BEA Union Investment Management, a subsidiary of Hong Kong-based Bank of East Asia, told our sister publication Fund Selector Asia it is aiming to take advantage of the new system through its joint venture with German asset manager Union Investment.
“We are hoping the scheme can launch within this year,” said BEA Union IM’s managing director of business development Rex Lo.
Lo said the firm is currently approaching Swiss banks and distributors to gauge their interest in Hong Kong-domiciled funds.
While in London, Ashley Dale, chief business development officer and chief marketing officer of Harvest Global Investments, part of Chinese giant Harvest Fund Management, said he was eyeing the opportunity to sell some of the firm’s Hong Kong-based products directly to the Swiss market.
“We’re looking at it,” Dale told International Adviser in an interview.
Hong Kong’s Securities and Futures Commission (SFC) and the Swiss Financial Market Supervisory Authority (Finma) signed a formal Mutual Recognition of Funds (MRF) and Asset Managers memorandum in December last year to provide a framework for the exchange of information and regulatory cooperation in relation to the cross-border offering of public funds.
Under the scheme, eligible Hong Kong-domiciled products can apply for authorisation to sell to investors in Switzerland.
Eligible fund types include general equity funds, bond funds and mixed funds, feeder funds, fund of funds, money market or cash management funds, index funds, structured funds, funds that invest in financial derivative instruments and ETFs.
Hong Kong funds that invest in real estate, precious metals or precious metal certificates, commodity or commodity certificates; carry out short-selling of investments; and exceed the maximum borrowing limit of 10% of its total net asset value are not eligible under the scheme.
Hong Kong funds applying for Finma authorisation must be established, domiciled and managed in Hong Kong, according to the regulator.
Currently, there is a well-established process for recognised jurisdiction schemes in Europe that allows the distribution of Ucits funds in Hong Kong, but not the other way around.
In the case of Switzerland, there is no existing channel under which a Hong Kong-domiciled fund could be sold to the retail public in Switzerland and vice-versa.