Hong Kong Complex And Non-complex Funds

This white paper addresses the following openfunds fields:
OFST710120 Is Maximum Exposure To Virtual Assets More Than 10 Percent Of GAV
OFST710121 Is Maximum Exposure To Virtual Assets More Than 10 Percent Of GAV Date
OFST710130 Is RQFII Fund
OFST710131 Is RQFII Fund Date
OFST710300 Is A Derivative Fund Under The SFC Code On Unit Trusts And Mutual Funds
OFST710301 Is A Derivative Fund Under The SFC Code On Unit Trusts And Mutual Funds Date
OFST710305 Jurisdiction And Publicity
OFST710310 Has Fund Used Derivatives For Investment Purposes
OFST710315 Does Fund Intend To Use Or Invest In Derivatives
OFST710316 Does Fund Intend To Use Or Invest In Derivatives Date
OFST710320 Is Fund Not Understandable For Retail Investors
OFST710325 Is Investment Strategy Considered Complex
OFST710330 Does Fund Invest In Instruments Without Secondary Market
OFST710335 Does Fund Invest In Instruments Without Transparent Information For Retail Investors
OFST710340 Does Fund Invest In Instruments That May Lose More Than Invested Amount
OFST710345 Does Fund Invest In Instruments Which Terms Could Fundamentally Changes The Nature Or Risk Or Pay-out Profile
OFST710350 Does Fund Invest In Instruments Which Terms Might Harm Liquidity Or Recoverability
OFST710360 Does Fund Intend To Hold More Than 50 Percent Of NAV In Loss-absorption Products
OFST710361 Does Fund Intended To Hold More Than 50 Percent Of NAV In Loss-absorption Products Date
OFST710380 Does Fund Intend To Hold More Than 50 Percent Of NAV In High-Yield Bonds
OFST710381 Does Fund Intend To Hold More Than 50 Percent Of NAV In High-Yield Bonds Date

Requirement of the Securities and Futures Commission (SFC)

According to the SFC, Platform Operators should determine whether an overseas product is complex or non-complex as defined in paragraph 6.1 of the Guidelines on Online Distribution and Advisory Platforms. A non-exhaustive list of examples of investment products that are considered to be non-complex can be accessed here. For offline transactions, intermediaries should also consider the list of examples and paragraph 5.5 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission to determine whether an overseas product is complex or non-complex.

Guidance for the use of the openfunds fields

The above mentioned fields can be used by a Platform Operator to determine if a fund is a complex or a non-complex fund. The following flowchart shall help the Fund Houses to decide which fields should be filled in. Click on it to see it enlarged.

Subscriptions

If the value of the field “OFST6030HK Country Legal Registration – Hong Kong” is “yes”, then the blue fields (OFST710300 and OFST710301) must be filled in, as well as the brown fields. The fields in green and orange can be left blank.
If the value of the field “OFST6030HK Country Legal Registration – Hong Kong” is “no”, then the field “OFST710305 Jurisdiction And Publicity” must be filled in. Depending on the value of this field, the following fields have to be populated:

  • The value of “OFST710305” is “specified”: The green and the brown fields must be filled in. The orange and the blue fields can be left blank.
  • The value of “OFST710305” is “non-specified and public”: The orange and the brown fields must be filled in. The green and the blue fields can be left blank.
  • The value of “OFST710305” is “non-specified and non-public”: Only the brown ields must be filled and the other fields (green, orange and blue) can all be left blank.

Depending on which path is the right one for a fund, the blue, green or orange fields may need to be filled in. The brown fields must always be populated.

Document Information

Title: Hong Kong Complex And Non-complex Funds
Language: English
Confidentiality: Public

Revision History

Version Date Status Notice
1.0 2019-08-22 Draft First Version.