News & Insights

Securities and Futures Commission and Competition Commission agree MoU

On 28 April 2020, the Securities and Futures Commission (SFC) and the Competition Commission entered into a Memorandum of Understanding (MoU) with the intention to enhance their cooperation and exchange of information, so as to allow each regulator to perform their respective functions more effectively. This is the second MoU entered into by the Competition Commission with a Hong Kong regulator, and is the first MoU the Competition Commission entered into with a financial regulator.

Under the MoU, each regulator agrees to notify and consult the other of any issue that it believes may have a significant implication for the other regulator. This includes, for example, the development and publication of policies and guidelines by either agency.

One particular provision of the MoU that is noteworthy is the regulators’ express intention to share with each other information regarding relevant market participants in the securities and futures sector, when doing so allows the regulators to more effectively exercise their respective powers and perform their respective functions.

For example, each regulator intends to share information with the other, as and when it considers appropriate and necessary, regarding issues arising in specific investigations, proceedings and processes relating to a relevant market participant. The two agencies also agree to exchange their respective views on policy issues regarding relevant market participants, as and when it is appropriate and necessary. Further, the SFC may seek from the Competition Commission any views or concerns the Competition Commission may have on any competition related issues.

Under the MoU, each regulator may make a formal request for information to the other with a statement explaining the purpose of such a request. Upon receiving such a request, if the other regulator does not intend to respond to the request, it must notify the requesting agency and provide reasons for this intention (e.g., the provision of information may undermine the efficacy of a leniency policy through the disclosure of information provided by a leniency applicant or related to a leniency application). For further information on the Competition Commission’s leniency policy.

One important implication brought about by such potential information sharing pursuant to the MoU is the following: if the SFC comes across an issue which it thinks may be relevant to competition enforcement, it may share such information with the Competition Commission (and vice versa). As such, by enabling information sharing between the SFC and the Competition Commission, the chances of detection of breaches of competition rules and/or securities and futures regulations may potentially be heightened, making compliance an even more important priority for companies engaged in the securities and futures industry.

Representatives of the SFC and the Competition Commission will meet on a regular basis to discuss issues of mutual interest, including the implementation of the MoU, further opportunity for collaboration and cooperation, and any proposed legislative or policy changes that may affect the performance of their respective functions.

The MoU with the SFC signifies the Competition Commission’s attention at the financial services and asset management sectors. It also shows that the Competition Commission is keen to cooperate with other regulators in Hong Kong in order to enhance the effectiveness of its enforcement efforts.

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