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Consultation on proposed amendments to the Securities and Futures (Professional Investor) Rules

On 1 March 2017, the SFC published a consultation paper on proposed amendments to the Securities and Futures (Professional Investor) Rules (PI Rules).

The proposed amendments include expanding the categories of persons who will qualify as professional investors; allowing the aggregation of certain assets in determining whether PI asset tests are met; and recognising alternative forms of evidence to show whether a person meets the relevant asset or portfolio thresholds to qualify as a professional investor.

The proposed amendments are derived from a number of existing waivers granted by the SFC and are intended to enhance consistency in the application of the PI Rules. They should be welcomed by the industry as they will provide some additional practical flexibility to the PI Rules and the methods intermediaries can adopt to show compliance.

The SFC is seeking views on their proposals, as well as suggestions for additional changes. It is unlikely that any changes to the monetary thresholds in the PI Rules will be considered, as these were subject to a separate consultation exercise concluded in September 2014. However, there are a number of issues which the industry may wish to raise:

  • whether individuals who are themselves regulated persons should automatically qualify as professional investors;
  • whether investment-linked assets such as investment linked assurance schemes and structured deposits should be taken into account;
  • whether intermediaries should be able to rely on a wider range of third party certificates to determine whether the asset or portfolio tests are met.

A link to the consultation paper is here. Comments on the proposals should be submitted to the SFC no later than 3 April 2017.

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