Regulatory Alerts2010-09-03
Added · Updated
HKMA Guidance on Synthetic Exchange-Traded Funds and Related Products
The Hong Kong Monetary Authority instructs registered institutions to implement appropriate measures for compliance when soliciting or recommending synthetic ETF products to clients. Institutions must ensure adequate disclosure of key features and specific risks, including counterparty, liquidity, and tracking error, while integrating these factors into product due diligence and customer suitability assessments. Additionally, specific obligations apply for clients without derivatives knowledge, requiring risk explanations or suitability advice depending on whether the product is exchange-traded.
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