News & Insights

Hong Kong SFC licensing and compliance hints – year-end review

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Authored by: Isabella Wong

2021 has been a challenging year: The Covid-19 pandemic has continued to change the way we work and operate businesses, as well as the regulatory approach of the Securities and Futures Commission (SFC). Whilst maintaining Hong Kong’s regulatory standards, the SFC has shown some flexibility towards supervision in 2021. As a year-end review, we have highlighted below the key licensing and compliance initiatives in the past 11 months.


  • Quarantine exemption scheme: Eligible senior executives of licensed corporations were allowed to apply to the SFC for waiving the compulsory quarantine requirement when returning to Hong Kong. See SFC’s circulars of 28 May 2021, 21 June 2021, 19 July 2021 and 1 November 2021.
  • New competency framework: To enhance the competence of industry practitioners, the SFC is changing the entrance and post-licensing training requirements for licensed representatives and responsible officers. Amendments to the Guidelines on Competence and Guidelines on Continuous Professional Training will take effect on 1 January 2022. See SFC’s circular of 9 November 2021 and consultation conclusions of 18 June 2021, and our article of 24 June 2021.


2022 outlook

Looking at the outstanding regulatory proposals, we predict 2022 will see developments in the following areas:

  • New digital licensing framework: The Financial Services and Treasury Bureau’s consultation conclusions of 21 May 2021 confirm the intention for the SFC to license virtual asset services providers under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance. The government has reported that the proposals received “general support”. We expect the SFC will now consult the market on its licensing proposals. The government targets to introduce an amendment bill in the 2021 – 2022 legislative session.
  • Over-the-counter (OTC) derivatives regulations: The OTC derivatives clearing, reporting and record-keeping requirements have been implemented in phases. Although the OTC derivatives licensing requirements are ready to take effect, the post-licensing financial resources and conduct requirements have not yet been finalised. We expect additional consultations will follow to finalise the OTC derivatives compliance requirements.

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