On 07th August 2020, the Securities and Futures Commission (SFC) published the updated Frequently Asked Questions, Guide, Checklist and Confirmations relating to Investment Products.
Frequently Asked Questions
Application Procedures for Authorization of Unit Trusts and Mutual Funds under the Revamped Process
Question: What are the requirements for submitting documents and application fee in support of a new fund application to the SFC?
Answer: To commence an application, various documents, including, for example, offering documents, duly signed and completed application form, information checklist and confirmations, as well as the application fee are required to be submitted to the SFC.
- Submission of application documents by soft copy only
- Alternatives for signing application documents
- Taking up new fund application(s) with application fee(s) to follow
Revamped Post Authorization Process of SFC-authorized Unit Trusts and Mutual Funds
Question: What are the requirements for submitting post-authorization documents to the SFC?
Answer: Set out below are the requirements for submitting documents to the SFC in connection with post-authorization matters of SFC-authorized funds.
- Submission of documents by soft copy only
- Alternatives for signing documents
Leveraged and Inverse Products
Question: What are required to be submitted from applicants of swap-based L&I Products tracking Mainland equity indices to start an application?
Answer: The management company of swap-based L&I Products tracking Mainland equity indices (Manager) is required to submit the following to the SFC to start an application:
(i) Manager’s confirmation that it has signed the index licence agreement with the index provider for each L&I Product;
(ii) Manager’s confirmation of procuring more than one swap counterparty for each L&I Product;
(iii) at least two term sheets with detailed explanation on the swap structure and collateral arrangement (if any), including but not limited to, the following key terms of the swap arrangements, as acknowledged by the Manager and the respective swap counterparty:
- notional amount of the swap;
- swap fees, including the description of the basis for calculation and amount under normal and extreme circumstances;
- maximum unwinding fee;
- margin and collateral arrangement; and
- events which may lead to early termination of the swap
(iv) Manager’s confirmation that the swap structure and collateral arrangement in the term sheets under item (iii) are in compliance with 8.8 (d)&(e) of the UT Code;
(v) proposed investments to be made by the products other than the swap (“Asset Portfolio”), and the Manager’s confirmation that the Asset Portfolio will comply with the requirements in 7.36-7.38 of the UT Code; and
(vi) contingency plan for the products to continue to achieve their investment objectives in the event of early termination of the swap, or exposure to Mainland equity indices is no longer obtainable by the products.