A Hong Kong parliamentary study of trading funds in the UK and Hong Kong describes their nature and purpose as follows: A trading fund is a financial and accounting framework established by law to enable a government department, or part of a department, to adopt certain accounting and management practices common in the private sector.

[The fund] operates on a self-financing basis and does not need to regularly seek funding from the legislature to finance its daily operations after its establishment... the intention [is that such] an institutional change would provide the appropriate flexibility in resource management and nurture a new working culture to improve services in terms of both quality and cost-effectiveness.

[4] Establishment and operation of a Hong Kong trading fund is subject to decisions made by the Legislative Council on the recommendation of the Financial Secretary.

The significance of a UK trading fund is that it has standing authority under the 1973 Act to use its receipts to meet its expenses or outgoings.

Some trading funds have, as their main function, the collection and supply of information to both public and private sectors; others do not.