Where an account executive meets with a prospective client outside the office and the prospective client signs the client agreement in front of the account executive, will third party certification still be required in these circumstances?
Are there any additional requirements where the account executive travels overseas to open account with new clients?
Third party certification will not be necessary in the circumstances though the intermediary may wish to satisfy itself that the client's identity and information are accurate and the client is actually contactable at that address and phone number.
Under paragraph 12.1 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission ("Code of Conduct"), intermediaries should comply with all requirements of any regulatory authority that are applicable to them. Intermediaries should enquire into the regulations in overseas to ensure that they would not breach any such requirements by so doing.
Instead of obtaining third party certification, could the branches of an intermediary's overseas parent help to open accounts for and on behalf of the intermediary for clients residing in that country (e.g. the PRC)?
Certification by an affiliate is permitted. However, the intermediary should ensure that
a. its affiliate must have established and maintained effective control procedures with regard to account opening as would be required of the intermediary itself;
b. for the opening of accounts using a non-face-to-face approach, its covering correspondence should specifically direct the client's attention to the appropriate risk disclosure statements in accordance with paragraph 6.1 of the Code of Conduct;
c. in accordance with paragraph 8.1(a) of the Code of Conduct, it should provide clients, including those who are outside Hong Kong, with adequate and appropriate information about its business, including contact details, and the identity and status of employees and others acting on its behalf with whom the client may have contact; and
d. its affiliate will not be in breach of any local requirements by so doing.
The SFC expects that any affiliate performing client identity verification for account opening purpose should be a regulated financial institution.
Is it possible to allow an overseas non-affiliate broker (e.g. PRC broker) to do the certification?
Intermediaries can rely on their affiliates which are regulated financial institutions to witness the signing of client agreements and the sighting of identity documents. However, an overseas broker which is not an affiliate of the intermediary is not allowed to do the certification.
What is an electronic signature?
Should a client have or apply for a certificate recognised under the ETO (Electronic Transactions Ordinance) before he can electronically sign on the client agreement?
Electronic signature is defined in section 2(1) of the ETO to mean any letters, characters, numbers or other symbols in digital form attached to or logically associated with an electronic record, and executed or adopted for the purpose of authenticating or approving the electronic record.
It is generally not necessary for a client to have any certificate recognised under the ETO before he can sign on a client agreement by way of an electronic signature, unless an intermediary relies on certification services recognised under the ETO to verify client's identity(Note).
Note: Please refer to 'Acceptable account opening approaches – Certification services' on the designated webpage for Account Opening for details.
Last update: 5 Jul 2019