularly developments affecting the asset management industry, as a major driver of the Hong Kong industry for the foreseeable future.

 

The SFC has been reviewing their processes for the approval of investment products with a view to trimming approval times. They are planning to introduce a more streamlined process for straightforward applications by previously approved managers. However, Ms. Leung emphasised that this will require a high degree of cooperation from the industry and will involve a high level of responsibility for applicants.

 

Presentation: IT Security Risks – What The Regulators Expect And What Can Go Wrong

 

Deacons’ Partner Richard Hudson’s presentation on IT security risks covered cybersecurity, including the growing threat of cybersecurity breaches to the financial services industry, recent examples of cybercrime and cybersecurity risk mitigation measures.

 

 

Panel Discussion: Managing Your Business – Employment, Outsourcing And Disclosure Obligations

 

A panel discussion on employment, outsourcing and disclosure obligations was moderated by Deacons’ Consultant Scott Carnachan. The panellists comprised: Charmaine Koo (Partner, Intellectual Property, Deacons), Alexander Que (Partner, Corporate Finance, Deacons) and Gladys Ching (Associate, Corporate Commercial, Deacons).

 

Charmaine encouraged asset managers to consider protection of their brand name, product names and advertising tag lines. Alex gave an overview of Hong Kong’s disclosure of interests regime under the Securities and Futures Ordinance and an update on the application of the regime to limited partnerships. He noted that the Financial Services Development Council has proposed changes to simplify Hong Kong’s disclosure of interests regime. Gladys discussed the difference between employees and independent contractors. She also spoke of the visa requirements for new hires and issues to be aware of when terminating an employment contract.

 

Presentation: SFC Inspection Update

 

Deacons’ Partner Jane McBride’s SFC inspection update presentation focused on the experiences our clients have had with the SFC on routine inspections. Jane shared general observations based on inspection data from the past 3 years, and the changes that Deacons have noticed in the inspection process. She concluded her presentation with her views on what the regulatory future holds for Hong Kong fund managers.

 

Panel discussion: China Investment Structures And Access To China Markets

 

The final session on China investment structures and access to China markets was moderated by Deacons Partner Taylor Hui. The panellists comprised: Sabrina Fung (Partner, Corporate Finance, Deacons), Edwarde Webre (Partner, Corporate Commercial, Deacons) and Robert Woll (Partner, Financial Services, Deacons). The panel discussed some of the latest developments in efforts to access China’s markets through foreign direct investment as well as offshore funds. This included recent developments in PRC Foreign Investment Law and related tax implications. The panel also considered trends in private equity fund raising and the increasing participation in PE by Chinese wealth management companies and institutional investors.

 

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