Hong Kong waives some rules for ultra wealthy investors in boost to city’s wealth management hub status
- The sophisticated professional investors must have at least HK$40 million (US$5.13 million) of assets under management or HK$80 million in net assets
- The new guideline will bring Hong Kong in line with international standards, as Switzerland, UK, US and Singapore have similar rules
Hong Kong’s regulators have smoothened the process for banks and brokers to sell products to ultra-high net worth investors aligning the city with international practices and strengthening Hong Kong’s wealth management industry with new guidelines announced last month, analysts said.
A joint circular issued by the Hong Kong Monetary Authority and the Securities and Futures Commission on July 28, said banks and brokers are no longer required to do suitability tests when they sell products to sophisticated professional investors and waived some product explanation requirements as well.
The sophisticated professional investors must have at least HK$40 million (US$5.13 million) of assets under management with the firm that they are trading with, or HK$80 million in net assets, the circular said. They also need to have a certain level of knowledge or experience in financial markets.
Financial Secretary Paul Chan Mo-po first mentioned the government’s plan to ease these conditions in his budget speech in February. “On wealth management, regulators will, on a risk-based principle and subject to appropriate protection for investors, streamline the suitability assessment and disclosure process for sophisticated or ultra-high net worth individual clients,” Chan said in his budget.
The new requirements were widely welcomed by banks and the wealth management industry.