Oversight February 2019 - Revamp of SFC licensing processes

Revamp of SFC licensing processes

On 01 February 2019 the Securities and Futures Commission (SFC) announced an updated and revised licensing process. Since 2003, under the Securities and Futures Ordinance (SFO), any person engaging in a regulated activity must either be licensed (if the person is not a bank or individual working at a bank) or registered (if the person is a bank or an individual working at a bank) by or with the SFC in respect of the relevant regulated activity. As part of the licensing application to the SFC, the SFC vets the fitness and properness of the key individuals who will become “responsible officers” (or executive officers for banks) as well as the substantial shareholders of the applicant corporation. Non-bank applicants are, on being licensed, “licensed corporations” whilst bank applicants are, on being registered, “registered institutions”. Licensed corporations are primarily regulated by the SFC but registered institutions, being banks, are supervised by the Hong Kong Monetary Authority under the Banking Ordinance as well (for example the Securities and Futures (Financial Resources) Rules (FRR) do not apply to registered institutions). “Intermediaries” is defined in the SFO to include licensed and registered persons.

The major changes now introduced by the SFC include: 

  • introducing new licensing forms for assessing the fitness and properness of applicants
  • publishing two new self-assessment questionnaires for corporate applicants to complete as part of their licensing applications, and 
  • requiring all intermediaries to submit their annual returns and notifications electronically through the SFC Online Portal.

The SFC has also issued a new edition of its Licensing Handbook and updated the licensing section of the SFC website to reflect the above changes. The Licensing Handbook provides information on licensing and registration matters including general requirements, application procedures and ongoing obligations.

Read this edition of Oversight in full.

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