SFC concludes consultation on amendments to the Code on Unit Trusts and Mutual Funds

6 Dec 2018

The Securities and Futures Commission (SFC) today released consultation conclusions on proposed amendments to the Code on Unit Trusts and Mutual Funds (UT Code) (Note 1).  

The SFC will implement the proposals set out in the consultation paper (Note 2) with some modifications and clarifications. These include modifications to the calculation method for funds’ derivatives investments and clarification of the enhanced obligations of trustees and custodians.

"These changes will ensure that our regulations governing public funds are fit for purpose and fully aligned with international standards," said Mr Ashley Alder, the SFC’s Chief Executive Officer. "A robust regulatory regime that adapts to the opportunities and risks presented by financial innovation and market development is key to foster the growth of the retail fund industry in Hong Kong."

Consequential amendments to the SFC Code on MPF Products (MPF Code), Code on Pooled Retirement Funds (PRF Code) and Code on Investment-Linked Assurance Schemes (ILAS Code) will also be implemented, with appropriate modifications. The revised UT Code, MPF Code, PRF Code and ILAS Code will become effective after gazettal, tentatively on 1 January 2019 (Note 3).

The SFC will publish frequently asked questions to provide further guidance to the industry regarding the implementation and transition arrangements for the revised UT Code (Note 4).  



  1. On 18 December 2017, the SFC issued a Consultation Paper on Proposed Amendments to the Code on Unit Trusts and Mutual Funds. The consultation ended on 19 March 2018.  The SFC received 29 written submissions from asset management firms, various industry associations, law and consulting firms and individuals.
  2. Key amendments include strengthening requirements for key operators (management companies, trustees and custodians), providing greater flexibility and enhanced safeguards for funds’ investment activities (particularly in relation to derivatives, securities lending, and repo and reverse repo transactions), and introducing new fund types such as active ETFs.
  3. The revised UT Code (as set out in Appendix A to the conclusions paper) and the revised MPF Code, PRF Code and ILAS Code incorporating the corresponding consequential amendments (as respectively set out in Appendices C, D and E to the conclusions paper) are scheduled to be gazetted on 14 December 2018.
  4. A 12-month transition period from the effective date of the revised UT Code will generally be provided for existing SFC-authorised funds. The same implementation timetable will apply to the revised MPF Code and PRF Code (wherever applicable). We will generally allow a 12-month transition period for compliance with the revised ILAS Code for existing investment-linked assurance schemes.


Page last updated : 6 Dec 2018