Hong Kong Licensing and Registration Requirements
Licensing and registration requirements for engaging in securities and futures activities in Hong Kong are set out under the Securities and Futures Ordinance (SFO) and enforced by the Securities and Futures Commission (SFC).
The Securities and Futures related regulated activities in Hong Kong are regulated by the Securities and Futures Commission (SFC). Any person carrying on a regulated activity as defined under schedule 5 of Securities and Futures Ordinance (SFO) is required to be regulated by and obtain the relevant license with the SFC, unless an applicable exemption from this requirement can be relied upon.
Who is required to hold an SFC license?
The SFC regulates a broad range of financial activities and firms who are intending to carry out any of the activities listed below are required to hold an SFC license:
- Type 1 – Dealing in securities
- Type 2 – Dealing in futures contracts
- Type 3 – Leveraged foreign exchange trading
- Type 4 – Advising on securities
- Type 5 – Advising on futures contracts
- Type 6 – Advising on corporate finance
- Type 7 – Providing automated trading services
- Type 8 – Securities margin financing
- Type 9 – Asset management
- Type 10 – Providing credit rating services
- Type 11* – Dealing in OTC derivative products or advising on OTC derivative products
- Type 12* – Providing client clearing services for OTC derivative transactions
- Type 13 – Providing depositary services for relevant CISs
- Type 11 and Type 12 are not yet in operation for licensing purposes.
* Type 11 and Type 12 are not yet in operation for licensing purposes.
Organisations intending to carry out these regulated activities must therefore obtain the relevant licenses from the SFC. Determining the appropriate license is key to ensuring compliance with the SFC in Hong Kong.
Penalties for operating without a valid license
Under Section 114 of the SFO (Cap. 571), if a company or person conducts a regulated activity without a valid license or applicable exemption from the SFC, they are subject to penalties and disciplinary actions under Sections 114(8) and 114(9) of the SFO. It is therefore important to get the correct license with the appropriate license condition at the outset.
Guide to SFC licensing requirements
Some of the activities conducted by financial institutions may consist of more than one type of regulated activity and there may also be exemptions. Our comprehensive ‘Guide to SFC Licensing Requirements in Hong Kong’ is available to download here and will help you to understand your regulatory obligations.
How can Waystone help?
Our APAC compliance solutions team can assist with determining the appropriate SFC licence your firm is required to hold in Hong Kong, in order to carry out regulated activities. Please reach out to a member of our team to find out more.