New SFC measures to heighten senior management accountability

16 Dec 2016



The Securities and Futures Commission (SFC) today issued a circular to all licensed corporations to introduce measures to heighten the accountability of the senior management of these firms (Note 1) and to promote awareness of senior management obligations under the current regulatory regime (Note 2).

Specifically, the circular aims to provide more guidance on who should be regarded as the senior management of a licensed corporation. It identifies eight core functions (Note 3) which are instrumental to the operations of licensed corporations. Licensed corporations are expected to designate fit and proper individuals to be Managers-In-Charge of each of these functions. Those who have overall management oversight of the licensed corporations and those in charge of key business line functions are also expected to seek the SFC’s approval as responsible officers.

"Senior managers bear primary responsibility for the effective and efficient management of their firms, and they should be well aware of the obligations currently imposed on them as well as their potential liability if they fail to discharge their responsibilities," said Mr Ashley Alder, the SFC’s Chief Executive Officer. "These measures will provide more clarity to the industry and strengthen our licensed firms’ governance structures so as to better align with the present responsible officer and regulated persons regime."

Starting from 18 April 2017, corporate licence applicants and existing licensed corporations will have to submit up-to-date management structure information and organisational charts to the SFC. All existing licensed corporations should submit the required information by 17 July 2017. In addition, their Managers-In-Charge of the overall management oversight and key business line functions who are not already responsible officers should have applied for approval to become responsible officers by 16 October 2017.

The SFC has also published over 40 frequently asked questions to provide more guidance to the industry on the measures. The SFC will organise a series of industry workshops in the first quarter of 2017 to help the industry further understand the measures. 

End

Notes:

  1. These measures are consistent with the existing provisions of the Securities and Futures Ordinance (SFO), subsidiary legislation made by the SFC, and codes and guidelines published by the SFC under the SFO.
  2. Since September 2016, the SFC has hosted consultation sessions to discuss the new measures with industry participants including fund managers, brokers, investment banks, financial planners, professional advisors and credit rating agencies. About 200 industry participants attended these sessions.
  3. The eight core functions are:
    (i) overall management oversight,
    (ii) key business line,
    (iii) operational control and review, 
    (iv) risk management,
    (v) finance and accounting,
    (vi) information technology,
    (vii) compliance and
    (viii) anti-money laundering and counter-terrorist financing. 
    Please refer to Annex 1 of the circular for details.


Page last updated : 19 Dec 2016