As a company based in Hong Kong, offering investment services, we are authorised and regulated by the Securities and Futures Commission (SFC). This is not to be confused with UK regulator the FCA or its US counterpart, the SEC. So how does the SFC work?
History of the SFC
While we take regulations for granted today, pre-1974 securities and futures markets in Hong Kong were largely unregulated. Following the stock market crash of 1973/74, thelegislative path began to emerge with the introduction of two separate commissions, one looking at securities and the other commodities trading. By coincidence, the crash of 1987 prompted a severe review of investment regulations.
Securities Review Committee
In the aftermath of the 1987 crash, the Securities Review Committee was created to consider regulatory changes in Hong Kong. The committee report, released in 1988, recommended the establishment of one regulator coveringsecurities and commodities trading. This was the first time that full-time employees staffed a stock market regulatory body in Hong Kong!
Step forward the SFC
The SFC was officially launched in May 1989 as an independent statutory regulator with fees and transaction levies funding operations. The independent, stand-alone structure has been intact ever since, with no government funding received. However, there have been additional reviews and changes with the introduction of the Security and Futures Ordinance (SFO) on 1 April 2003.
The SFO is the body that provides the SFC's investigative, remedial, and disciplinary powers. It is safe to say that the FarEast has faced several regulatory challenges over the years. However, the SFC has remained aligned with the original brief to:-
"Strengthen and protect the integrity and soundness of Hong Kong securities and futures markets for the benefit of investors in the industry."
Functions of the SFC
Over the years, the SFO has assigned multiple roles upon the SFC although the principal responsibilities remain the same, maintaining and promoting:-
• Fairness
• Efficiency
• Competitiveness
• Transparency
• Orderliness
The current scope of the SFC includes:-
• Setting and enforcing market regulations
• Licensing and supervising intermediaries
• Supervising market operators
• Authorising investment products
• Exercising oversight over regulations governing takeovers and mergers
• Co-operating with and assisting local, mainland and overseas regulatory bodies
• Helping investors understand market operations
While there have certainly been challenges over the years, the SFC has adapted and changed to accommodate changing markets and a growing number of investment instruments.
One of four regulators in Hong Kong
The SFC is one of four regulators in Hong Kong, regularlyworking together to tackle financial crime and misconduct. The other three regulators are:-
• The Hong Kong Monetary Authority – Regulates financial institutions, conducts monetary policy operations and manages the exchange fund
• The Insurance Authority – Regulates and supervises the insurance industry
• The Mandatory Provident Fund Schemes Authority -Regulates and supervises provident fund schemes
In November 2012, the SFC decided to delegate the responsibility of investor education to a subsidiary, The Investor and Financial Education Council.
All bases covered
Here at GIS HK Ltd, we work hand in hand with both Hong Kong and UK regulators to maintain the integrity of investment markets and the protection of investors. We have a healthy relationship with our regulators, allowing us to provide the highest quality services to our customers. If you have any questions or queries regarding regulatory approval/cover, please feel free to contact us.