MRF rules need to be relaxed, finds survey

Relaxing the regulatory requirements would enable more fund managers to participate in the Mainland-Hong Kong Mutual Recognition of Funds (“MRF”) Scheme, according to a survey.

The survey was relating to northbound funds through MRF, the Chinese liberalising measure designed to enable Hong Kong domiciled managers to sell to mainland retail and vice versa.

The key restriction that managers wish to see relaxed is the requirement that 50% of the assets must be raised overseas with 26% citing this as the key item to be addressed.

23% believe it’s important to allow non-HK domiciled funds for MRF purposes, while another 23% believe managers should be allowed to delegate the investment management function overseas. Eliminating the requirement that a fund has a one-year track record is cited by 14% of respondents.

Out of the responding companies, 37% have already filed or plan to offer funds while another 9% will set up a HK platform or re-domicile their funds for MRF purposes. According to the results 29% have adopted a wait-and-see approach pointing out that their decision would primarily hinge on how the regulations evolve.

The survey follows a Global Custodian report earlier this week which claimed that MRF could be extended throughout Asia, according to experts.