HONG KONG: Europe’s main funds regulator has introduced a fast-track procedure for approving mutual funds that wish to participate in a landmark Hong Kong-China equity trading scheme.
The announcement, made by the Association of the Luxembourg Fund Industry (ALFI) yesterday, comes amid growing industry frustration over European Union regulatory hurdles that have prevented many institutional asset managers from participating in the Hong Kong-Shanghai Stock Connect scheme.
Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF) will fast-track applications from mutual funds sold to retail investors, also known as UCITS, whose investment policy already permits exposure to China shares and which only need to adapt their existing paperwork, ALFI said.
Some Luxembourg funds can already invest in Chinese shares through limited cross-border investment schemes known as QFII and RQFII.
The so-called Stock Connect scheme, launched on November 17, allows foreign investors to trade Shanghai-listed shares via the Hong Kong stock exchange, and mainland investors to invest in Hong Kong shares via the Shanghai bourse.
But within a week of its launch, trading volumes had dwindled to less than 20 percent of the maximum allowance. The CSSF said that it had so far approved just one UCITS fund.
About 13,000 global mutual funds, or two-thirds of Europe’s funds industry, are domiciled in low-tax Luxembourg and regulated by the CSSF.
Reuters
