The Securities and Futures Commission (SFC) is an independent statutory body set up in 1989 to regulate the city’s securities and futures markets. It works to ensure orderly securities and futures market operations, to protect investors and help promote Hong Kong as an international financial centre and a key financial market in China. It is funded by levies on transactions conducted on the Stock Exchange of Hong Kong and the Hong Kong Futures Exchange, and by licence fees..
SFC signals HK$232m deficit for year as income misses target
The Securities and Futures Commission expects to remain in the red this year, with a total deficit of HK$435.16 million caused by lower fee income and rising staff costs, the second consecutive year the regulator will lose money.
The SFC said it would record a deficit of HK$232.13 million for the financial year ending this March, as market turnover was surprisingly low, reducing income from the levy stock investors pay. The levy, 0.003 per cent of the value of every share transaction, is one of the SFC's major sources of income.
The SFC said it had expected daily stock market turnover to average HK$77 billion a day last year, but it came in at about HK$50 billion a day, 35 per cent below the forecast. Although market turnover has improved since the beginning of the year, the regulator said lower fees and charges, mainly due to a plunge in licensing fees, will result in a drop of 38.5 per cent in fee income year on year.
In April last year, the SFC waived the licence fees paid by brokers, fund managers and financial advisers for two years, which will reduce its revenue by HK$332.4 million.
Expenditure for this year is expected to rise by HK$209.33 million, or 16.2 per cent, to HK$1.5 billion as staff costs jump 20 per cent from a year earlier, the commission said. It said it planned to add 47 full-time posts for the financial year to the end of March next year.
The regulator expects its income to rise 0.6 per cent year on year to HK$1.07 billion.
The new employees will mainly work to support the SFC's new and proposed legislation, including the development of new rules for the over-the-counter derivatives market and for the sponsor regime for initial public offerings, it said.
The SFC expects to pay HK$220 million in rent this year. It will relocate its office from Charter House to Cheung Kong Center in the first quarter.