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HK Plans Corporate ETF Exemption

The Hong Kong Securities and Futures Commission has proposed exempting certain SFC-authorized open-ended collective investment schemes from having to disclose interests under the Securities and Futures Ordinance.

The exemption applies to schemes that take a corporate form, such as mutual fund companies, and are listed on the Stock Exchange of Hong Kong.

The exemption has been proposed as part of the SFC's attempts to promote the asset management industry in Hong Kong (CR, 1/28). According to the regulator, at present there are no exchange-traded index-tracking funds listed in the special administrative region that have been structured as corporations. The structure is common in other jurisdictions, however, and the SFC said the proposed exemption would help the local ETF market develop by allowing new forms of ETF to list.

The reform would also bring Hong Kong into line with standards in countries such as the U.K., Australia and Singapore, the SFC said. At the moment ETFs listed on the stock exchange take either a contractual or trust form.

"The SFC's policy is to encourage the development of ETFs in the Hong Kong market," said Alexa Lam, the Commission's deputy chief executive officer.

The proposal is open to comments until June 6.

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