Jurisdiction - Hong Kong
Hong Kong – SFC’s Consultation Conclusions On Amendments To Professional Investor Regime.

16 December, 2014



The concept of “professional investors” plays an important role in Hong Kong’s securities market. Among other things, once a person or entity’s status as a “professional investor” has been established, an intermediary can dispense with the following:


  • Ensuring that a recommendation or solicitation is reasonable in all the circumstances (the Suitability Requirement).
  • The need to establish a client’s financial situation, investment experience and investment objectives.
  • The need to assess a client’s knowledge of derivatives and characterise the client based on his knowledge of derivatives.
  • The need to disclose certain transaction-related information.
  • The need to enter into a written agreement and the provision of relevant risk disclosure statements.
  • For discretionary accounts, the need to obtain from the client an authority in written form prior to effecting transactions for the client without his specific authority, the need to explain the authority and the need to confirm it on an annual basis.
  • The need to inform the client about itself and the identity and status of its employees and others acting on its behalf.
  • The need to confirm promptly with the client the essential features of a transaction after effecting a transaction for a client.



The SFC had sought views on whether individual and corporate professional investors
(namely, individuals with portfolios of HK$8 million or more, or corporations with total assets of HK$40 million or more) should be prevented from participating in private placements, and whether the dispensations noted above should be removed in relation to individual professional investors. Based on feedback received, the SFC decided to continue to allow individual and corporate professional investors to participate in private placements but decided that intermediaries should be required to comply with the Suitability Requirement and the remainder of the first six requirements noted above when dealing with individual professional investors. The SFC also adopted a number of other proposals, including amendments to the requirements for the terms of client contracts. The proposed amendments will come into effect in early 2016.



For further information, please contact:


Christopher Betts, Partner, Skadden
[email protected]

Edward Lam, Partner, Skadden
[email protected]

Alec Tracy, Partner, Skadden
[email protected]

Will Cai, Partner, Skadden
[email protected]


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