The electronic network will cover the full distribution cycle of retail funds authorised by the Securities and Futures Commission (SFC), the exchange said in a statement on Thursday. HKEX will work with the government and regulators to develop the model in coming months.
The aim is to make it easier for money managers and their sales partners to sell fund products to clients, attracting more companies into the market and creating more choice for investors, the exchange said.
“The new integrated fund platform, which is expected to generate new business opportunities for the industry and to increase participation and diversification in Hong Kong’s retail fund market, will reinforce Hong Kong’s position as a leading international asset and wealth management centre,” said Christina Choi, executive director of investment products at the SFC.
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“Equally important, the platform, which will facilitate fund distribution and public access to information on fund investment options, will enrich product choice and enhance product transparency for investors.”
The SFC has authorised 2,917 funds as of the end of June this year, according to data from the regulator.
The platform will complement other initiatives announced by the Hong Kong government last year to promote the city as a centre for wealth management and family offices while also diversifying the market.
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The city’s Chief Executive John Lee Ka-chiu announced in his annual policy address last week a revamped investment migration scheme, offering fast-track residency for those with at least HK$30 million (US$3.8 million) invested in local stocks, funds or other assets.
Lee also announced a cut in stamp duty, effective later this month, to 0.1 per cent from 0.13 per cent for both buyers and sellers to boost stock market turnover. The average daily turnover fell 12 per cent in the first nine months of this year to HK$109.7 billion from the same period a year earlier.
HKEX, which operates the third largest stock market in Asia, initially plans to establish the fund platform as a business-to-business service model.
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It will have three components: a communication hub to connect fund managers and their distributors to facilitate transactions; a business platform for fund order routing, subscriptions, redemptions and payments; and an information portal to provide fund information to the public, the exchange statement said.
“The new HKEX platform is warmly welcomed by the fund industry,” said Sally Wong, CEO of the Hong Kong Investment Funds Association. “This represents a major initiative to broaden the distribution channel of funds and to increase the availability of funds to the public.”
The association believes the platform will allow more players to participate in the market, offering more products and fostering more competition, which will ultimately be in the interest of the investing public, she said.
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The city’s 600 stockbrokers will also benefit from the new move, said Robert Lee Wai-wang, the lawmaker for the financial services sector and CEO of local brokerage Grand Capital Holdings.
“The new fund platform will be a good way for traditional brokers selling mostly Hong Kong stocks to diversify their product offerings,” Lee said. “Many of them have been operating on HKEX’s systems for years, so the transition should make it easier to distribute other products. Facing a challenging environment, brokers should be able to offer more products across asset classes, geographies and investment styles.”