On 14 Mar 2025, the HKMA issued guidance consolidating existing regulatory requirements for accumulator sales without introducing new rules, clarifying exemptions for Institutional Professional Investors and Qualified Corporate Professional Investors, and providing detailed compliance guidance for Authorized Institutions regarding Sophisticated Professional Investors, including alternative product disclosure and FX accumulator exposure calculation.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction and Purpose
On 14 Mar 2025, the Hong Kong Monetary Authority (HKMA) issued a circular updating and consolidating existing regulatory requirements for the selling of accumulators, decumulators, and similar products, without imposing any new regulatory requirements.
Consolidation of Existing Requirements
The circular consolidates and updates over time product-specific regulatory requirements previously issued by the HKMA on accumulator sales, providing a single, convenient reference for industry compliance. It clarifies that accumulators include decumulators and similar products regardless of naming, and updates guidance on suitability assessments, product disclosure, and foreign exchange (FX) accumulators.
Clarified Investor Exemptions and Compliance Guidance
The circular clarifies exemptions for Institutional Professional Investors and Qualified Corporate Professional Investors regarding accumulator transactions. It also provides specific guidance for Authorized Institutions (AIs) on ensuring compliance when dealing with Sophisticated Professional Investors (SPIs), including requirements to provide reasonable alternative investment products with documented rationale in the Product Category Information Statement, and to adopt the expected exposure framework (instead of full notional approach) for calculating gross exposure from FX accumulators to meet SPI streamlining thresholds.
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