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SFC gives green light to EIP’s new suite of synthetic ETFs

Hong Kong financial regulator, the Securities and Futures Commission (SFC) has authorised a new and innovative suite of ETF products to be rolled out by local asset management firm, Enhanced Investment Products Limited (EIP). EIP is scheduled to list the first suite of products on the Hong Kong Stock Exchange on Thursday 16 February 2012. In doing so it is expected to become the first Hong Kong-domiciled swap-based synthetic ETF platform to be managed by a local manager. Unsurprisingly, given the negative headlines recently surrounding synthetic ETFs and counterparty risk exposure, the product suite has undergone a stiff authorisation process. It is believed that the suite will launch with country-specific ETFs to give investors exposure to Emerging Asia: like all other ETFs, investors will be able to go long or short on EIP’s ETFs to express their investment views.

The ETFs will be managed by Paul So, Head of Beta Products at EIP, who was quoted as referring to the launch as a “monumental milestone for EIP”. On receiving the SFC’s authorisation to launch the synthetic ETF platform So commented: “We commend the SFC in introducing various initiatives to update the regulation of investment products in Hong Kong in light of market events in order to protect investors.” Tobias Bland, CEO of EIP said that whilst the ETF market was “very strong” in the US and Europe, it was “growing substantially” in Asia. The firm therefore felt it was the right time to take advantage of investor interest, said Bland, adding that they were pleased to be “the first local firm to be launching and managing swap-based synthetic ETFs authorised by the SFC. We are looking forward to their formal launch in mid-February.”  

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