HK fund managers grapple with new client rule

Author: Brian Yap | Published: 12 May 2016

Hong Kong-based private fund managers are struggling with the possibility of being brought under new client agreement regulations, counsel tell IFLR.

The Securities and Futures Commission (SFC) made it mandatory last December for licensed companies to include a new contractual clause in client agreements requiring them to ensure the suitability of investment recommendations and solicitations to their clients.

Gaven Cheong, Simmons & Simmons
But counsel in Hong Kong point to uncertainty about the application of the new clause to licensed private fund managers, claiming those advising on securities and asset management would fall into the category of licensed intermediaries covered by the new requirements.

“In the narrow context of a fund manager exercising type nine asset management type four investment regulated activities to its fund, then there’s little scope for the application,” said Gaven Cheong, partner at Simmons & Simmons.

Counsel suggest that, in most cases, there is no existing...