News & Insights

SFC licensing and compliance hints – Oct 2017

What is “relevant” to meet the relevant industry experience requirement?

The Securities and Futures Commission (SFC) issued a circular on 29 September 2017 clarifying the “relevant industry experience” requirement for responsible officer (RO) applicants in order to fulfill the competence requirements as set out in the Guidelines on Competence.

The circular clarifies that where a licensed entity relies heavily on innovative technology to conduct its regulated activities, the SFC may recognise the RO applicant’s IT experience as relevant industry experience if (i) s/he has been a key person in developing, or ensuring the proper and continued functioning of, a technology, platform or system; and (ii) his/her experience is the key element to the licensed company’s technology, platform or system.

The circular also clarifies that merely providing system support will not be considered as relevant industry experience. Further, IT experience in a brokerage firm that offers an online trading platform is unlikely to be treated as relevant industry experience (as the operation of such a platform is unlikely to be considered as the key element to the brokerage firm’s activities).

Relevant industry experience must be directly relevant or crucial to the business of regulated activities that the licence applicant will be carrying on. However, possessing relevant industry experience is just one of the four competence requirements which the SFC will consider when assessing an RO application. Therefore, RO applicants also need to fulfill the (1) academic / industry qualification, (2) management experience requirement, and (3) pass the relevant local regulatory framework papers, in order to be approved as ROs.

CPT reminder

We are now in the final quarter of 2017 which means licensed individuals have less than three months to comply with their annual CPT requirement. If your company has licensed individuals who still need to get annual CPT hours for this year, you should remind them to take action soon. This also include individuals who got their licenses during this calendar year. If your company has individuals who need to take additional CPT hours to comply with conditional exemptions from taking licensing exams, this may also be a good time to check how many CPT hours they still need to collect and whether those CPT training hours need to be provided by approved CPT providers.

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