Hong Kong’s securities regulator plans to introduce a tougher set of reporting rules for asset managers in a bid to boost investor protection.

The Securities and Futures Commission (SFC), headed up by IOSCO chair Ashley Alder, sent out a series of proposals on Wednesday focusing on fund houses.

Securities lending, repo, custody, liquidity risk management and disclosure of leverage are all areas marked for enhanced reporting.

The move forms part of the regulator’s broader initiative to boost Hong Kong’s position as a major international asset management centre.

“It is important to ensure that our regulations are properly benchmarked to evolving international standards,” said Alder, the SFC’s chief executive.

IOSCO and the FSB are currently looking into the systemic risks potentially posed by asset managers, particularly around shadow banking, liquidity and risk management and securities lending. 

SFC’s proposals will impact the Fund Manager Code of Conduct (FMCC) which applies to registered investment managers in Hong Kong.

Planned modifications include noting minimum valuation and margin requirements where a fund manager engages in securities lending, repo and similar OTC transactions on behalf of the funds it manages.

Similarly, it is recommended that managers put in place a cash collateral reinvestment policy to ensure that assets held in the cash collateral reinvestment portfolio are liquid with transparent pricing and low risk to meet recalls.

Additional documentation of securities lending and repos in annual reports and fund literature are also on the cards.

In the US the SEC is putting in place new rules requiring more frequent and detailed fund reporting requirements around securities lending and repo activity for certain US investment funds

Meanwhile in Europe, SFTR will force firms to report details of their securities financing transactions (SFTs) to trade repositories from mid-2018 for the benefit of regulators.

Hong Kong funds have until the end of February 2017 to give their thoughts on the SFC's plans.