HK's first hybrid peer lending fund explained

Author: Brian Yap | Published: 18 Jul 2016

Hong Kong fund managers have ventured out of the territory’s strict internet financing regulations to establish the city’s first fund-type peer-lending platform - but low regulatory transparency has presented problems.

In March 2015 the Court of Final Appeal (CFA) ruled in favour of an exemption for promoters of unauthorised collective investment schemes (CIS) from seeking approval from the Securities and Futures Commission (SFC). It had overturned a ruling by the Court of First Instance by stating that only issuers of securities to the public are required to seek the SFC’s approval, and that they must state the intention in their advertisements.

But counsel advising Hong Kong-licensed money lender Elephant Club on the deal argue that the lack of clarity over peer-to-peer lending (P2P) regulations has made it difficult to conduct due diligence on the lending aspect of the fund. Specifically, counsel point to the challenge of...