SFC proposes to standardise rules for prescribing professional investors

1 Mar 2017



The Securities and Futures Commission (SFC) today launched a consultation on proposed amendments to the Securities and Futures (Professional Investor) Rules (PI Rules) to allow joint accounts with non-associates and assets held in investment vehicles owned by individuals to be counted in ascertaining whether individuals meet the monetary threshold to qualify as professional investors (Note 1).

In addition, the categories of professional investors would be expanded to include corporations which have investment holding as their principal business and are wholly owned by one or more professional investors, as well as corporations which wholly own another corporation that is a qualified professional investor. Alternative forms of evidence would also be allowed to demonstrate qualification as a professional investor (Note 2).

“The proposed amendments are intended to enhance market transparency and promote consistency in the application of the PI Rules,” said Mr Ashley Alder, the SFC's Chief Executive Officer. “Our key consideration is that the proposals should cater for the business needs of intermediaries and their clients without compromising investor protection.”

Under the proposals, the SFC envisages that more persons will qualify as professional investors. Nevertheless, intermediaries remain subject to the suitability requirement and other fundamental requirements when serving them (Note 3). 

The public is invited to submit their comments to the SFC on or before 3 April 2017. Written comments may be submitted online via the SFC website (www.sfc.hk), by email to SFCPIRules@sfc.hk, by post or by fax to 2523 4598.

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Notes:

  1. These proposals are separate from the 2014 consultation exercise which aimed to enhance the professional investor regime and client agreement requirements with amendments to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct).  For details, see the SFC’s consultation conclusions paper on proposed amendments to the professional investor regime published on 25 September 2014.
  2. The existing PI Rules allow the use of statements issued by custodians and certificates issued by auditors and certified public accountants to ascertain the professional investor status of individuals, and it is proposed to also allow the use of public filings made under legal or regulatory requirements, certificates issued by custodians, auditors or certified public accountants for all professional investors.
  3. Under the Code of Conduct, the other fundamental requirements inherently linked with the suitability requirement or that have significant bearing on investor protection include the need to disclose certain transaction-related information and to enter into a written agreement as well as the provision of relevant risk disclosure statements. 


Page last updated : 1 Mar 2017