On 12 Sep 2025, the HKMA issued Supervisory Policy Manual (SB-1) V.4, superseding its 2024 version, to clarify its supervisory framework for SFC-registered Authorized Institutions. The document mandates minimum two executive officers per regulated activity with HKMA consent, enforces enhanced retail investor protections including audio-recording of sales, and establishes a three-tier supervisory approach from good practice encouragement to enforcement for misconduct. The HKMA acts as the front-line supervisor under the SFO, coordinating with the SFC via a Memorandum of Understanding.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
Market Misconduct Tribunal: A Guide to Penalties and Other Consequences for Misuse of Insider Information
Market Misconduct Tribunal proceedings for mishandling of insider information can result in fines and disgorgement orders
Disclosure Of Material Non-Public Price Sensitive Information (MNPI): A Guide For Hong Kong Listed Companies
New legislation in Hong Kong introduces a statutory regime for the disclosure of price sensitive information by SEHK listed companies. The regime substantially
SPOTLIGHT ON
FAMILY OFFICES
Introduction
On 12 Sep 2025, the Hong Kong Monetary Authority (HKMA) published Supervisory Policy Manual (SB-1) V.4, superseding the previous version dated 10 May 2024, to outline its supervisory framework for Authorized Institutions (Als) registered with the Securities and Futures Commission (SFC) under the Securities and Futures Ordinance (SFO).
Regulatory Framework and Supervisory Role
The HKMA serves as the 'front line supervisor' for SFC-registered Authorized Institutions (RIs), responsible for day-to-day supervision of their regulated activities under the SFO and Banking Ordinance. As per Section 5(3) of the SFO, the SFC may rely on HKMA supervision for RI matters. The HKMA and SFC maintain a Memorandum of Understanding to coordinate registration, examinations, investigations, and disciplinary actions, with the HKMA advising the SFC on RI fitness and properness during registration.
Key Regulatory Requirements
RIs must appoint at least two executive officers per regulated activity, with HKMA written consent required for all appointments. Executive officers must meet Fit and Proper Guidelines, Guidelines on Competence, and Continuous Professional Training (CPT) standards. Relevant individuals (including executive officers) must be registered in the HKMA Register, with RIs required to report changes within seven business days. The HKMA mandates enhanced investor protection measures for retail customers, including physical segregation of investment/deposit activities, audio-recording of sales processes for complex products, and pre-investment cooling-off periods for vulnerable customers.
Supervisory Approach and Enforcement
The HKMA adopts a risk-based supervisory approach with three tiers: (1) encouraging good practices; (2) requiring corrective actions for control deficiencies; and (3) triggering enforcement for prima facie misconduct. Disciplinary actions under Sections 58A and 71C of the Banking Ordinance include removal from the HKMA Register, withdrawal of executive officer consent, or prohibitions. The Securities and Futures Appeals Tribunal (SFAT) reviews all disciplinary decisions, ensuring consistency in sanctions.
View the full article:Source
