On 27 Oct 2025, the HKMA updated guidance on SFO registration requirements, mandating stricter fitness and properness assessments for executive officers and relevant individuals, including enhanced background checks, verification of industry experience, and controls for the 6-month grace period. The guidance supersedes 15 prior circulars and clarifies prohibitions on unregistered dealing, requiring RIs to implement robust reporting, monitoring, and client identification procedures.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction and Key Regulatory Updates
On 27 Oct 2025, the Hong Kong Monetary Authority (HKMA) issued updated guidance on registration requirements for institutions under the Securities and Futures Ordinance (SFO), establishing enhanced controls to ensure the fitness and properness of executive officers (EOs) and relevant individuals, while superseding 15 prior circulars.
Registration Requirements for Institutions
The guidance clarifies that authorized institutions (AIs) must obtain HKMA consent for at least two EOs per regulated activity before applying to the Securities and Futures Commission (SFC) for registration. The HKMA will assess applicants' fitness and properness, management capabilities, and controls, and may recommend registration conditions (e.g., activity restrictions for insufficient experience). The SFC will consider HKMA's advice before approving or refusing registration, with applicants entitled to a hearing if the SFC preliminarily refuses or conditions an application. Registration status requires public display of the certificate, and variations to regulated activities must be formally applied for to the SFC.
Executive Officer (EO) Appointment and Oversight
Under Section 71C of the Banking Ordinance (BO), AIs must obtain HKMA's written consent for all EOs before appointment, with applications submitted concurrently with SFC registration. The HKMA will assess whether applicants are fit and proper and possess sufficient authority within the institution. EOs must be at least one rank below a Chief Executive Officer (CEO), Alternate CEO (ACE), director, or Section 72B manager, with limited flexibility for exceptional cases. Provisional consent may be granted under Section 71E of the BO to address statutory registration requirements, subject to satisfactory background checks. EOs must be notified to the HKMA within 7 business days of any change in appointment or activity scope.
Enhanced Fitness and Properness Controls
The guidance mandates rigorous controls for relevant individuals, including comprehensive background checks covering civil litigations, criminal records, and reference checks from previous employers. RIs must verify industry experience through credible sources (e.g., HKMA Register) and implement a self-declaration mechanism with regular reviews. For staff under the 6-month grace period to pass licensing exams, RIs must enforce clear communication and prompt de-registration upon expiry. Ongoing monitoring via annual self-declarations and bankruptcy checks is required. The guidance explicitly prohibits unregistered dealing under Section 114(3) of the SFO, with RIs obligated to train staff, maintain clear job descriptions, and immediately report suspected violations to the compliance unit.
HKMA Register and Reporting Obligations
The HKMA Register now requires submission of specified particulars for all relevant individuals (including EOs), with EOs' regulated activity scope clearly indicated. RIs must submit non-EO details via the e-Register, while EO information is submitted directly to the HKMA. Changes to individual particulars must be notified within 7 business days to both the HKMA and SFC. The Register includes public-facing details (e.g., name, registration number, regulated activities) and non-public data (e.g., nationality, dates). RIs must also ensure clients can identify relevant individuals via information cards displaying registration numbers and activity types.
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