Hong Kong regulator reclassifies certain funds with exposure to private markets

Hong Kong's Securities and Futures Commission (SFC) has reclassified certain authorized funds as complex products. This reclassification applies to funds with direct or indirect exposure to private market assets exceeding 50% of their net asset value. The SFC's decision aims to raise the threshold for selling these products to retail investors. The regulator observed that some funds were gaining indirect exposure to private market assets through layered structures and complex instruments, which may lack transparency. This action by the SFC in Hong Kong will impact how these specific funds are offered to the public.