Fund Manager Code of Conduct

10 Sep 1997



The Securities and Futures Commission (SFC) today publishes a consultation paper on a new Fund Manager Code of Conduct.

The Fund Manager Code of Conduct (FMCC) was developed following the introduction of personal account dealing guidelines by the Hong Kong Investment Funds Association (HKIFA) and in response to market needs.

The HKIFA had expressed the wish that the SFC give their guidelines some regulatory backing. This was considered in light of other areas on which fund managers had requested further guidance.

The SFC then decided that a fund manager-specific code of conduct would be developed and, together with the HKIFA, formed a working group which included industry compliance officials to draw up the code.

The FMCC has two main objectives. First, it supplements the existing codes and guidelines that apply to all registered persons by expanding on certain requirements with fund manager-specific detail about the SFC's expectations. Second, it highlights existing requirements applicable to fund managers.

"The proposed new Fund Manager Code of Conduct shows Hong Kong's commitment to enhancing its reputation as a well-regulated international fund management centre. The HKIFA's assistance in developing this Code has been invaluable, demonstrating the fund industry's own commitment to international best practice," said Ms Deborah Glass, SFC's Senior Director of Investment Products.

"The Code should also assist compliance officers in keeping track of the volume of existing requirements relevant to their business. Thus it draws together references from some 14 pieces of legislation, codes and guidelines," she said.

While much of the proposed FMCC is a consolidation of existing requirements, there are some new requirements including:

  • Designated Compliance Officer

    Each firm is required to have a designated person appointed by senior management to be responsible for compliance. For a small firm, its senior management should assume this responsibility directly.

  • Personal Account Dealing Rules

    These are derived from the HKIFA guidelines but the version in the FMCC is shorter and, in parts, more relaxed in order to accommodate the practices of different types of firms. Comment is specifically sought as to whether the original HKIFA guidelines should be adopted, or whether more flexibility should be introduced.

  • Fund Management

    Detailed rules are given for fund manager-specific matters such as order allocation, participation in initial public offerings, cross trades, house accounts, and custody arrangements. Where the details are new, the requirements are generally consistent with international best practice.

Ms Glass said: "The SFC recognizes that small fund management companies may not be in a position to comply with all requirements, and the introduction to the FMCC makes it clear that the size of a firm will be taken into account in considering its application."

Comments are invited and should be sent in to the SFC before 15 October 1997.

Copies of the consultation paper are available at the SFC. The English version of the document can also be found on the SFC website at http://www.hksfc.org.hk.

For further information, please contact Chan Chi-keung at 2840-9287.




Page last updated 10 Sep 1997