The comment period of the Securities and Future Commission’s (“SFC”) public consultation paper (the “Consultation”) on proposed amendments to the Code on Pooled Retirement Funds (the “Code”) has recently come to an end.
Pooled retirement funds (“PRFs”) are collective investment schemes authorised by the SFC under section 104 of the Securities and Futures Ordinance (“SFO”) and the Code. PRFs are offered by banks, trustees, asset managers and insurance companies and they enable multiple occupational retirement schemes to gain exposure to underlying investment portfolios.
The Consultation is a result of a holistic review of the Code by the SFC following the latest changes to the Code on Unit Trusts and Mutual Funds. The main areas for consultation include the following:-
- Obligations of key operators – Introducing more detailed obligations for each specific type of key operator (product providers, trustees, management companies and insurance companies) in administering the PRFs and investment portfolios, managing investments, safeguarding fund assets, and providing independent oversight of the management of the PRFs and investment portfolios.
- Fund operations – Introducing requirements in relation to fund operations including valuation and pricing, dealing, reporting, pricing errors, suspension and deferral of dealings, and transactions with connected persons.
- Trustees’ internal control review – Strengthening requirements for trustees: (i) to enhance the annual independent internal control review requirements in the PRF Code; and (ii) to require the submission to the SFC of an internal control review report.
- Specific requirements for different types of investment portfolios – Proposing that an investment portfolio of a PRF shall only be structured as either as (i) a fund investing in SFC-authorised funds, (ii) a cash management portfolio, (iii) a guaranteed fund or (iv) a direct investment fund, and enhancing requirements for each type of investment portfolio including mandatory appointment of SFC-licensed or registered management companies for all direct investment funds.
Other than the above, the Consultation also includes an overarching proposal to enhance the disclosure requirement for PRF principal brochures.
We await to see the conclusions papers together with the final form of the amended PRF Code. The amended PRF Code will become effective upon its gazettal.