The Securities Commission Malaysia (“SC”) and the Securities and Futures Commission of Hong Kong (“SFC”) signed a Memorandum of Understanding Concerning Mutual Recognition of Covered Funds, and Simplified Dual IPO Listing Framework on 23 July 2026 (“MOU”).
 
The MOU provides a framework for the mutual recognition and cross-listing of collective investment schemes (“CIS”), particularly exchange-traded funds (“ETFs”) and real estate investment trusts (“REITs”) (“MRF Framework”) and seeks to introduce a simplified dual initial public offering (“IPO”) listing framework between the two jurisdictions.
 
The MOU is expected to broaden investment opportunities for issuers and investors and deepen cross-border participation in both markets. The MOU also leverages on Hong Kong’s role as an international financial centre and gateway to China.
 
Simplified IPO listing framework
 
To facilitate the cross-listing of equity securities, the Stock Exchange of Hong Kong Limited has added Bursa Malaysia Securities Berhad (“Bursa Securities”) to the list of Recognised Stock Exchanges (RSE). This enables public limited companies listed on Bursa Securities to apply for a secondary listing in Hong Kong.
 
The simplified dual IPO listing framework will also allow issuers seeking simultaneous primary and secondary listings to use a single set of submission documents, including the prospectus.
 
The simplified dual IPO listing framework will come into effect in September 2026.
 
Mutual Recognition of Funds Framework
 
The MRF Framework expands the range of products eligible under the mutual recognition of funds to include ETFs, including futures-based ETFs, leveraged and inverse ETFs and commodity ETFs. The MRF Framework also facilitates the cross-listing of REITs in each jurisdiction.
 
Under the MRF Framework, ETFs and listed REITs approved in Malaysia or Hong Kong may be offered to investors in the other jurisdiction through a secondary listing on the securities exchange of that other jurisdiction.
 
To implement the mutual recognition of funds, the SC has revised the Guidelines for the Offering, Marketing and Distribution of Foreign Funds (“MDFF Guidelines”) with effect from 23 July 2026.
 
A summary of the amendments to the MDFF Guidelines and the provisions of the SC’s Prospectus Guidelines for Collective Investment Schemes and Guidelines on Exchange-traded Funds applicable to a Hong Kong CIS seeking a listing or has obtained recognition for offering to the public in Malaysia is set out in Appendix D of the MOU.
 
In summary, a Hong Kong CIS must comply with paragraph 3.01(a) and Appendix 5, and fulfil the eligibility requirements applicable to a Hong Kong CIS to be offered under the MRF Framework as set out in Part 1 of Appendix 1 of the MDFF Guidelines. A more detailed write-up on the amendments to the MDFF Guidelines will be published in due course.
 
Memorandum of Understanding on Regulatory Cooperation
 
Acknowledging the need for regulatory cooperation to support the implementation of the MOU, the SC and Hong Kong’s Accounting and Financial Reporting Council (“AFRC”) entered into a separate memorandum of understanding to facilitate information sharing, supervisory assistance and coordination on financial reporting compliance and audit oversight matters. This memorandum will enable the SC and the AFRC to address cross-border issues and strengthen investor protection and confidence in both markets.
 
Comments
 
This initiative is a welcomed step to expand the range of instruments available in the Malaysian capital market. It also builds on the mutual cooperation between the SC and the SFC that traces back to a 2009 Declaration on Mutual Co-operation on Development of Islamic Capital Market and Islamic Collective Investment Schemes, which established a framework for the mutual recognition of Islamic CIS offered to the public in Malaysia and Hong Kong.
 
 
Alert by Phua Pao Yii (Partner) and Tan Wei Liang (Partner) of the Corporate Practice of Skrine.