The Securities and Futures Commission (SFC) has announced the launch of a three-month consultation regarding proposed enhancements to the regulation of the asset management industry and other amendments aimed at enhancing point-of-sale transparency and addressing conflicts of interest in the sale of investment products by intermediaries.
In its consultation paper, the SFC has proposed amendments to the Fund Manager Code of Conduct (FMCC) in the following four key areas:
- Securities lending and repurchase agreements
- Custodians and safe custody of fund assets
- Liquidity risk management
- Disclosure of leverage
The SFC also proposes to make it clear in the revised FMCC that the FMCC applies to all persons licensed by or registered with the SFC whose business involves the management of collective investment schemes (whether authorised or unauthorised) and/or discretionary accounts (in the form of an investment mandate or a pre-defined model portfolio), including, where appropriate, their representatives.
In addition, the SFC proposes to regulate the circumstances in which an intermediary can represent itself as being “independent” or as providing “independent advice”, as well as require enhanced disclosure of monetary benefits received or receivable that are not quantifiable prior to or at the point of entering into a transaction. Changes in this regard are proposed to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (COC).
The consultation period will end on 22 February 2017. Our recent e-bulletin highlights the SFC's proposals in more detail (please click here). If you wish to discuss the proposals further, please contact William Hallatt, Hannah Cassidy, Alice Dillon or your usual Herbert Smith Freehills contact.
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