HKEX to launch retail fund platform as Hong Kong seeks to burnish status as wealth management hub

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  • The platform aims to make it easier for fund companies and their sales partners to sell fund products to clients, expanding the market, the exchange says
  • Money managers and brokers welcome the platform, which they believe will diversify investment products available in Hong Kong

Bourse operator Hong Kong Exchanges and Clearing (HKEX) is developing a platform to support asset management companies in selling retail funds, which is expected to broaden the market and support the government’s effort to turn the city into a global wealth management center.

The electronic network will cover the full distribution cycle of retail funds authorized by the Securities and Futures Commission (SFC), the exchange said in a statement on Thursday. HKEX will work with the government and regulators to develop the model in the coming months.

The aim is to make it easier for money managers and their sales partners to sell fund products to clients, attracting more companies into the market and creating more choices for investors, the exchange said.

“The new integrated fund platform, which is expected to generate new business opportunities for the industry and to increase participation and diversification in Hong Kong’s retail fund market, will reinforce Hong Kong’s position as a leading international asset and wealth management center,” said Christina Choi, executive director of investment products at the SFC.

“Equally important, the platform, which will facilitate fund distribution and public access to information on fund investment options, will enrich product choice and enhance product transparency for investors.”

The SFC has authorized 2,917 funds as of the end of June this year, according to data from the regulator.

The platform will complement other initiatives announced by the Hong Kong government last year to promote the city as a center for wealth management and family offices while also diversifying the market.

The city’s Chief Executive John Lee Ka-chiu announced in his annual policy address last week a revamped investment migration scheme, offering fast-track residency for those with at least HK$30 million (US$3.8 million) invested in local stocks, funds, or other assets.

Lee also announced a cut in stamp duty, effective later this month, to 0.1 percent from 0.13 percent for both buyers and sellers to boost stock market turnover. The average daily turnover fell 12 percent in the first nine months of this year to HK$109.7 billion from the same period a year earlier.

HKEX, which operates the third largest stock market in Asia, initially plans to establish the fund platform as a business-to-business service model.

It will have three components: a communication hub to connect fund managers and their distributors to facilitate transactions; a business platform for fund order routing, subscriptions, redemptions, and payments; and an information portal to provide fund information to the public, the exchange statement said.

“The new HKEX platform is warmly welcomed by the fund industry,” said Sally Wong, CEO of the Hong Kong Investment Funds Association. “This represents a major initiative to broaden the distribution channel of funds and to increase the availability of funds to the public.”

The association believes the platform will allow more players to participate in the market, offering more products and fostering more competition, which will ultimately be in the interest of the investing public, she said.

The city’s 600 stockbrokers will also benefit from the new move, said Robert Lee Wai-wang, the lawmaker for the financial services sector and CEO of local brokerage Grand Capital Holdings.

“The new fund platform will be a good way for traditional brokers selling mostly Hong Kong stocks to diversify their product offerings,” Lee said. “Many of them have been operating on HKEX’s systems for years, so the transition should make it easier to distribute other products. Facing a challenging environment, brokers should be able to offer more products across asset classes, geographies, and investment styles.”

HKEX will also launch a digital initial public offering platform called FINI on November 22 to shorten IPO settlement time from five days to two days. The bourse operator also opened offices in London and New York earlier this year to promote international listings.
Image by: HKEX
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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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