News & Insights

Countdown to the regulatory regime for trustees and custodians of Hong Kong public funds

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Authored by: Jeremy Lam and Mary Nieto

The regulatory regime for depositaries of Hong Kong public funds will commence on 2 October 2024. The regime includes the requirement for trustees and custodians of Hong Kong authorised funds to be licensed by the Securities and Futures Commission (SFC) for a new type 13 regulated activity (RA13). In this article we look at which depositaries are in scope, the key dates for licensing application process and the preparatory steps that are advisable over the next few months.

Key dates

On 24 March 2023, the SFC gazetted amendments to the Securities and Futures Ordinance (SFO) to introduce RA13. The SFC has provided for an 18-month transitional period between the gazettal date and the commencement date of 2 October 2024. The SFC expects existing in-scope trustees and custodians to submit RA 13 licensing applications within four months of the launch of the SFC’s electronic forms, which is expected in the third quarter of this year.


RA13 is an activity of providing depositary services for a relevant collective investment scheme (CIS) with reference to two core functions of a depositary, being (a) custody and safekeeping of scheme property and (b) oversight of the operation of the relevant CIS to ensure that it is operated in accordance with its constitutive documents. Entities will need to be licensed for RA13 if they carry on business in Hong Kong as the top-level trustee or custodian of one or more SFC-authorised CIS, excluding (i) mandatory provident fund schemes (MPFs) and their constituent funds; and (ii) approved pooled investment funds (APIFs) which are or are intended to be offered only to professional investors, employers, MPFs, occupational retirement schemes and pooling arrangements and other APIFs. APIFs that may be offered to retail investors are included, so the trustees of such APIFs will need to be licensed for RA13.

Individuals performing regulated functions for licensed depositaries will also need to be approved as executive officers, responsible officers or representatives for RA13. Regulated functions in respect of RA13 include custody operations, monitoring of investment and borrowing restrictions, fund accounting and valuation, and monitoring of subscriptions and redemptions.

Regulatory framework

Amendments to the SFO to introduce RA13 are supported by a new Schedule 11 to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. Schedule 11 is specific to RA13 and covers conduct and internal control requirements. In addition, there are amendments to other SFC codes and guidelines, such as the Code on Unit Trusts and Mutual Funds, and consequential amendments to subsidiary legislation, such as the financial resources rules. Details are available in the SFC’s consultation conclusions of 24 March 2023: Consultation Conclusions on Proposed Amendments to Subsidiary Legislation and SFC Codes and Guidelines to Implement the Regulatory Regime for Depositaries of SFC-authorised Collective Investment Schemes.

Preparatory steps

The SFC has provided a transitional period for in-scope trustees and custodians to prepare for the commencement of the regime. Issues to consider in advance of the submission of the licensing application include:

  • Substantial shareholders: ascertain the shareholding structure of the entity to be licensed and identify substantial shareholders; compile the information required by the SFC in order to review and approve the substantial shareholders.
  • Organizational chart and supervision: identify who needs to be licensed as representatives, responsible officers / executive officers (ROs) and Managers-in-Charge; prepare CVs for the RO candidates to assess fulfilment of the SFC’s competence requirements.
  • RA13 business compliance: prepare gap analysis to identify required compliance infrastructures, such as those required by the Code of Conduct and in particular, the new Schedule 11 to such Code. Prepare policies and procedures.

We are currently advising a number of trustees on their impending RA13 licensing applications and are able to assist with your migration to the new regime. For existing trustees and custodians, the SFC expects submissions to be made within four months of the publications of the relevant forms in Q3, i.e. the application deadline will be a date between November 2023 and January 2024. There is much to do before then and we recommend applicants starting planning well in advance.

Key Contacts

Jeremy Lam

Partner | Financial Services

Email or call +852 2825 9732

Mary Nieto

General Counsel | Financial Services

Email or call +852 2826 5366

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