Since the launch of the first Renminbi (RMB)
denominated fixed income fund in mid-2010, we have seen a number of
developments. So far, RMB denominated funds that have been
authorised for sale to the public in Hong Kong are primarily
regulated by the Securities and Futures Commission
(SFC). At the outset, RMB denominated funds could
only offer units denominated in RMB and the underlying investments
were entirely denominated and settled in RMB.
As the RMB market opens up and more RMB related investments
become available, we have seen a number of relaxations and new
developments. Towards the end of 2011, RMB denominated funds were
able to start offering classes of units denominated in other major
currencies, such as HKD and USD. In addition, in early 2012, the
permissible investments for RMB denominated funds were expanded to
allow an RMB denominated fund to invest a limited portion of its
assets in non-RMB denominated investments. At least 70% of an RMB
denominated fund's assets are still required to be invested in
assets denominated and settled in RMB.
UCITS funds offered in Hong Kong may now offer RMB denominated
share classes on a private placement basis or to professionals
only. The offering documents must state clearly that the RMB
denominated share classes are not available to the public in Hong
Kong. Before launching an RMB share class for an SFC authorised
fund, the product issuer will first need to consult the SFC.
According to item 27B of the SFC's FAQ on the Code of Unit
Trusts and Mutual Funds, the SFC should be consulted before a
fund manager launches a new share class which is denominated in a
restricted currency. In particular, RMB was named as an example of
a restricted currency. The FAQ is available from the SFC website:
Although RMB funds are still at a developing stage, the number
of RMB products available for investment has increased
significantly with the launching of RMB denominated RQFII ETFs as
well as an increasing number of RMB fixed income funds (both RQFII
fixed income funds and Dim Sum Bond fixed income funds) and an RMB
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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