"$140 billion" potentially to flow into the market
Funds deal widens access to Hong Kong
AUSTRALIA's $1.4 trillion funds management industry will have unprecedented access to retail investors in Hong Kong and, by extension, China, in the wake of a cross-border deal between regulators.
In the latest agreement aimed at expanding access to financial services industry by foreign investors, the Australian Securities and Investments Commission said it had signed a "declaration of mutual recognition" with its counterpart in Hong Kong on regulations covering retail funds.
The agreement means retail funds from Australia will be able to operate in Hong Kong under a substantially loosened regulatory regime, and vice versa. For Hong Kong it is believed to be the most open agreement struck with any foreign regulator.
Australia has allowed regulatory "relief" to Singapore, Jersey and US fund managers to operate in Australia, and hopes to strike a "mutual recognition" deal - allowing Australian fund managers similar access - with Singapore soon.
The chief executive of the Investment and Financial Services Association, Richard Gilbert, said the deal added to the Federal Government's pledge to help develop Australia into a "regional financial services hub".
"We have waited 10 years for this recognition," Mr Gilbert said. "If it means a 10 per cent addition to the local industry, that's $140 billion. Even if we only get 1 per cent more, that's $14 billion. That's a massive flow."
The ASIC chairman, Tony D'Aloisio, said the agreement would provide "exciting marketing opportunities" for the funds management industries of each country, and offer more choice to retail investors in Australia and Hong Kong.
"This is an important milestone," Mr D'Aloisio said.
The agreement follows last month's deal with New Zealand on cross-border recognition of securities offerings in the two countries, and comes amid negotiations with the US on an agreement on securities that could provide Australian investors easier access to US stocks.
US brokers, meanwhile, could potentially be able to sell shares of Australian companies to US retail investors - not allowed at present, except for Australian companies dual-listed in the US.
Last month the Federal Treasury and ASIC released a paper on cross-border recognition. It said that, for mutual recognition, the regulatory regime of each jurisdiction must be "substantially equivalent", and involve "significant commitment and co-operation" between governments and regulators.
