funds to Singapore. Australia’s Corporate
Collective Investment Vehicle (CCIV)
was anticipated to launch in 2019, but will
most likely go live later this year.
The introduction of these new fund
structures comes at a vital time where
local regulators are attempting to develop
a single regional market for funds
through various cross-border passporting
schemes, notably the ASEAN Collective
Investment Scheme (ASEAN CIS), the
Asia Region Funds Passport (ARFP), and
various bilateral schemes such as the
Hong Kong-China Mutual Recognition of
Funds (MRF) scheme.
“Funds domiciled in the region are
trying to concentrate activity and to
work in a more international fashion.
The new structures are part of a larger
effort to establish Asia as vehicle of
choice by replicating the features of an
international fund and promoting cross-
border distribution rather than using a
Luxembourg or Irish-domiciled fund,”
says Bernard Tancre, head of investment
fund services, Clearstream.
From offshore to onshore
The introduction of the new structures
provide a freedom of choice for local
asset managers who have not, in the past,
been able to benefit from. Hong Kong’s
mutual funds have traditionally not been
able to accommodate the diverse needs of
fund providers. When it comes to listing
and launching new funds, it has been a
distribution hub for Luxembourg and
“The new structures are part of a larger effort to establish
Asia as vehicle of choice by replicated the features of an
international fund.”
BERNARD TANCRE, HEAD OF INVESTMENT SERVICES, CLEARSTREAM
Cayman funds only.
“Hong Kong and Singapore have
become popular jurisdictions for offshore
funds, with offshore funds comprising
60-70% of the total funds registered or
authorised for sale,” says Ganesh Valakati,
head of regulatory product management,
Asia-Pacific, HSBC Securities Services.
“While many of these are UCITS
established in the UK, Luxembourg,
Dublin, or structure in the Cayman, there
is now a concerted effort by regulators
to grow local fund by creating the right
set of incentives for fund managers in
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Global Custodian
Spring 2020
the region. In addition, with increased
scrutiny on offshore jurisdictions such as
Cayman funds, there is a rising demand
among investors for local domiciles.”
The corporate fund vehicle, similar
to those structures used in other global
cross-border centres, gives Hong Kong
the ability to accommodate locally-
launched products.
Meanwhile in Singapore, the VCC is the
fourth fund type to be introduced into
the market, designed to provide fund
managers with operational flexibility
and help reap economies of scale when
launching a locally-listed fund.
“The VCC is geared towards providing
an alternative to structures under the
existing Companies Act, and has been
modelled after the more recognisable
offshore funds,” says Asim Hasan, head
of global services, South East Asia, State
Street.
Both the OFC and VCC supports an
umbrella and sub-funds structure, with
the latter allowing sub-funds to appoint a
local board of directors and use the same
service provider as the umbrella fund.
"Singapore has historically been
constrained by the limited types of fund
structures. The VCC solution brings
tax benefits and operational flexibility
for fund managers, and it is also a good
choice for both mutual and alternatives
fund strategies,” explains Caleb Wong,
head of alternatives, Asia-Pacific, BNP