Expansion of our licensing regime

In response to global moves to intensify the regulation of CRAs, a regulatory regime governing CRAs came into effect in Hong Kong on 1 June 2011. Under the new regime, both CRAs and their rating analysts conducting the business of providing credit rating services in Hong Kong, are obliged to acquire Type 10 licences from us and are subject to our ongoing supervision. This expansion of our regulatory role coincided with similar developments in a number of other jurisdictions following international recognition of the need to more clearly define the obligations of CRAs and to enhance supervision of their activities. In the period leading up to 1 June 2011, we worked closely with the five CRAs operating in Hong Kong and succeeded in avoiding any interruption to their operations by issuing licences to them, and to their 156 rating analysts, on that day.

Granting more licences

Despite global economic uncertainty, licence applications from local and overseas intermediaries registered significant growth, bringing the total number of SFC licensees to a record high of 39,590 as at 31 March 2012.

The hedge fund industry in Hong Kong continued to expand during the year. The number of licensed hedge fund managers/advisers increased by 9% to reach an historical high of 354 as at 31 March 2012, underscoring Hong Kong’s attraction as an international financial centre with a favourable business environment for the hedge fund industry.

In 2011, five banks that had been conducting sponsor work in Hong Kong decided to transfer this activity to licensed corporations within their respective groups. The process was largely completed by 31 March 2012. As a consequence of this reorganisation, approximately 630 individuals who were previously responsible for the conduct of sponsor work within these banks as executive officers and relevant individuals, have recently been licensed by us as responsible officers and representatives accredited to licensed corporations.

Enhancing licensing efficiency

The SFC Online Portal was launched in September 2009, permitting our licensees to have online access to their information and to submit their annual returns and notifications online. Subsequently, the payment of annual fees was able to be made online. In November 2011, the functions of the SFC Online Portal were further enhanced to permit the online submission to us of all types of licensing applications and the electronic payment of all licensing related fees. As at 31 March 2012, approximately 95% of licensed corporations, registered institutions and licensed individuals had activated their portal accounts.

In response to difficult market conditions and the unclear outlook and to lessen the regulatory cost burden on the industry, we waived the annual licensing fees for intermediaries for two years starting from April 2012.