Hong Kong enforces new rules to better manage city’s funds, stockbrokers and financial firms
Managers in eight designated functions must be approved by the regulator under the new regime
A new rule aimed at ensuring brokers, fund houses and financial advisers in Hong Kong are being run by qualified, experienced managers came into force on Tuesday.
The “manager in charge” regulation requires such companies to hire staff approved and licensed by the Securities and Futures Commission to take up senior management roles in eight key areas including compliance, IT and oversight.
The SFC first announced the measure in December and has been implementing it in different phrases since April.
The move came after waves of mainland investors, many of them lacking any experience in the securities or financial field outside the mainland, bought local brokerages and other financial firms in recent years.
Their acquisitions have brought new capital to the market and boosted the number of active local brokers from about 430 to more than 500. According to the SFC, 13 per cent of local brokers, fund houses and financial advisers are now owned by mainland shareholders, overtaking the US which was formerly the largest non-Hong Kong owner of local financial firms.
But the regulator was concerned that some of the firms were under the control of management teams that lacked the necessary experience.
The SFC listed the eight “core functions” affected by the new rule as overall management oversight; key business line; operational control and review; risk management; finance and accounting; information technology; compliance; and anti-money-laundering and counterterrorist financing.
