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SFC-HKMA's joint product survey shows increasing participation of intermediaries and investors
The following is issued on behalf of the Hong Kong Monetary Authority: 
     The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) today (September 27) released the findings of their 2021 joint survey on the Sale of Non-exchange Traded Investment Products by licensed corporations (LCs) and registered institutions (RIs) (Note 1).
     The survey results show that notwithstanding the continued pandemic and difficult market environment, the number of investors who purchased investment products increased 5 per cent to 770 000 (Note 2). The total number of firms engaged in the sale of investment products increased slightly to 390. Major observations from the survey included:
  • Among the $5,015 billion (Note 3) investment products sold in 2021, structured products ($2,385 billion or 48 per cent) remained the predominant product type sold by firms, followed by collective investment schemes (CIS) ($1,491 billion or 30 per cent) and debt securities ($818 billion or 16 per cent). CIS was the most popular product in terms of the number of investors who purchased them.
  • The total transaction amount of equity-linked structured products increased by 5 per cent to $1,674 billion, largely due to the buoyant market of the underlying internet and technology stocks during the first half of 2021, while the sales of authorised CIS helped drive the 5 per cent increase in the overall transactions in CIS to $1,491 billion.
  • Weighed down by uncertainties in interest rates outlook, the total transaction amount for debt securities dropped 23 per cent to $818 billion. This, along with declines in the sales of other structured products, was the main reason for the 12 per cent decline in the overall sales of investment products by LCs and RIs in 2021.
  • A total of 70 firms used online platforms to distribute investment products, up 21 per cent from the last survey. CIS remained the most popular product type, accounting for 91 per cent of total online sales. About 65 per cent of clients investing in CIS transacted online and the online sale of CIS accounted for 18 per cent of the transaction amount of all CIS sold.
     "The survey reveals increased retail participation in the investment market, notwithstanding the difficult market environment, and an increasing trend for firms to use online platforms for distribution," the Deputy Chief Executive Officer and Executive Director, Intermediaries of the SFC, Ms Julia Leung said. "It yields useful information on market trends and distribution channels for the industry participants and regulators alike to better serve the interests of retail investors."
     "This joint product survey strengthens the supervisory collaboration between the SFC and the HKMA, and enhances surveillance of the market by the regulators," Deputy Chief Executive of the HKMA, Mr Arthur Yuen added. "The survey also provides useful input to our policy formulation and supervisory work in protecting investors."
     This is the second survey conducted annually by the SFC and the HKMA on all the LCs and RIs which engaged in selling activities. The above findings were based on responses from a total of 327 LCs and 63 RIs which reported sale of investment products during the reporting period.

Note 1: Survey questionnaires were sent to 2 223 LCs and 111 RIs licensed or registered for Type 1, Type 4 or both regulated activities and over 99 per cent responded. The survey covered the sale of non-exchange traded investment products from January 1 to December 31, 2021 (the reporting period) by respondent firms to non-professional investor (PI) clients, individual PIs and certain corporate PIs.

Note 2: The number of investors who completed at least one transaction in non-exchange traded investment products during the reporting period.

Note 3: The transaction amount refers to the amount paid or payable by investors for investment products. For structured products and derivative products, the transaction amount refers to the maximum exposure of the contracts at the point of sale. Respondent firms were requested to report only one side of the transaction. Rollovers, redemptions and position close-outs were not included.
Ends/Tuesday, September 27, 2022
Issued at HKT 18:15
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