Information Centre

Pursuant to section 11(1A) of Schedule 1 to the Mandatory Provident Fund Schemes (General) Regulation (the Regulation), unless an authorized financial institution satisfies a minimum credit rating set by the Authority, the funds of an MPF fund must not be placed on deposit with a branch outside Hong Kong of an authorized financial institution incorporated outside Hong Kong. The Authority has issued Guidelines III.3 on Eligible Overseas Banks and Authorized Financial Institutions to set out the minimum credit rating requirements with respect to an authorized financial institution incorporated outside Hong Kong for the purposes of section 11(1A) of Schedule 1 to the Regulation.

Yes, alongside other securities permitted under section 8(2) of Schedule 1 to the Regulation, not more than 10% in total of the fund asset may be invested in depositary receipts that are listed on approved stock exchanges and the underlying shares of the company are fully paid-up and not listed on any stock exchange.

SFC-authorized UCITS funds of the following fund types will generally be considered permissible for MPF investment purposes pursuant to section 8(2)(c) of Schedule 1 to the Regulation and paragraph 12(a) of Guidelines III.2:

 

• A non-derivative fund (defined as one with a net derivative exposure of up to 50% of its net asset value) that is not a specialized scheme under Chapter 8 of Section II of the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products (SFC Handbook); 
• A money market fund as defined in Chapter 8.2 of Section II of the SFC Handbook; or 
• An unlisted index fund or index tracking exchange traded fund as defined in Chapter 8.6 of Section II of the SFC Handbook which (i) does not adopt a synthetic replication strategy through the use of financial derivative instruments to replicate the index performance, and (ii) is not already approved by the Authority under section 6A of Schedule 1 to the Regulation.

Reference can be made to the “List of investment products” on the SFC website, offering documents and other supporting documents (e.g. Product Key Facts Statements) to identify SFC-authorized UCITS funds, and the fund types of such funds.  Trustees and investment managers can consider whether the fund type of SFC-authorized UCITS fund would be one of those considered permissible under section 8(2)(c) of Schedule 1 to the Regulation and paragraph 12(a) of Guidelines III.2.

Yes, pursuant to section 15(2)(a) of Schedule 1 to the Mandatory Provident Fund Schemes (General) Regulation (Regulation), an MPF fund may enter into a currency forward contract with an eligible overseas bank.  Pursuant to section 13 of the of the Regulation, an eligible overseas bank

1. is a bank incorporated outside Hong Kong and not holding a valid banking licence under the Banking Ordinance (Cap. 155) and
2. satisfies a minimum credit rating set by the Authority, based on the credit rating of the bank as determined by an approved credit rating agency. 

 

Trustees should note that some overseas financial institutions, which provide currency trading services, are not incorporated as banks. As such, trustees should ensure that their investment managers have put in place relevant control measures to review the eligibility of their counterparty prior to entering into any currency forward contract.

The MPFA would consider applications for such unit/share classes if they invest in accordance with the Mandatory Provident Fund Schemes (General) Regulation and if there are sufficient risk control measures in place to monitor and mitigate the potential risks of such unit/share classes.

 

In an application on the establishment of currency-hedged unit/share classes under an APIF, the related risks of currency-hedged unit/share classes under an APIF are required to be disclosed in the offering document.  As part of the approval process, the applicant will have to explain to the MPFA the justification(s) for establishing such unit/share classes and what relevant risk mitigation measures are in place so as to ensure MPF investors’ interests are protected.

No, cryptocurrencies are not permissible investments for MPF funds under Part 2 of Schedule 1 to the Mandatory Provident Fund Schemes (General) Regulation. 

 

In light of the complex nature of cryptocurrencies and the significant risks they can pose to an MPF fund, it has all along been the MPFA’s policy that MPF funds should not invest in cryptocurrencies, whether directly or indirectly through any other investment products or arrangements, so as to ensure scheme members’ interests are protected.  

