Hong Kong regulator Securities and Futures Commission (SFC) is finding it difficult to recruit new hires because of the city’s tough quarantine rules, even as it loses talent to emigration. The commission lost 12 per cent of its staff last year, compared with 5.1 per cent in 2020, Tim Lui, its chairman, told a regular monthly financial affairs meeting at the Legislative Council on Monday. The most serious shortages were in junior professional staffing, which was down 25 per cent, he said. “This been compounded by the limited ability to import talent from outside Hong Kong,” the SFC said in a document presented before lawmakers. The commission is not alone – in recent months, local banks too have complained about staff shortages . Financial firms said stringent quarantine and travel rules that are part of Hong Kong’s relentless pursuit of a “zero-Covid” policy had deterred visitors and cut off their supply of skilled labour. From 21-day quarantines to school breaks and lockdowns, the Hong Kong government’s zero-Covid rules had also begun to grind down many expatriate staff after two years, they added. “The competition for financial talent is keen, which is why we have to set aside more money to compete with the private sector, and to give a 4.5 pay rise to the current staff,” Lui said on Monday. The SFC plans to increase its staff cost by HK$140.5 million (US$18 million), or 9.5 per cent year on year rise, with total costs amounting to HK$1.6 billion for the 12 months starting from April. These include the 4.5 per cent pay rise, as well the cost of adding 30 new permanent staff and 50 two-year contract staff to handle needs around virtual assets as well as listings by special purpose acquisition companies (SPACs), which starting from January this year. This will increase the total headcount at the commission to 1,018, as of the end of March 2023, 3 per cent more than current levels. “The SFC now has more than 1,000 staff while the market turnover and initial public offerings are on a downwards trend. On average, each staff earns almost HK$1.6 million a year. Will the expansion lead to an increase in regulatory costs for the market?” asked Robert Lee Wai-wang, the lawmaker representing the financial services sector. Ashley Alder , the SFC’s CEO, however, said that the expansion of manpower was needed for regulatory efficiency and to address the needs of the markets. “We have been very careful to make sure the headcount will not add a burden for market participants or taxpayers,” Alder said. Despite its increased staff costs, the SFC expects to still have a surplus of HK$13.8 million in the coming financial year starting from April, thanks to a rising turnover.