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On 23 May 2018, the Securities and Futures Commission (SFC) published consultation conclusions on proposed disclosure requirements for discretionary accounts. The SFC states that the objective is to enable investors to make better informed decisions – that increased transparency makes it easier to detect potential conflicts of interest.
The SFC will proceed to implement the new disclosure requirements by way of amendments to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct). These were gazetted on 25 May 2018 and will come into effect on 25 November 2018.
Timing of disclosures
The disclosure is designed to be one-off – made in writing at the account opening stage or prior to entering into a discretionary management agreement. Where there are changes, an update must be provided to the client as soon as reasonably practicable.
Intermediaries will not be required to disclose benefits receivable for effecting transactions for a client under a discretionary management account where the client is a Corporate Professional Investor, where the intermediary has complied with paragraphs 15.3A and 15.3B of the Code of Conduct, or an Institutional Professional Investor.
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