Amendments to MPFA Guidelines

In June 2018, Hong Kong’s Mandatory Provident Fund Association (MPFA) issued four sets of revised Guidelines, namely Guidelines on Central Securities Depositories (Guidelines I.7), Guidelines on Approved Exchanges (Guidelines III.4), Guidelines on Index-Tracking Collective Investment Schemes (Guidelines III.10) and Guidelines on Default Investment Strategy (DIS) (Guidelines III.14). Portfolio managers should take note of the changes, especially the reclassification of certain asset classes as “higher risk assets” for the purpose of the DIS.

Amendments to Guidelines I.7, III.4 and III.10 are made to reflect the approval of a central securities depository (namely the “Shanghai Clearing House”) and the approval of a futures exchange (namely “ICE Futures Europe”) by the MPFA for the purpose of the MPF Regulation. Amendments to Guidelines III.14 relate to the classification of SFC authorised REITs, Value Gold ETF and SPDR Gold Trust as “higher risk assets” for DIS investment purposes.

Enhancement to fee disclosures

Recently the MPFA proposed to align the disclosure of fees for each constituent fund in the offering document with that for DIS constituent funds. The management fees of constituent funds and the underlying approved pooled investment funds should be disclosed separately, and where practicable, broken down by service function (e.g. trustee fee, administration fee, investment management fee). Trustees are expected to make a submission to the MPFA by the end of August 2018.