Hong Kong Regulations

MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 49

Duties of approved trustee with respect to investment of scheme funds

(1) The approved trustee of a registered scheme must ensure that any
investment manager appointed in respect of the scheme, and any delegate of
that manager, act in the interests of the scheme members and do not collude
with other persons as regards any transaction relating to the investment of
the funds for the scheme.

(2) The trustee must ensure that, if a transaction involving the acquisition
of an asset for or in relation to the scheme is entered into between relevant
persons, the consideration to be paid for the asset is not greater than the
prevailing market price.

(3) The trustee must ensure that, if a transaction involving the disposal or
lending of an asset for or in relation to the scheme is entered into between
relevant persons, the consideration to be paid for the asset is not less than
the prevailing market price.

(4) For the purposes of subsections (2) and (3), the following persons are
relevant persons-

   (a)  the approved trustee and any service provider appointed or engaged for
        the purposes of the scheme;

   (b)  the participating employers of scheme members;

   (c)  all associates of any of those participating employers, of any scheme
        member, or of any service provider appointed or engaged for the
        purposes of the scheme.

(5) The trustee must also ensure that service providers appointed or engaged
for the purposes of the scheme and their associates do not retain any payment
or benefit from a third party, either directly or indirectly, derived from the
acquisition or disposal or lending of scheme  assets.

(6) Subsection (5) does not prevent the third party from providing the service
providers and their associates with goods or services that are of demonstrable
benefit to the scheme or scheme members.

(7) The trustee must also ensure that-

   (a)  any investment manager appointed for the purposes of the  scheme, and
        any delegate of that manager, do not acquire or dispose of securities
        for those purposes at brokerage rates that exceed the customary
        institutional full-service brokerage rates generally applicable to the
        acquisition and disposal of securities; and

   (b)  the acquisition or disposal of securities for those purposes is
        effected in accordance with the best commercial practice applicable to
        the preparation and execution of financial transactions.