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Hong Kong Warned Of Need For Continued Product Development

Wednesday, September 11, 2013

In order to consolidate its position as Asia's premier wealth and asset management hub, Norman Chan, the Hong Kong Monetary Authority's (HKMA) Chief Executive, told the Treasury Markets Summit 2013 that Hong Kong needs to continue to improve the infrastructure for its services and products, and to reach out and market to overseas asset managers.

While he said that "it is not easy to come up with an exhaustive list of factors that affect Hong Kong's competitiveness as a wealth and asset management center," he cited a few examples of Hong Kong's infrastructure that are uniquely important to its future development.

Firstly, before its abolition in Hong Kong in 2006, the existence of an inheritance tax or estate duty, even at low rates, was, in his opinion, a "material impediment" to the development of wealth and asset management businesses; and, secondly, the modernization of the trust laws passed by the Legislative Council (LegCo) in July this year was "an important milestone to revamp Hong Kong's antiquated trust regime which had not been substantially reviewed and modified for decades."

In addition, Chan pointed to the promotion of Islamic finance through the legislative amendments to provide a comparable tax and stamp duty framework for common types of sukuk vis-à-vis conventional bonds that were also passed by the LegCo in July 2013. The development of an Islamic financial platform in Hong Kong was a key policy proposal made in the study jointly led by HKMA and the Treasury Markets Association in late 2007.

Furthermore, HKMA recently announced jointly with Bank Negara Malaysia the establishment of a private-sector-led joint forum for advancing the development of Islamic finance in Hong Kong.

HKMA has also lobbied for a legislative framework and regulatory regime for open-ended investment companies in Hong Kong. It has been encouraged that this initiative was announced by the Financial Secretary in the 2013-14 Budget to provide more choices to market participants in terms of the legal form of funds. This, Chan added, would be a major step to attract more funds to domicile in Hong Kong.

He affirmed that Hong Kong is already a hub for private wealth and asset management. Nearly 80 of the top 100 global money managers are in Hong Kong, while 15 private banks have opened for business since 2009, bringing the total to 45 banks offering private banking services to their clients. Combined fund management assets reached a record high of USD1.6 trillion in 2012, with 65 percent of the funds sourced from non-Hong Kong investors.

Chan noted, however, that a survey has also showed that 74 percent of the practitioners in the asset management field in Hong Kong were engaged in the sales and marketing functions. While the figure has already reduced from 81 percent in 2008, it does reflect, he said, the fact that Hong Kong needs to further expand the other segments of the asset management "value added" chain, for example, in structuring, research, investment and trading. To achieve this objective, HKMA's outreach work in the last two to three years has taken a new focus on asset owners, such as pension funds and sovereign wealth funds.

He concluded that "competition amongst financial centers has always been fierce and will be even more so in the future … (and) there is no room for complacency. We will need to do more to further enhance the platform and to reach out to the overseas asset managers and owners to market Hong Kong's platform." He warned that most financial centers in Asia, including those in Mainland China (in particular, presumably, Shanghai) "all harbor the understandable aspirations to become an international financial center."

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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