SFC concludes consultation on disclosure requirements for discretionary accounts

23 May 2018



The Securities and Futures Commission (SFC) today released consultation conclusions on proposed disclosure requirements for intermediaries providing discretionary account management services (Note 1).

Under the proposed requirements, which the SFC will implement (Note 2), these intermediaries will be required to disclose benefits receivable from product issuers as well as trading profits they make from products purchased from or sold to third parties for their clients. The requirements address potential conflicts of interest arising from incentives provided by product issuers.

"The new disclosure requirements enhance transparency whilst enabling investors to make better informed decisions,” said Ms Julia Leung, the SFC’s Deputy Chief Executive Officer and Executive Director of Intermediaries. “They also make it easier for investors to compare benefits which discretionary account managers will receive from product issuers.”

The amendments to the Code of Conduct will come into effect six months following gazettal (Note 3). The SFC will publish frequently asked questions to provide further guidance to the industry.

End

Notes:

  1. On 16 November 2017, the SFC issued Consultation Conclusions on Proposals to Enhance Asset Management Regulation and Point-of-sale Transparency and Further Consultation on Proposed Disclosure Requirements Applicable to Discretionary Accounts. The consultation period ended on 15 January 2018. Most of the 10 written submissions were made by asset management firms and industry associations.
  2. The disclosure requirements, with clarifications detailed in the conclusions paper, will be implemented through amending the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct).
  3. The amendments to the Code of Conduct, set out in Appendix A to the conclusions paper, will be gazetted on 25 May 2018.


Page last updated : 23 May 2018