The Securities and Futures Commission (SFC) requires businesses engaged in “regulated activities” in Hong Kong to obtain the appropriate SFC licenses. This guide will help you understand the types of licenses, determine which one your business may need, and navigate the application process.
Hong Kong’s Financial Landscape
Hong Kong SAR was recently ranked fourth globally in the Global Financial Centres Index (GFCI 32), published on September 22, 2022. This reinforces Hong Kong’s status as a leading international financial center in the Asia-Pacific region, trailing only Singapore. Additionally, Hong Kong ranks seventh in financial development competitiveness, reflecting continued optimism in its fund management industry.
For more information on Hong Kong’s fund industry, refer to Lanturn’s article: "2022 Facts About Hong Kong’s Fund Management Scene."
Types of SFC Licenses
The Securities and Futures Ordinance (SFO) empowers the SFC to regulate Hong Kong’s securities and futures markets. Any company or individual not classified as an authorized financial institution, but engaging in regulated activities (RA) in Hong Kong, must obtain the relevant SFC license. Firms involved in regulated activities must be licensed by the SFC unless exempted.
Individual Requirements:
Individuals must be registered as licensed representatives to perform regulated functions on behalf of licensed corporations.
Any firm, whether located inside or outside Hong Kong, that markets investment and related products to the Hong Kong public must obtain the relevant license.
The SFO Schedule 5 lists the types of SFC licenses and the regulated activities they cover:
SFC License Type 1: Securities
SFC License Type 2: Dealing in futures contracts
SFC License Type 3: Leveraged foreign exchange trading
SFC License Type 4: Advising on securities
SFC License Type 5: Advising on futures contracts
SFC License Type 6: Advising on corporate finance
SFC License Type 7: Providing automated trading services
SFC License Type 8: Securities margin financing
SFC License Type 9: Asset management
SFC License Type 10: Providing credit rating services
Common Regulated Activities and Their Licenses
Dealing in Securities – SFC License Type 1Involves creating agreements for acquiring or profiting from securities. Securities brokerage firms require this license, and their brokers and dealers must be licensed representatives.
Dealing in Futures Contracts – SFC License Type 2Involves offering or inducing agreements to acquire or dispose of futures contracts. Futures brokerage firms need this license, and their brokers, dealers, and sales traders must be licensed representatives.
Advising on Securities – SFC License Type 4Includes providing advice on acquiring or disposing of securities.
Advising on Futures Contracts – SFC License Type 5Includes advising on futures contracts and issuing analyses or reports influencing decisions to acquire or dispose of contracts.
Asset Management – SFC License Type 9Includes managing securities portfolios, futures contracts, and hedge funds. Hedge fund managers and portfolio managers must hold this license.
SFC License Criteria
To qualify for an SFC license, applicants must meet the following criteria:
Financial Status or SolvencyApplicants must not be in receivership, bankruptcy, or similar proceedings, and must meet financial and capital requirements.
Educational, Experience, and Other QualificationsApplicants must have relevant education and experience. Individuals must be over 18 and capable of performing regulated activities effectively.
Competency and HonestyApplicants must comply with relevant laws, codes, and guidelines, demonstrating the ability to conduct activities honestly and fairly.
Reputation, Reliability, Character, and Financial IntegrityApplicants must have a good reputation and financial integrity. Those with poor credit history or dishonesty will be deemed unfit.
For details on qualifications or the Licensing Examination for Securities and Futures Intermediaries (LE), contact Lanturn’s Hong Kong fund management specialists.
SFC License Application Procedure
Applications are submitted online via the WINGS platform. Ensure that all questions in the application form are answered and that necessary supporting documents are attached. For individuals, select the “Individual Account” category; for corporations, use the “Sub Account of an Advisory Firm Account” category.
Corporations must provide a board resolution approving the application. Processing times are approximately 8 weeks for licensed representatives, 10 weeks for responsible officers, and 15 weeks for licensed corporations.
Hong Kong is a premier location for asset and fund management, ranked fifth globally in the 2022 IMD Competitiveness Ranking. For assistance with your SFC license application, our HK specialists will guide you through the process and assist with fund formation and administration services.
Why Choose MVG?
At Morgan Vantage Group (MVG), we are uniquely positioned to support you through the SFC license application process. Here’s how we can help:
Expert Guidance: Our specialists have extensive experience navigating Hong Kong’s regulatory environment and can provide tailored advice to ensure your application meets all requirements.
Comprehensive Services: We offer end-to-end support, from determining the most appropriate SFC license type for your business to assisting with fund formation and administration.
Global Reach with Local Expertise: Leveraging our global network and local knowledge, we help you navigate the complexities of Hong Kong’s financial regulations with ease.
Personalized Support: Our team is committed to providing personalized assistance, ensuring that your specific needs are met throughout the licensing process.
Contact us today at info@mvgtrust.com for expert assistance with your SFC license application and to learn how MVG can support your business in Hong Kong.
