The following updates are examinable from 2 October 2024
TOPIC 1 – REGULATORY OVERVIEW OF THE HONG KONG FINANCIAL INDUSTRY
- Number of IOSCO members has increased from 230 (Jan 2023) to 240 (June 2024)
TOPIC 2 – PRINCIPLES OF RELEVANT HONG KONG LAW AND THE COMPANIES ORDINANCE
- No updates
TOPIC 3 – SECURITIES AND FUTURES ORDINANCE
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- The number of SFC-regulated activities has increased from 10 to 13:
The Thirteen SFC-regulated Activities
1. Dealing in securities 2. Dealing in futures contracts 3. Leveraged foreign exchange trading 4. Advising on securities 5. Advising on futures contracts 6. Advising on corporate finance 7. Providing automated trading services 8. Securities margin financing 9. Asset management 10. Providing credit rating services 11. Dealing in OTC derivative products or advising on OTC derivative products 12. Providing client clearing services for OTC derivative transactions 13. Providing depositary services for relevant CISs - Type 11 and Type 12 regulated activities are not yet fully in force
TOPIC 4 – LICENSING AND REGISTRATION, AND SUBSIDIARY LEGISLATION
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- The definition of Type 13 activities has been added:
Definition of Depositary Services for Relevant CISs
- Either or both of:
- The custody and safekeeping of relevant CIS property
- The oversight of the relevant CIS to ensure that it is operated in accordance with its scheme documents
Definition of a Depositary
- The trustee or custodian of a relevant CIS
- A CIS constituted as a trust will have a trustee performing the safekeeping function of the CIS assets
- A CIS constituted as a corporate will have a custodian performing the safekeeping function of the CIS assets
- ‘Relevant CIS’ means a CIS authorised by the SFC as per the SFO
TOPIC 5 – BUSINESS CONDUCT AND CLIENT RELATIONS
- Minor updates to reflect introduction of RA 13 – Providing depositary services for relevant CIS
TOPIC 6 –BUSINESS OPERATIONS AND PRACTICES
- The Financial Action Task Force (FATF) is an inter-governmental body supported by the membership of 37 jurisdictions (as at May 2024) and includes Hong Kong
TOPIC 7 –PARTICIPATING IN THE HONG KONG EXCHANGES
Stamp duty reduced from 0.13% to 0.1%
Stamp Duty on Stock Transaction
- 0.1% on each purchase/sale. No stamp duty on ETFs, derivative warrants and CBBCs trading
TOPIC 8 –ACCESSING PUBLIC CAPITAL
- New material on listing Specialist Technology CompaniesSpecialist Technology Companies (STCs)
- A STC is a company primarily engaged in research/ development/commercialisation/sales of a product/service that applies science/technology within an acceptable sector of the Specialist Technology Sector
- Examples include:
- Next generation information technology
- Advanced hardware and software
- Advanced materials
- New energy and environmental protection
- New food and agricultural technologies
- To list, a STC must have been in operation under substantially the same management and engaged in R&D of its speciality technology products for at least three financial years
- It must have incurred a specific %age amount of its total operating expenditure on R&D of its specialty technology products
- A STC must qualify as either a Commercial Company or a Pre-Commercial Company to be listed
- To be a Commercial Company, revenues for the most recent audited financial year must be at least HK$250 million initial market cap must be at least HK$6 billion
- To be a Pre-Commercial Company, initial market cap must be at least HK$10 billion
- Pre-Commercial Companies must disclose to shareholders in the listing document and in its semi-annual and annual reports details of its R&D and pathway to commercialisation and any restrictions it faces
Trustees/custodians of CISs can now be licensed/registered for Type 13 regulated activity
Trustees/Custodians
- Unit trusts – require trustees
- Mutual fund corporations – require custodians
- Trustees/custodians do not perform ‘regulated activities’ and therefore do not need to be licensed/registered
- For a CIS to obtain authorization from the SFC, its trustee/custodian must be acceptable to the SFC.
- To satisfy the SFC’s key requirements, a trustee/custodian must be:
- A banking institution incorporated outside Hong Kong, which is subject to prudential regulation and supervision on an ongoing business; or
- An entity authorised to act as a trustee/custodian of a CIS and prudentially regulated and supervised by an overseas supervisory authority acceptable to the SFC; or
- A depositary licensed/registered to carry on Type 13 (Providing depositary services for relevant CISs) regulated activity; and
- Be independently audited
- Trustee/custodians that are licensed/registered for Type 13 regulated activity are subject to the Financial Resources Rules. Those that are not, must have a minimum issued and paid-up capital and non-distributable capital reserves of HK$10 million, although this requirement is waived in the case of a wholly-owned subsidiary of a substantial financial institution
TOPIC 9 –MARKET MISCONDUCT AND IMPROPER TRADINGPRACTICES
- No updates
