New Measures To Update The Hong Kong Securities and Futures Commission’s Licensing Processes

The Securities and Futures Commission (SFC) today announced new measures to enhance its gatekeeping function (Note 1), introducing revamped licensing forms, a new edition of the SFC’s Licensing Handbook and mandatory electronic submission of all annual returns and notifications (Note 2).

The revamped forms, which have been standardised and come with clear instructions and navigation guides, will help the SFC more efficiently gather the information it needs to assess an applicant’s fitness and properness to be licensed (Note 3). Applicants for corporate licences will be required to complete newly-introduced business profile and internal control questionnaires which will allow the SFC to identify potential regulatory issues at an early stage.

"These new measures are part of the SFC’s front-loaded, risk-based approach to address issues as early as possible, "said Mr Ashley Alder, the SFC’s Chief Executive Officer. "It is essential for the SFC to modernise its licensing processes to keep ahead of rapid changes in the market landscape and the emergence of new technologies."

The new licensing forms are now available on the SFC website and should be used starting 11 February 2019. Current forms will be accepted during a two-month transition period. Use of the new forms will be compulsory from 11 April 2019, when mandatory electronic submission of annual returns and notifications will also take effect. The SFC will organise workshops on the revamped licensing processes for the industry in February and March 2019.

Notes:

A circular issued today provides details.
From 11 April 2019, all intermediaries will have to submit their annual returns and notifications to the SFC electronically via the SFC Online Portal. Individual licensees are already required to submit these documents online. Registered institutions are not required to submit annual returns under the Securities and Futures Ordinance.
The SFC hosted consultation sessions to discuss the new measures with industry participants including fund managers, brokers, investment banks, financial planners and professional advisors. Some were also invited to comment on the new forms during the development stage.