The French Autorité des Marchés Financiers (AMF) and the HK Securities and Futures Commission (SFC) signed a Memorandum of Understanding (AMF-SFC MoU) concerning the mutual recognition framework for funds and management companies aiming at enhancing mutual cross-border asset management activities.
The AMF-SFC MoU provides a set of rules agreed by both the AMF and the HK SFC to increase the cross-border activity between both markets and therefore promote reciprocal market access for French and HK fund providers.
The purpose of the AMF-SFC MoU is to enhance the cooperation between both authorities and the facilitation of fund providers to grow cross-border activities in two areas:
1. The mutual recognition of funds, promoting the distribution of eligible funds to retail investors:
- The public offering of eligible French UCITS in HK, and
- The public offering of eligible HK funds in France
2. The mutual recognition of management companies, promoting the cross-border management of collective assets:
- By licensed Honk Kong management companies in France, and
- By authorised French management companies in HK
The AMF-SFC MoU, together with the SFC circular and AMF instruction, have been published on 10 July 2017 by both AMF and HK SFC on their respective websites and are directly applicable.
Executive summary
The AMF-SFC MoU lays down a mutual recognition framework in both jurisdictions to facilitate French fund providers to operate in HK and HK fund providers to operate in France.
The reciprocal market access for fund providers facilitating cross-border activities for the public offering of eligible funds, public offering meaning the marketing to retail investors in France, and the offer to the public in HK.
This also covers:
- The rules relating to the mutual recognition of funds, including; inter alia, the eligibility requirements applicable to funds, the streamlined one-month notification process and the marketing requirements
- The rules relating to the mutual recognition of management companies, including; inter alia, the eligibility requirement and the delegation rules
- The cooperation between both AMF and SFC, including the mutual recognition of authorities and related national regimes, the exchange of information and the mutual assistance thereto, the supervision of the fund providers and fund products in their home jurisdictions and the supervision of activities in the host jurisdictions
The AMF-SFC MoU provides a mutual recognition regime framework for both French and HK funds and management companies to operate and enhance their activities on the reciprocal market.
This AMF-SFC mutual recognition framework is structured on the following pillars:
- Eligibility requirements applicable to fund and management companies,
- A mutual recognition framework, including market access, applicable requirements and conditions for operating activities in the reciprocal market
- An application process for authorisation and ongoing supervision of activities.
Eligibility requirements
The AMF-SFC MoU provides reciprocal eligibility requirements to be met by any fund and management company from France or Honk Kong to be eligible for mutual recognition in the other jurisdiction
AMF/SFC Mutual recognition framework
The AMF-SFC mutual recognition framework provides the set of rules and conditions for a French Covered Fund to be offered to the public in HK , and a HK Covered Fund to be marketed to retail investors in France.
The reciprocal set of rules and conditions apply to both French funds/management companies whishing to access HK market and HK funds and management companies whishing to access French market.
Application process, notification
The AMF-SFC mutual recognition framework includes a one-month application process where both AMF and SFC grant authorisation to a Covered Fund for public distribution into their respective territories.
Any change to a Covered Fund affecting investors of the host market must be made in accordance with the terms of the AMF-SFC mutual recognition framework and must be filed with the host competent authority.
A breach against the AMF-SFC mutual recognition framework may entails
- A prompt remedy by the Covered Management Company
- A withdrawal of the authorisation from the host authority
Any Covered Management Company may withdraw its authorisation in the host jurisdiction in compliance with AMF-SFC mutual recognition requirements. Any Covered Fund may apply for termination of distribution in the host jurisdiction subject to the prior approval of its home competent authority