On 27 Oct 2025, the HKMA issued consolidated guidance updating operational procedures for registration under the Securities and Futures Ordinance and reinforcing fitness and properness controls for staff at Authorized Institutions. The guidance consolidates obsolete prior guidance without introducing new regulatory standards, emphasizing comprehensive due diligence on potential employees, adherence to Mandatory Reference Checking requirements, and timely industry collaboration on reference checks. It supersedes previous HKMA circulars on these matters.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction and Purpose of Guidance Update
On 27 Oct 2025, the Hong Kong Monetary Authority (HKMA) issued updated guidance consolidating and revising existing operational procedures for registration under the Securities and Futures Ordinance (SFO) and controls to ensure the fitness and properness of staff at Authorized Institutions (AIs). The guidance consolidates obsolete prior guidance to facilitate compliance without introducing new regulatory standards.
Registration Requirements and Operational Procedures
The updated guidance details operational and procedural requirements for AIs to become Registered Institutions (RIs), appoint Executive Officers (EOs), and register Relevant Individuals (Rels) on the HKMA Register. It specifies that AIs must apply for RI status with the Securities and Futures Commission (SFC) to conduct Regulated Activities (RAs), appoint at least two EOs per RA, and register Rels before they perform regulated functions. These procedures are set out in Annex 1.
Fitness and Properness Controls for Staff
The guidance reinforces AIs' obligations to ensure the fitness and properness of all staff, including EOs, Rels under temporary engagement, and itinerant professionals. AIs must conduct comprehensive due diligence on potential employees, covering terminated employments and criminal convictions, as detailed in Annex 4. It specifically reminds AIs to require reference checks from previous employers covering dismissals, resignations, internal investigations, or disciplinary actions related to conduct matters, and to adhere to the Mandatory Reference Checking (MRC) Scheme's requirements for reporting conduct-related information.
Industry Collaboration and Compliance Reminders
AIs are reminded to provide timely responses to other AIs' requests for information about previous employees, referencing the MRC Scheme's prescribed timeline. The HKMA emphasizes the industry's joint responsibility to ensure practitioner fitness and properness. AIs must comply with this circular and all applicable regulatory requirements, with key existing guidelines referenced in Annex 3. The circular supersedes previous HKMA circulars listed in Annex 5.
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