On 20 January 2021, the Securities and Futures Commission (the “SFC”) and the Securities and Exchange Commission of Thailand (the “SEC”) have entered into a Memorandum of Understanding (“MoU”) on Mutual Recognition of Funds (“MRF”) to allow eligible Hong Kong and Thai public funds to be distributed in each other’s market through a streamlined process. In relation to this, the SFC published a Circular on Mutual Recognition of Funds between Thailand and Hong Kong on the same day (the “Circular”).
Under the MRF, Thai domiciled funds (“Thai Covered Funds”) and Hong Kong domiciled funds (“Hong Kong Covered Funds”) are eligible for a streamlined process of authorization for offering to the public in both Thailand and Hong Kong.
Types of eligible funds
Generally, Thai Covered Funds and Hong Kong Covered Funds applying for SFC and SEC authorisation must fall within one or more than one of the following eligible fund types:
- general equity funds, bond funds and mixed funds;
- unlisted index funds;
- passively managed index tracking exchange-traded funds (“ETFs”) including physical gold ETFs; and
- feeder funds, where underlying fund is not itself a feeder fund and falls within one of the fund types in (a), (b) or (c) above.
Applicants should request the SEC to provide directly to the SFC a certificate confirming that the eligibility requirements listed in Annex B to the Circular are met. Upon receipt of the application documents, the SFC will assess within five working days whether the documents have been duly and properly submitted.
Authorisation will be granted by the SFC to a Thai Covered Fund for offering, marketing and distribution of its units to the public in Hong Kong within 21 calendar days if the Thai Covered Fund meets all requirements set out in the Circular and if all outstanding issues have been addressed to the satisfaction of the SFC.
Applications from Hong Kong Covered Funds should be submitted to the SEC, the process of which are the same as the above. Details of the eligibility requirements of applications for both jurisdictions could be found in the Circular and the circular published by the SEC.
The SFC and the SEC is expected to implement the MRF arrangement within 6 to 12 months following the signing of the MoU and will publish separate announcements informing the industry of the effective implementation of the arrangement.