Sat. Nov 28th, 2020

Regulation HK

Financial Regulator

SFC, HKMA to Launch New Survey to Assess Product Selling Risks

2 min read

The survey will help the SFC and HKMA identify risks associated with the selling activities of intermediaries and coordinate their responses to address areas of common concern. 

The SFC (Securities and Futures Commission) and HKMA (Hong Kong Monetary Authority) have announced they will jointly launch a new annual survey on the sale of non-exchange traded investment products by licensed corporations and registered institutions licensed or registered for Type 1 or 4 regulated activity.

The survey will cover the sale of non-exchange traded investment products, to enable the SFC and the HKMA to better understand market trends, identify risks associated with the selling activities of intermediaries and coordinate their responses to address areas of common concern.

Intermediaries will have to provide information on the sales of products such as collective investment schemes, debt securities, structured products, swaps and repos to individual professional investors, certain corporate professional investors (where intermediaries cannot rely on a waiver of the suitability obligation), and investors other than professional investors.

Transactions by institutional and corporate professional investors for whom intermediaries are exempt from the suitability obligation will be outside the scope of the survey.

Intermediaries will be required to provide an overview of their selling activities, such as the transaction amount by types of investment products, top issuers of investment products sold, and clientele.

Licensed corporations with total transaction amounts of over HKD 1 billion and registered institutions with total transaction amounts over HKD 30 billion during the reporting period will additionally have to provide information about the transaction amount of investment products by types of investors and the details of the top five investment products sold.

The questionnaire will be available in Excel format in WINGS around mid-2020, and further guidance about submitting the questionnaires will be provided in late 2020.

Intermediaries will have to submit completed questionnaires to the SFC electronically through WINGS4 in the first quarter of 2021 for the first reporting period: 1 January to 31 December 2020.

All information collected from the survey will be treated in strict confidence and will not be disclosed to any other third party, except as anonymised, aggregated statistics.

The survey will replace the SFC’s existing biennial surveys and potentially the HKMA’s survey on the sale of investment products to retail banking customers.

Intermediaries are asked to plan ahead to arrange the necessary resources and system enhancements for the survey.

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