Streamlining Pre-vetting of Notices and Advertisements

The SFC proposes to streamline the pre-vetting of notices and advertisements of collective investment schemes authorised by the SFC under four Product Codes (Note 1). The proposed changes are set out in a consultation paper issued by the SFC today.

The SFC recognises that the current regulatory requirement for detailed pre-vetting of notices and advertisements adds costs and delay to the market. The SFC therefore proposes to replace pre-vetting with post-vetting and monitoring in so far as the law permits.

This initiative would help improve the timeliness of notification to investors and the promotion of products by the market. The proposed changes would also better align Hong Kong’s regulatory requirements with international standards and practices in this area.

Mrs Alexa Lam, the SFC’s Executive Director of Intermediaries and Investment Products, said: “We are committed to promoting and strengthening the position of Hong Kong as an asset management hub in Asia. The current proposal is another step towards lowering compliance costs and keeping the rules simple.”

The key aspects of the proposal are:

• to remove pre-vetting for most notices as well as advertisements falling within the exemptions under the Securities and Futures Ordinance (Note 2). On implementation, the SFC will continue to monitor compliance through subsequent reviews of filed notices and surveillance of issued advertisements.

• to establish a common set of advertising guidelines for all schemes authorised under the four Product Codes. The revised guidelines will provide more specific guidance to the market in terms of disclosure and presentation requirements in advertisements.

• to invite comments on whether back-tested and simulated performance information should be allowed for passively managed formula funds.

The public are invited to submit comments in writing before 29 February 2008. Following the consultation, the SFC will publish a conclusions paper to summarise the views collected and set out the final proposal.

The Consultation Paper is available at the SFC office and on the SFC website at www.sfc.hk.

Comments may be sent:

by mail to:
Investment Products Department
Intermediaries and Investment Products Division
The Securities and Futures Commission
8/F Chater House
8 Connaught Road Central
Hong Kong

by fax to:
(852) 2877 0318

by online submission at:
http://www.sfc.hk

by email to:
ipconsult@sfc.hk

Ends

Notes to Editor:

1. The four Product Codes are the Code on Unit Trusts and Mutual Funds, the Code on Investment-Linked Assurance Schemes, the Code on Pooled Retirement Funds and the Code on MPF Products. These Product Codes establish guidelines for the authorisation of collective investment schemes.

2. Under section 103 of the SFO, it is unlawful to offer any collective investment schemes to the public in Hong Kong, unless it is authorised by the SFC, or is exempted under the SFO.