SFC issues guidance to fund industry amidst COVID-19 outbreak

27 Mar 2020

In view of the volatility in local and international markets related to the COVID-19 outbreak, the SFC today reminded fund industry participants and intermediaries of their obligations to look after the interests of clients.

In a circular to managers, trustees and custodians of SFC-authorized funds, the SFC reiterated their obligations to properly manage the liquidity of funds and ensure fair treatment of investors in light of the current market situation. The SFC has stepped up its monitoring of SFC-authorized funds and should be given early warning of any material issues affecting them, the circular emphasised.

A separate circular reminded intermediaries of their obligation to ensure suitability when they make a solicitation or recommendation. This includes performing due diligence having regard to an investment product’s liquidity and credit quality as well as taking the client’s current circumstances into account. Intermediaries were also reminded to disseminate notices and other communications about investment products in a timely manner where they hold them directly or indirectly on behalf of their clients.

"Under current market conditions, industry participants should exercise due care when recommending products which may be highly volatile or less liquid," said Mr Ashley Alder, the SFC’s Chief Executive Officer. "This is a period of unprecedented volatility across asset classes and the SFC remains laser focused on ensuring Hong Kong markets stay open and continue to function in a fair and orderly manner."

The SFC is closely monitoring the operational and financial resilience of industry participants and market infrastructure, and will provide further guidance to the industry as needed.


Page last updated : 27 Mar 2020