HSBC wins custody mandates for Hong Kong’s first open-ended fund company

HSBC says the arrival of the OFC provides Hong Kong with a corporate structure comparable to jurisdictions such as UK, Luxembourg, Cayman Islands, and BVI

By Jonathan Watkins

HSBC Securities Services has been appointed the custodian and fund administrator for Pacific Hawk, the first open-ended fund company (OFC) launched in Hong Kong.

Pacific Hawk officially offered their open-ended private fund on 14 October 2019 after getting the approval from Hong Kong’s Securities and Futures Commission (SFC) in August.

The OFC strikes a balance for investors and fund managers alike between providing investor protection and familiarity of a company limited by shares with the simplicity of fund raising previously only available for funds structured as unit trusts in Hong Kong.

“The arrival of the OFC provides Hong Kong with a corporate structure comparable to internationally recognisable jurisdictions such as UK, Luxembourg, Cayman Islands, and BVI,” said Brian Godins, HSBC Securities Services Asia-Pacific regional head.

With the upcoming Corporate Collective Investment Vehicles scheme launch in Australia and the Variable Capital Company in Singapore, Godins added that he is seeing competition between fund jurisdictions in the Asia-Pacific region heating up.

“We expect that these new structures would boost Hong Kong’s position as an international asset management hub,” he added.

The assets of OFCs must be segregated from those of the investment manager and entrusted to a separate, independent custodian for safekeeping. An OFC must appoint a custodian who should meet the same eligibility requirements which are applicable to SFC authorised funds under the Unit Trust Code.

”This is a really positive step for the local economy,” said Ann Cooley, chief executive officer of Pacific Hawk.

“OFCs fill a big gap in the range of investment options in Hong Kong and will create new opportunities for fund managers, independent directors and other legal and professional services. Having investor protection under Hong Kong law and direct access to the custodian/administrator and advisors in the same time zone will bring greater transparency and confidence for the investors. There are also clear advantages to having the professionals in the same location including more cost-effective funds,” added Cooley.

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