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OTC derivatives licensing regime: SFC concludes consultation on regulatory scope and competence requirements


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The Securities and Futures Commission (SFC) today released a consultation conclusions paper on proposals (Note 1) to refine the scope of regulated activities so that the corporate treasury activities of non-financial groups and certain portfolio compression services would not be captured under the over-the-counter (OTC) derivatives licensing regime. The paper also sets out the competence and continuous professional training requirements which will apply to those licensed or applying to be licensed under the regime.

“The refinements will focus our licensing framework on derivatives market intermediaries and avoid creating an unnecessary compliance burden for other market participants,” said Mr Ashley Alder, the SFC’s Chief Executive Officer.

The SFC received written submissions from industry associations, market participants, professional services firms and other stakeholders. Responses were generally supportive. The SFC will work with the Government to finalise the necessary legislative changes and introduce them into the Legislative Council.



  1. On 20 December 2017, the SFC launched a Consultation on (1) the OTC derivatives regime for Hong Kong – Proposed refinements to the scope of regulated activities, requirements in relation to OTC derivative risk mitigation, client clearing, record-keeping and licensing matters; and (2) Proposed conduct requirements to address risks posed by group affiliates. The consultation ended on 20 February 2018. Consultation conclusions were issued in December 2018 on the proposed requirements in relation to client clearing for OTC derivative transactions, risk mitigation for non-centrally cleared OTC derivative transactions and to address conduct risks posed by dealings with group affiliates and other connected persons. The consultation conclusions paper published today covers the proposed refinements to the scope of regulated activities and the competence and continuous professional training requirements under the OTC derivatives licensing regime. Conclusions on the remaining rule changes proposed in 2017 will be published separately in due course.

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Regulator Information

Abbreviation: SFC
Jurisdiction: Hong Kong

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