The Securities and Futures Commission (SFC) today published its Annual Report 2018-19 which summarises and provides key statistics on its work during the year and sets out its priorities to address emerging challenges, including structural changes in the financial services industry and risks posed by greater cross-border capital flows.
"To strengthen Hong Kong’s position as a premier international financial centre, we remain steadfast in our commitment to world-class regulation and the development of healthy and sustainable markets in which global investors can have full confidence," said Mr Tim Lui, the SFC’s Chairman. "We strive to enhance Hong Kong’s competitiveness as a capital-raising hub for a more diverse range of quality listings, a full-service asset and wealth management centre, as well as a risk management centre."
"We have substantially reengineered the SFC’s organisational structure and pursued a multidisciplinary approach to more effectively direct our regulatory tools at the most serious threats which can harm investors and damage market integrity," added Mr Ashley Alder, the SFC’s Chief Executive Officer. "Our new 'front-loaded' approach to regulation is now well established and has already had a substantial impact on behaviour, resulting in improved outcomes for investors."
Under this approach, the SFC has stepped up the use of its regulatory powers to intervene when it became aware of potentially serious disclosure, conduct or public interest issues in listing applications and with listed companies. The SFC also updated its licensing and supervisory processes during the year to focus on key risks amongst financial intermediaries.
Highlights of the year include the introduction of new guidelines on securities margin financing activities to enhance brokers’ risk management, an open-ended fund company structure which enables investment funds to be established in corporate form in Hong Kong and updates to the Code on Unit Trusts and Mutual Funds to ensure the regulations governing public funds remain robust and aligned with international standards.
The SFC also released a comprehensive strategy to contribute to the development of Hong Kong as a leading centre for green finance and to connect green finance flows between mainland China and the rest of the world (Note 1).
Key statistics in the report period (Note 2) include the following:
- The number of licensees and registrants increased to 46,678, of which the number of licensed corporations rose to 2,960
- It authorised 136 collective investment schemes and 130 unlisted structured products for public offering
- It reviewed 394 listing applications and supervised 373 takeovers-related transactions and applications
- It directly intervened in 19 IPO applications and 27 post-listing cases using its regulatory powers under the Securities and Futures (Stock Market Listing) Rules
- It conducted 304 on-site inspections of intermediaries and noted 1,236 incidents of breaches of the SFC’s rules
- It made 9,074 requests for trading and account records from intermediaries as a result of market surveillance
- It disciplined seven firms and three individuals and imposed fines totalling $867.7 million for failures as IPO sponsors
The Annual Report is available on the SFC website.
Notes:
- Strategic Framework for Green Finance, published in September 2018.
- The report covers the period from 1 April 2018 to 31 March 2019.