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SFC Issues New Rules Requiring Clear Disclosure of Authorized Funds' Exposure Risks to Private Market Assets
2026-09-03 18:18:46 The Securities and Futures Commission (SFC) today (3rd) issued a circular to provide guidance on SFC-authorized funds with exposure to private credit and private equity (collectively, private market assets) to enhance their transparency on underlying investments and associated risks. Recent market developments have prompted regulators to pay closer attention to private market assets. The SFC has observed that some funds may gain indirect exposure to private market assets through various types of investments for asset allocation and yield enhancement purposes. The SFC also noted that retail investors in Hong Kong may have limited familiarity with private market assets and their associated risks, as some of these indirect exposures involve layered structures and complex financial instruments, which may lack transparency. Against this backdrop, the SFC sets out in this circular its enhanced disclosure requirements, obligating fund managers to provide a clear, sufficiently completed and balanced picture of the characteristics, nature and risks associated with a fund’s exposures to private market assets. In addition, the SFC may, where appropriate, subject such funds to enhanced scrutiny and classify them as a complex product with heightened distribution requirements for offering in Hong Kong. For existing funds that may have exposure to private market assets, the SFC also expects fund managers to review their funds and update the funds’ offering documents as soon as practicable. ~ AASTOCKS Financial News Website: www.aastocks.com | |