The Hong Kong Securities and Futures Commission (SFC) has issued its “Circular to Licensed Corporations Regarding Measures for Augmenting the Accountability of Senior Management” which introduces additional specific requirements and expectations of the SFC regarding senior management personnel of licensed corporations (referred to below as “the Managers-in-Charge Circular”).
The Managers-in-Charge Circular was published on 16 December 2016 and shall be effective from 18 April 2017 (“Commencement Date”). It is intended to enhance accountability and transparency of senior management of licensed corporations in the conduct of business operations. Existing licensed corporations will need to submit to the SFC additional information on and particulars of their senior management personnel who are responsible over 8 core functions (the “Managers-in-Charge”) within 3 months of the Commencement Date, latest by 17 July 2017. With effect from the Commencement Date, applicants for license with the SFC to engage in regulated activities in securities and futures businesses will need to submit such additional information on their proposed Managers-in-Charge together with the intended human resources and organizational structure when applying to the SFC for license. Any change in the appointment or particulars of the Managers-in-Charge of a licensed entity should be notified to the SFC within 7 business days.
Core Functions
The new Managers-in-Charge framework would impact senior management persons over the following 8 categories of functions within a licensed corporation:
- Overall Management Oversight (eg. Chief Executive Officer, President);
- Key Business Line (of the regulated activities – eg. Chief Investment Officer, Head of Equity, Head of Corporate Finance, Chief Rating Analyst, Head of Fund Marketing);
- Operational Control and Review (eg. Chief Operating Officer, Head of Operations, Head of Internal Audit);
- Risk Management (eg. Chief Risk Officer, Head of Risk Management);
- Finance and Accounting (eg. Chief Finance Officer, Financial Controller, Finance Director);
- Information Technology (eg. Chief Information Officer, Head of Information Technology);
- Compliance (eg. Chief Compliance Officer, Head of Legal and Compliance);
- Anti-Money Laundering and Counter-Terrorist Financing (eg. Head of Financial Crime Prevention, Head of Compliance).
Information regarding the job position and reporting lines of the Managers-in-Charge will need to be submitted, together with details on the identity and residence of the Managers-in-Charge.
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