SFC Licensing

Overview

Our SFC licensing lawyers advise clients on the licensing regime under the Securities and Futures Ordinance (“SFO”) and helps clients apply for SFC licenses from the Securities and Futures Commission (“SFC”) and meet ongoing regulatory requirements following successful license applications. Our SFC Licensing practice is part of our market leading Financial Services Regulatory practice, which has been consistently recognized and recommended by independent editorial publications, including the International Financial Law Review 1000 (ILFR1000), the Legal 500, Chambers and Partners and Asialaw Profiles. Our lawyers in this area have been consistently recognized as “market-leading”, “leading”, “highly regarded” and “well regarded” lawyers.

Our clients include hedge fund managers, private equity sponsors, managers of units trusts and mutual funds, stock and future brokerage firms, trading firms, family offices, wealth managers, independent financial advisers, banks and corporate finance sponsors and advisers, ranging from start-ups and new industry entrants to established institutions and experienced market players.

Our work includes advising on the following:

  • what activities are regarded as “regulated activities” under the SFO to trigger licensing requirements, whether a firm is carrying on a business in a regulated activity, and whether a firm’s representatives are performing regulated functions

  • whether an SFC license is required, what type of SFC license is required and how to meet the SFC license requirements

  • what personnel are required for a SFC licensed corporation, including responsible officers (“ROs”) and managers-in-charge (“MICs”)

  • the process of applying for an SFC license and the various regulatory requirements under the SFO and subsidiary legislation and the expectations of the SFC as set out in various codes, guidelines and circulars, including the “fit and proper” requirements and competency requirements under the Code of Conduct for Persons Licensed by or Registered with the SFC (“SFC Code of Conduct”), the Fit and Proper Guidelines and the Guidelines on Competence, and capital requirements under the Securities and Futures (Financial Resources) Rules (“FRR”)

Experience

Global Corporate Re-Organization of Financial Institution

Hong Kong counsel to a Fortune Global 200 financial institution advising on complex tax and securities and insurance regulatory issues in connection with a global re-organization in connection with US Government TARP funding.

Establishment of Broking-Dealing Office in Hong Kong for a Fortune Global 200 Financial Institution

Lead counsel to a Fortune Global 200 financial institution in relation to the establishment of a non-equities broking and dealing business in Hong Kong.

Acquisition of Trading Membership in Stock Exchange of Hong Kong for U.S Based Global Institution

Lead counsel to a US based global institutional agency broker in connection with the acquisition of a Trading Right and the application to become an Exchange Participant and the establishment of third party clearing arrangements.

Spin-off of Global Commodities Business

Hong Kong counsel to a Fortune Global 200 financial institution in respect of the US$430 million spin-off of its global commodities brokerage and derivatives business.

Establishment of Hong Kong Operations by US Hedge Fund

Lead counsel to New York based hedge fund manager with over US$4 billion of assets under management on establishment of Hong Kong operations. Fund focused on volatility and convertible arbitrage and special situations. Addressed all corporate, tax, employment and regulatory issues.

US$102 Million Sale of Private Wealth Management Business

Hong Kong counsel to U.S. based Fortune Global 200 financial institution with a market capitalization of over US$35 billion in respect of US$102 million sale of its private wealth management business to a European based financial institution.

Criminal Defence of Former Employee of Financial Institution on Suspicion of Fraud and Dishonesty

Lead counsel to former employee of a US based bank in respect of suspicions of fraud and dishonesty arising from trading activities. Advised on potential criminal offences and prepared submissions which ultimately resulted in no prosecution moving forward.

Tax Driven Corporate Restructuring for Fortune Global 500 Financial Institution

Hong Kong counsel to Fortune Global 200 financial institution in connection with a multi-step global corporate restructuring which triggered complex tax and regulatory issues.

Investment and Private Equity Real Estate Joint Venture

Co-counsel to US private funds manager on an investment into a Hong Kong private equity real estate fund manager with US$450 million of assets under management.

Q&A

To find out more about how we can assist in an SFC licence application, we set out below a list of common enquiries we receive from clients and our approach to addressing these enquiries.

We will discuss your planned business activities and assess how the regulatory framework applies. We routinely handle licensing applications so we have a solid understanding of when the SFC normally expects a license and the type of license the SFC will likely require.

At the same time, we routinely represent clients in SFC enquiries and SFC investigations where the SFC alleges breach of licensing requirements. As a result, we understand the precise boundaries of the licensing requirements under the SFO and where those boundaries and the SFC’s normal expectations diverge, enabling us to advise clients on the availability of exemption from licensing.

We will review the credentials of each responsible officer candidate and advise on the likelihood of the SFC approving him or her as a responsible officer and the conditions, if any, which the SFC may impose upon him or her in giving this approval.

Where the candidate is a borderline candidate for meeting SFC published competency requirements, we advise on how best to present the case for approval. We advise on whether exemptions may be available from examinations and if such exemptions may be available, we advise on how best to present any application for exemption.

As we routinely handle SFC licensing applications, we have a clear understanding of SFC practices and expectations.

The ability of an applicant to demonstrate to the SFC that it not only understands its regulatory obligations, but also how it can comply with those obligations dramatically increases the probability that a licensing application will be granted.

The regulations governing the ongoing operation of SFC licensed corporations and registered institutions are complex. It is not uncommon even for experienced investment professionals to miss or misunderstand the full range of regulatory requirements that could apply to their proposed business.

We have extensive background in these regulations. We review the proposed business activities and determine what regulatory requirements will apply and how the applicant can meet those requirements.

We prepare the business plan and the compliance manual that will form part of the application, thereby setting up the systems, policies and procedures that will help you comply with regulatory requirements and SFC expectations. We can prepare the full range of other policies and procedures which the SFC may expect the applicant to have in place.

We ensure that all the necessary forms are completed. We look at the application holistically to understand what areas of concern the SFC may have and we pre-empt those concerns, thus maximizing the probability of a quick and smooth application process.

Awards

Chambers and Partners

Financial Services Regulatory

Leading Practice

2011

Chambers and Partners

Financial Services Regulatory

Leading Individual

2016

Chambers and Partners

Financial Services Regulatory

Leading Lawyer

2018

Chambers and Partners

Financial Services Regulatory

Well Regarded Lawyer

 

IFLR 1000

Financial Services Regulatory

"Positively Ranked"

2018

IFLR 1000

Financial Services Regulatory

Highly Regarded Lawyer

2019

Legal 500

Financial Services Regulatory

Leading Individual

 

Legal 500

Financial Services Regulatory

“Recommended Practice”

 

Asialaw Profiles

Financial Services Regulatory

Leading Practice

2016

Asialaw Profiles

Financial Services Regulatory

Outstanding Practice

2018

Asialaw Profiles

Financial Services Regulatory

Market Leading Lawyer

2017

Asialaw Profiles

Financial Services Regulatory

Leading Lawyer

2018

 

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