KPMG Luxembourg notes HK regulator shift on UK Ucits after Brexit
The Hong Kong Securities and Futures Commission (SFC) has changed the way it regulates and authorises Ucits manufactured in the UK, notes KPMG Luxembourg in its latest Fund Distribution Alert.
The SFC announced on 6 February that it has issued an updated "List of recognised jurisdiction schemes", "List of inspection regimes", and "Application of the Code on Unit Trusts and Mutual Funds on Ucits funds".
KPMG notes that these changes reflect the fact that UK domiciled collective investment schemes will no longer be classificed as Ucits, but as "UK Ucits" post Brexit and during the transition period.
It adds that "the application procedure in Hong Kong for UK collective investment schemes classified as UK Ucits remains unchanged. It continues to follow either the 'Mutual recognition of funds (MRF) between the United Kingdom and Hong Kong' dated 8 October 2018 - or the streamlined process for Ucits funds, which also applies to Ucits domiciled in Germany, France, Luxembourg and the Netherlands."
Links to further information from the SFC can be found here:
- (Updated) List of recognized jurisdiction schemes
- (Updated) List of inspection regimes
- (Updated) Frequently asked questions on SFC authorization of UCITS funds — questions one and seven have been updated
- (Updated) Application of the code on unit trusts and mutual funds on UCITS funds
Brexit means that UK authorised schemes are no longer established and authorised in the EEA, and have lost their legal status as Ucits funds according to EU law - as explained by the UK government in August 2019: https://www.gov.uk/government/publications/draft-eu-exit-sis-for-investment-funds-and-their-managers/the-collective-investment-schemes-amendment-etc-eu-exit-regulations-2018-explanatory-information
The status of UK Ucits and their treatment could change again in future, depending on what happens after the transition peroid.For example, Danish law firm Njord warned last year (2019) that if a no-deal scenario emerged, then the ability to passport such funds into Denmark from the UK might no longer be possible. The transition period agreement avoids that no-deal scenario for now, but it is uncertain to what degree passporting will be allowed following the negotiations between the UK and the EU27, which are scheduled to take place through 2020.
