Compliance & Regulation

Strengthening Financial Ties: Hong Kong Funds Explore Opportunities in Dubai's DIFC

Financial regulators have initiated discussions on enabling Hong Kong funds to be distributed within the Dubai International Financial Centre (DIFC), aiming to fortify the economic bridge between China and the Middle East by enhancing collaborative efforts in the asset management sector.

A significant meeting was convened on April 5 by the Dubai Financial Services Authority (DFSA) and the Securities and Futures Commission (SFC) of Hong Kong. The focus was on exploring avenues for Hong Kong-based asset managers to offer their funds in the DIFC. This event saw participation from over 15 executives representing Hong Kong asset management firms, as per a release from Dubai's financial regulatory body.

This dialogue marks a continuation of the partnership between these two global financial centers, covering a range of topics such as sustainable finance, and the integration of digital and technological advancements.

Ian Johnston, the Chief Executive of DFSA, addressed the regulatory frameworks necessary for the introduction of Hong Kong-domiciled funds in the DIFC. He also discussed the potential benefits for Hong Kong asset managers in the DIFC, particularly highlighting the opportunity to reach investors across the broader UAE market through the UAE fund passporting regime established in 2019. This system allows Hong Kong funds to collaborate with a local DIFC manager to create a regional feed fund via a master-feeder structure, as outlined by the SFC.

Johnston emphasized the potential for increased collaboration between the DIFC and Hong Kong, focusing on the expansion of the China-Middle East economic corridor.

Plans for a subsequent roundtable to be held in May, aimed at participants in the asset management industry from Dubai, have been announced by the DFSA and the SFC, signaling ongoing efforts to deepen financial cooperation.