 

As the market develops, it is observed that a broader range of investment products has been made available to both retail and professional investors to provide investment exposure to cryptocurrencies, for example, exchange traded funds (ETFs) which track the investment results closely corresponding to the performance of a cryptocurrency through investing in cryptocurrency futures or spot cryptocurrency have been authorized by the Securities and Futures Commission (SFC). 

 

For the avoidance of doubt, cryptocurrency ETFs are not permitted for investment by MPF funds, regardless of whether they are futures-based ETFs or spot ETFs and whether they are authorized by the SFC under Chapter 8.6 of Section II (Unlisted Index Funds and Index Tracking ETFs) of the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products.

The Mandatory Provident Fund Schemes Ordinance specifies the persons who can make applications to the Authority for approval of trustee, registration of MPF scheme and approval of constituent fund.  

 

In general, applications involving registration of MPF scheme and approval of constituent fund require approved trustees to be the persons who can make applications to the Authority.

 

For other types of applications, please refer to the guidelines issued by the Authority.  You may refer to respective guidelines via the link below:

https://www.mpfa.org.hk/en/info-centre/laws-and-regulations/guidelines

The Authority has issued guidelines relating to the application for registration of MPF scheme and the application for approval of trustee / constituent fund / pooled investment fund / index-tracking collective investment scheme.  Application forms, information and documents required for submission of a particular type of application are specified in the relevant guideline issued by the Authority.

 

To assist applicants in preparing applications, the Authority has also issued information and document checklists which can be accessed via the link below:

https://www.mpfa.org.hk/en/home/useful-tools/forms/mpf-schemes/for-trustee

 

When making an application to the Authority, you should note the application fee applicable to your particular application.  For details, please refer to Q3 of this FAQ.

 

For application for approval of constituent fund, applicants are advised to submit the electronic application forms with all relevant supporting documents to the Authority via the eApplication Submission Platform for MPF Products (eAS) at: https://eas.mpfa.org.hk.  To use the eAS, applicants should register with the Authority for opening an applicant account by sending a registration request to: MPFesubmission@mpfa.org.hk.

 

For other types of application, applicants should send the application forms with all relevant supporting documents to the designated email address: MPFesubmission@mpfa.org.hk.

An application fee is required for application relating to approval of trustee / registration of MPF scheme / approval of constituent fund and pooled investment fund.

 

The application fees are prescribed in the Mandatory Provident Fund Schemes (Fees) Regulation, which can be accessed via the link below:

https://www.mpfa.org.hk/en/info-centre/laws-and-regulations/legislation/secondary-legislation

 

You can pay the application fee by either cheque made payable to “MPFA Administration Account” or e-Cheque via e-Cheque Collection Portal which can be found on the Authority’s website.

MPF scheme / constituent fund / pooled investment fund are required to be authorized by the SFC. 

 

Under the current arrangement agreed between the Authority and the SFC, an application is first reviewed by the Authority.  Subject to the Authority’s satisfaction with the review result, the Authority would agree in principle (AIP) to grant approval to the application and issue an AIP letter to the applicant. The applicant should then submit an application to the SFC to seek the SFC’s authorization.  

After the SFC has granted authorization, the applicant should submit all relevant documents to the Authority for obtaining the Authority’s approval.

Applicants may submit both “Non-Material” Amendments and Other Amendments in the same application. If an application includes Other Amendments, the timeline of “Non-Material” Amendments will not be applied in the circumstances, and such an application will be subject to the timeline of performance pledge in respect of Other Amendments (i.e. within 6 weeks after receipt of all required information and documents).

The “Standard Information / Document Request List for Application for Approval of Amendment(s) to Trust Deed and/or Offering Document of Registered Scheme or Approved Pooled Investment Fund” (Standard Information List) sets out the types of amendments categorized as “Non-Material”. The Standard Information List is available on the Authority’s website, and can be accessed by clicking the link below.

https://www.mpfa.org.hk/en/home/useful-tools/forms/mpf-schemes/for-trustee

The list of amendments categorized as “Non-Material” is reviewed / updated from time to time. Applicants should refer to the latest Standard Information List when preparing applications.