Financial services publications

Sound risk management is always essential to sustaining the resilience of licensed corporations (“LCs”) amid market uncertainty and volatility.
 
In March 2023, the Securities and Futures Commission (“SFC”) issued a report on the theme review including the assessment on data risk management practices adopted by 48 LCs. The SFC report summarised the industry practices in risk governance, oversight and management in the respective risk areas covered, together with examples of good practices and areas for improvement observed from the thematic review and other supervisory activities. The SFC’s expected standards for LCs to mitigate these specific risks are also set out in the report.

The Hong Kong Monetary Authority has recently issued an updated Supervisory Policy Manual module IC-4 on “Complaints Handling and Redress” (the “Module”) as a statutory guideline in order to align the requirement of the HKMA with the latest industry good practices in financial consumer protection. All authorized institutions are required to implement this updated Module no later than 5 April 2023.

To address intermediaries’ conduct issues in Hong Kong’s Equity Capital Market and Debt Capital Market, the Securities and Futures Commission has recently revised its Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the “Code”) to include conduct requirements for bookbuilding and placing activities. The relevant requirements have come into effect on 5 August 2022.

With the introduction of a new type of investment-linked assurance scheme (“ILAS”) known as Protection Linked Plan (“PLP”), the Hong Kong Monetary Authority (“HKMA”) have recently published a circular to provide guidance to authorized institutions (“AI”) highlighting on its regulatory requirements and expectations on the selling practice of PLP to enhance customer protection in Hong Kong.

In March 2022, the Securities and Futures Commission and the Hong Kong Monetary Authority announced that they will commence a concurrent thematic review on the distribution of non-exchange traded investment products, such as equity-linked structured products and corporate bonds. The review will focus on selected firms’ compliance with suitability obligations, which aims to assess these firms’ practices with respect to product due diligence, suitability assessments and information disclosure to clients, based on their policies, procedures, systems and controls, as well as senior management oversight of such product distribution.