Hong Kong makes ETF listing exception
Hong Kong's Securities and Future Commission's (SFC) has approved State Street Global Advisors' fund to track the price of gold, despite its failure to meet the usual requirements for fund diversification.
The SPDR Gold fund, listed on July 31, was the first to list on the Hong Kong Stock Exchange. Clifford Chance advised State Street Global Advisors.
"Originally, it seemed difficult for a fund with only one asset class, gold, to meet the SFC's normal requirements for fund diversification," said Mark Shipman, the Hong Kong partner at Clifford Chance who led the team.
Normally no more than 10% of the securities in a fund product can come from a single issuer and no more than 20% of the net asset value can be invested in commodities.
"But we provided the SFC with the information they needed to feel comfortable about approving such a product," said Mark. "It's a credit to the Exchange and SFC that they supported the introduction of such an innovative product."
The ETF allows investors to trade gold shares in the same way as any stock without having to store or transport it themselves. Investors must place a minimum order of 10 shares, with a single share based on the price of one-tenth of an ounce of gold.
Sammy Yip, Head of Exchange-Traded Funds (Asia Pacific) at State Street Global Advisors, said: "As long as you have a brokerage account, you are able to trade this gold fund very efficiently."