Conventus Law » Blog Archive » Deacons 6th Annual Investment Products And Regulatory Forum.

Deacons 6th Annual Investment Products And Regulatory Forum.

7 June, 2014

On 30 May 2014, more than 400 senior figures from Hong Kong’s financial services industry attended our sixth annual forum, held at the Hong Kong Convention & Exhibition Centre.

Please find below a brief overview of the day’s proceedings. It includes a link to the keynote address of Salina Yan, Acting Permanent Secretary for Financial Services and the Treasury, synopses of the main panel sessions and links to reference materials.

Keynote Address: Hong Kong As A Premier International Asset Management Centre

This year we were honoured to have Salina Yan, Acting Permanent Secretary for Financial Services and the Treasury, open the forum with a keynote address, entitled: Hong Kong as a premier international asset management centre. In her speech, Miss Yan shared the Government’s policy agenda on sharpening Hong Kong’s edge as a premier international asset management centre from the perspectives of “Capacity”, “Connectivity” and “Consumer Protection”.

A link to Miss Yan’s speech is here.

Investment Products: Developments And Opportunities

The panel was moderated by Deacons’ partner Alwyn Li, with guest panellists Christina Choi (Senior Director, Investment Products of the Securities and Futures Commission), Sandra Lu (Partner, Llinks Law Offices) and Stewart Aldcroft (Managing Director, Citi Securities & Fund Services and Chief Executive Officer, CitiTrust Limited). They gave an overview of the proposed mutual funds recognition programme between Hong Kong and the Mainland, including the “knowns” and “unknowns”, and how product issuers can prepare for the scheme. The panellists also considered the current QDII regime and new product trends in Hong Kong for 2014. The session wrapped up with a discussion on the latest SFC regulatory practices.

Hong Kong As An Asset Management Centre: Challenges And Opportunities

Moderated by Deacons’ partner Susan Gordon, the panellists comprised John Levack (Vice Chairman, HKVCA), Heide Blunt (Managing Director, AIMA Hong Kong) and Eugenie Shen (Managing Director and Head of ASIFMA’s Asset Management Group).

The panel considered the opportunities and challenges – key issues and “wish-lists” – for the asset management industry in Hong Kong from the perspective of each sector: global asset managers, PE groups and hedge funds.

In response to a question from the floor about key wishes for regulatory reform in Hong Kong during 2014, the panellists chose (i) implementation of an open-ended fund company structure that was suitable for the hedge funds industry, (ii) ensuring that the offshore funds profits tax exemption keeps pace with industry developments, (iii) “true” mutual recognition between Hong Kong and the Mainland for retail funds, rather than a streamlined review process, and (iv) tax certainty for private equity managers operating in Hong Kong and for the funds they manage.

Conduct Of Business: Meet The Regulator

For the final session, Deacons’ partner Jeremy Lam led a discussion with James Shipton (Executive Director, Securities and Futures Commission) on conduct of business issues and the ongoing supervision of licensed corporations in Hong Kong.

James provided an insightful overview of the current global regulatory environment and in particular the need to reinforce trust between regulators, the industry and the investing public. Maintaining high ethical standards throughout the industry would be fundamental in strengthening Hong Kong’s reputation as an internationally-recognised asset management hub. James also urged asset managers to consider the need to exercise greater control / responsibility over the distribution of their products and to be vigilant of the risks of delegating the management of their reputations to third party distributors.

The discussion moved on to consider issues surrounding cross border regulatory co-operation as well as the challenges to implementation in the current regulatory environment, particularly within the Asian region.

Commission, remuneration and incentives were discussed and James indicated that the SFC is closely monitoring the developments in Europe, the US and other major jurisdictions in considering what approach would best suit Hong Kong’s market. Issues surrounding transparency, conflicts of interests and fairness to customers were identified as being central themes which the industry would need to address as part of these considerations.