SFC consults on rules for custodians

The Securities and Futures Commission yesterday began a further consultation on a proposal to regulate depositaries, or top-level trustees and custodians of SFC-authorised collective investment schemes, after releasing the result of a preliminary consultation.

The public was invited to submit comments until April 31, a statement on the SFC's website said.

The further consultation came about two years after the SFC launched a consultation proposing to introduce a new Type 13 regulated activity or RA 13, to put depositaries of SFC-authorised CIS under the regulator's direct supervision in 2019.

The previous consultation ended on December 31, 2019. Nine written submissions were received from trustee companies, industry associations and law firms.

Respondents were generally supportive of the proposal, with some seeking clarification of the proposed licensing scope and conduct requirements, the SFC said. The SFC is now consulting the public on proposed amendments to subsidiary legislation and SFC codes and guidelines to implement the regime.

"The RA 13 regime will enhance the regulation of public funds in Hong Kong by regulating how depositaries safeguard scheme assets and oversee scheme operations," said Ashley Alder, the SFC's chief executive.

"The new regulatory framework is in line with those in other leading international markets and is an important part of the SFC's efforts to develop Hong Kong as an international, full-service asset management center."