Hong Kong bill would bring listed funds and REITs under insider dealing, manipulation and disclosure rules

Hong Kong’s government published the Securities and Futures (Amendment) Bill 2026 in the Gazette on 30 October. The bill would amend the Securities and Futures Ordinance (Cap. 571) (SFO) and its subsidiary legislation. According to the government, it will “enhance the market misconduct and disclosure regimes for collective investment schemes that are listed on the Stock Exchange of Hong Kong (Listed CISs), by expressly providing that the provisions in the SFO relating to relevant regulatory regimes also cover Listed CISs, in addition to listed companies.”

The bill’s long title says it would “have listed collective investment schemes covered by regimes regulating market misconduct, disclosure of inside information and disclosure of interests and by certain enforcement powers”. The government said the bill “will be introduced into the Legislative Council for first reading on November 11.”

Which rules would apply to listed funds

According to the bill’s explanatory memorandum, clauses 6 to 133 amend the SFO provisions on:

• market misconduct: the civil regime in Part XIII (Market Misconduct Tribunal) and the parallel criminal regime in Part XIV
• the disclosure of inside information regime (Part XIVA)
• the disclosure of interests regime (Part XV)
• related interpretation and enforcement powers in Parts VIII, X and XVI and Schedule 1

The insider dealing provisions (sections 270, 271 and 273) would be made applicable to any listed CIS. The provisions on disclosing information about prohibited transactions and on stock market manipulation (sections 276 and 278) would expressly cover CIS securities. The Market Misconduct Tribunal’s disqualification orders would be widened so that a person could be barred from holding certain positions in, or taking part in the management of, a listed CIS. Under the SFO, market misconduct also includes false trading, price rigging and disclosing false or misleading information that induces transactions.

Under Part XIVA, a listed CIS would have a duty to disclose inside information on a timely basis, with related duties on its officers. Under Part XV, substantial unitholders of a listed CIS would have to disclose certain interests and short positions. The SFC would also get powers to require records and documents relating to CISs that are or were listed, and to seek court orders where unitholders’ interests are unfairly prejudiced.

A June 2026 paper from the Financial Services and the Treasury Bureau (FSTB) and the Securities and Futures Commission (SFC), prepared for the Legislative Council’s Panel on Financial Affairs meeting on 6 July, explained the policy behind these provisions. It said obligations would “mainly rest with the management company of a CIS”. It also said the long-standing exemptions from Part XV for listed open-ended CISs, which the SFC grants under section 309 of the SFO, would be kept. In a footnote, it said that for open-ended schemes such as ETFs, disclosure-of-interests enforcement “is considered difficult and not particularly meaningful” because the number of units outstanding changes constantly with subscriptions and redemptions.

As of end-May 2026, there were 257 SFC-authorised listed CISs: 246 exchange-traded products and 11 REITs. The paper put their total market capitalisation at around HK$918.2bn, and average daily turnover in 2026 at around HK$45.7bn.

Timing

Clause 1 of the bill sets two start dates:

• Market misconduct and REITs. Apart from the provisions listed below, the amending ordinance would come into operation on the day it is published in the Gazette. That covers the civil and criminal market misconduct amendments and the new REIT regime.
• Disclosure. The provisions covering the inside information and disclosure of interests amendments (clauses 37 to 123, with clauses 130 and 133, Divisions 2 and 4 of Part 3, items 157 to 459 of Schedule 1, and Schedules 2 and 3) would come into operation on 4 December 2027.

The panel paper said the later start for disclosure is to allow time to update the electronic disclosure forms and guidelines and to give the industry time to adjust. Until then, listed CISs and their personnel would remain subject to the SFC’s existing disclosure requirements. The SFC consulted on the proposals from March to May 2024 and published its conclusions in October 2024.

REIT restructurings and compulsory acquisition

The bill would also add a new Part IVB and Schedule 4A to the SFO. These would give REITs, which are trusts rather than companies, a statutory regime for schemes of arrangement or compromise and for compulsory unit acquisition in takeovers and unit buy-backs. The panel paper said that at present a REIT seeking a merger or privatisation “can only do so indirectly by disposing of all or a substantial part of its assets.” Under the bill, an offeror that had acquired, or contracted unconditionally to acquire, at least 90% of the units the offer relates to could buy out minority unitholders who did not accept. Minority unitholders would have a matching right to be bought out. Similar rules would apply where a REIT makes a general offer to buy back its own units.

A spokesperson for the FSTB said “clear and holistic market misconduct and disclosure regimes can help strengthen investor protection and confidence, enhance market integrity and robustness, and support the long-term development of the fund industry.”

Why it matters

Analysis. For market participants, the change closes a gap between the statutory regime and the product mix on the exchange. Exchange-traded products make up most of Hong Kong’s listed CISs. If the bill passes as gazetted, insider dealing or manipulation in ETF or REIT units would be expressly within the Market Misconduct Tribunal’s remit and the criminal regime from the day the ordinance is gazetted, with no transition period. Compliance teams at issuers, market makers and brokers would need surveillance and information-barrier policies that treat listed fund units in the same way as listed shares.

If the SFC keeps the Part XV exemption for open-ended funds, as the panel paper proposed, the new statutory disclosure-of-interests duties would bite mainly on closed-ended schemes such as REITs. The paper noted that the SFC currently applies equivalent requirements to those schemes through their trust deeds. For ETF holders, the change is mainly about conduct rather than new reporting.

Our recent Hong Kong coverage includes HKEX accepting China government bonds as derivatives margin and the SFC’s approach to tokenised money market funds.

What we are watching

• First reading on 11 November, and whether the Legislative Council forms a bills committee.
• The SFC’s updated guidance, exemptions and electronic disclosure forms ahead of the 4 December 2027 start date for the disclosure provisions.

Sources

• Securities and Futures (Amendment) Bill 2026, gazetted bill text, Hong Kong Government Gazette, Legal Supplement No. 3, via the Legislative Council, 30 October 2026
• Securities and Futures (Amendment) Bill 2026 gazetted, Hong Kong SAR Government, 30 October 2026
• Enhancing the REIT regime and the market conduct regime for listed CISs, paper for the Panel on Financial Affairs meeting on 6 July 2026, FSTB and SFC via the Legislative Council, June 2026
• LC Paper No. CB(2)59/2026(01), 2026 Legislative Programme, Legislative Council, 2026