HONG KONG is seeking to bolster its position as a premier wealth management hub by proposing relaxed rules for mutual funds, aiming to draw more international asset managers to establish operations in the city.
Bloomberg reported today that the regulatory changes, outlined in a consultation paper released on 22 October, include allowing alternative risk models and permitting private market asset funds greater access to retail investors.
As Hong Kong competes with Singapore for Asia’s leading wealth centre status, the city has experienced a surge in listings and trading activity amid renewed interest in Chinese investments in 2025.
Efforts to attract high-net-worth individuals have also contributed to a 13 per cent increase in assets under management last year, reaching over HK$35 trillion (S$5.85 trillion).
Funds domiciled in Hong Kong managed approximately HK$2.1 trillion as of the end of June.
Among the proposed changes, bond funds heavily reliant on swaps and derivatives would transition to a value-at-risk approach widely used in Europe and the United States.
This new model would operate alongside the existing rule that limits derivatives exposure to 50 per cent of a fund’s net asset value.
Additionally, the regulator proposes expanding retail investor access to private market funds, which focus on illiquid assets and typically offer less frequent redemption opportunities.
This follows a February relaxation permitting listed closed-end alternative asset funds to exceed the previous 15 per cent cap on illiquid assets.
The new framework would also apply to SFC-authorised unlisted funds.
Other recommendations include enhanced liquidity management requirements and mandating money market funds to maintain a constant net asset value.
Stakeholders have until 21 January 2026 to provide feedback on the proposed regulatory adjustments. - October 23, 2025
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