Hong Kong: SFC Updates Retail Fund Guidance

On 28 October 2026, Hong Kong’s Securities and Futures Commission (SFC) published guidance to support implementation of the revised Code on Unit Trusts and Mutual Funds (UT Code), which took effect on 1 November 2026. The changes are intended to enhance investor protection while further aligning Hong Kong's retail fund regime with international standards.

The revised UT Code introduces, among other changes, the following key updates:

Financial derivative instruments

Introduction of a Value-at-Risk (VaR) approach alongside the existing Net Derivative Exposure (NDE) approach for measuring derivatives risk. Funds complying with the applicable VaR or NDE limits will generally be treated as non-complex products, although the SFC retains discretion to classify certain funds as complex depending on their features and risks.
Liquidity risk management

The revised UT Code introduces enhanced requirements aligned with updated international standards, including the appropriate design, calibration and use of anti-dilution and other liquidity management tools. The supplemental circular generally applies to SFC-authorized open-ended funds, including overseas UCITS, with additional requirements for funds investing significantly in less liquid or illiquid assets, particularly where frequent dealing is offered.
Money Market Funds

The framework applicable to MMFs has been updated through new anti-dilution tool requirements, revised credit quality standards and additional safeguards for constant net asset value (CNAV) structures. The revisions also introduce enhanced disclosure requirements for MMFs.
Key personnel of management companies

Key personnel requirements are streamlined for management companies that are part of a well-established fund management group or regulated in mutual recognition of funds jurisdictions or acceptable inspection regimes.
Retail access to private market assets

The SFC may, on a case-by-case basis, permit an SFC-authorized non-complex fund to exceed the existing 15% limit on direct investment in illiquid assets, including private market assets.
Implementation

The SFC has also issued specific guidance on implementation and transitional arrangements for existing and new funds, together with revised product key facts statement (KFS) templates introducing enhanced disclosures on product classification and liquidity risk management tools.

Existing funds benefit from a 12-month transitional period ending on 31 October 2027 for specified requirements, including liquidity risk management, MMF requirements and relevant offering-document disclosures. Other amendments apply immediately in accordance with the SFC’s implementation schedule.

Existing funds, including UCITS continuing to be publicly offered in Hong Kong, must use the enhanced KFS disclosures from 1 November 2027.

The revised UT Code and KFS templates apply immediately to funds applying for SFC authorization on or after 1 November 2026. Funds with applications submitted before that date and subsequently authorized fall within the existing-fund transitional arrangements.

Further details are available here.

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