The Hong Kong Monetary Authority (HKMA) has
changed its definition of high net worth (HNW) individuals to
better protect inexperienced investors.
Under the new formula, banks can classify
individuals as a private banking customer only if they have: (a) at
least US$3m in investable assets, such as securities and deposits;
or (b) at least US$1m under the bank’s management.
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The former definition was broader. It classified clients as HNW
if they (a) maintained a personalised relationship with the bank;
(b) they received personalised banking services or portfolio
management services from the bank; and (c) had assets under the
bank’s management of at least US$1m.
The HKMA said the definition could be subject to further
revision in the future.
Accumulators forbidden for
inexperienced clients
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By GlobalDataHKMA said that private banks should not sell
financial derivative products known as accumulators to clients who
fall outside this new definition.
Accumulators should also not be sold to
customers without investment experience or knowledge of derivative
products.
Accumulators are derivative products where an
investor agrees to buy shares of an underlying security at a
predetermined price during a given period of time.
