Securities & Futures Commission of Hong Kong

Insurance requirements applicable to certain licensed corporations

Q1:

Is every licensed corporation required to take out insurance for the purposes of licensing?

A:

No. The Securities and Futures (Insurance) Rules (the "Rules") set out the insurance requirements applicable to corporations licensed for certain regulated activities only. Currently, there are two master policies of insurance respectively applicable to licensed corporations which are under the following categories:

(1)  Participants of The Stock Exchange of Hong Kong Limited and licensed for
      Type 1 regulated activity;

(2)  Participants of Hong Kong Futures Exchange Limited and licensed for
      Type 2 regulated activity.

Licensed corporations not falling into either of the two categories above are currently not required to take out insurance under the Rules. For more information, please refer to the Circular to Licensed Corporations which are Participants of The Stock Exchange of Hong Kong Limited or Hong Kong Futures Exchange Limited issued by the SFC.

 

Q2:

If a corporation applies or is licensed for Type 1 or Type 2 regulated activity and intends to become an exchange participant, when does it need to take out the required insurance?

A:

It is not necessary for the corporation to take out the insurance at the time when it submits its licence application to the SFC. However, before or at such time when the corporation becomes an exchange participant and is licensed for Type 1 or Type 2 regulated activity, it should take out the required insurance under the relevant approved master policy. 

Related administrative matters are being dealt with by the appointed insurance broker (also acting as the administrator of the insurance scheme). For more information, please refer to the Circular to Licensed Corporations which are Participants of The Stock Exchange of Hong Kong Limited or Hong Kong Futures Exchange Limited issued by the SFC.

 

 

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