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Hong Kong – SFC Licensing And Compliance Hints.

29 January, 2014

 

Legal News & Analysis – Asia Pacific – Hong Kong – Regulatory & Compliance

 

Have I Told The SFC About Recent Changes? Previously readers were reminded of the need to be careful about what is being communicated to the SFC and to keep clear records of the same, whether in the context of a licence application or an on-going notification filing. In December, the SFC reprimanded a securities brokerage firm for providing inaccurate and out-dated information to the SFC during its licence application and for failing to notify the SFC subsequently of a “significant” change in the nature of its business. The SFC concluded that the firm breached the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Licensing and Registration) (Information) Rules and fined it HKD5,000,000.

 

This case is a timely reminder of two points: the importance of ensuring that all information which is provided to the SFC is accurate and that “significant” changes to information previously communicated to the SFC are notified to the SFC. It is not always easy to determine whether a change is “significant” but to quote from Mark Steward in a recent speech, “This is where expertise, experience, judgment, the ingredients of fitness and properness, perhaps summed up by that most Roman of virtues, prudence needs to be applied.” Consistency is also important.


What’s On Your Agenda? This is a non-exhaustive list of hot items that we think most of our clients should think about this year:

 

  • Is the company subject to the electronic trading rules? Who is responsible for oversight of the electronic trading activities? Are the policies, procedures and record keeping arrangements compliant with the requirements?
  • Will the company need a Type 11 or Type 12 licence or will it be enough to apply for an expanded Type 9 licence when the OTC derivatives regime kicks in?
  • What would the impact be on the company if the new professional investor regime and client agreement requirements are rolled out in the form proposed by the SFC in the consultation paper?
  • Have there been any changes to the requirements to which the company is subject or to its business activities necessitating amendments to the compliance manual?

 

Should the existing compliance monitoring plan be updated to cope with recent changes?

 

  • Does the company have a 2014 CPT plan?
  • Does the company need to schedule compliance refresher training for everyone?
  • How is the new Companies Ordinance going to affect the company?
  • How ready are the company and its staff for an SFC onsite inspection?

 

Deacons

 

For further information, please contact:

 

Rebecca Yip, Deacons

rebecca.yip@deacons.com.hk

 

Deacons Regulatory & Compliance Practice Profile in Hong Kong

 

Homegrown Regulatory & Compliance Law Firms in Hong Kong 

 

International Regulatory & Compliance Law Firms in Hong Kong 

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