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SFC publishes Annual Report 2019-20

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The Securities and Futures Commission (SFC) today published its Annual Report 2019-20 which sets out its priorities to ensure the integrity and overall soundness of Hong Kong’s securities and futures markets in the face of unprecedented challenges, particularly stemming from the COVID-19 outbreak.

The report recaps the SFC’s efforts to promote regulatory compliance and ensure markets operate efficiently and fairly amidst increased volatility and a challenging business environment. These include stepping up its supervisory work and regular stress tests to monitor firms’ financial resilience as well as conducting special inspections to ensure compliance with the SFC’s requirements.

“It is more crucial than ever to deliver world-class regulation which upholds market integrity and supports Hong Kong’s vital role connecting mainland China with the world,” said Mr Tim Lui, the SFC’s Chairman. “Ensuring financial markets are healthy and sustainable is key to reinforcing Hong Kong’s status as a leading international financial centre.”

“Our unwavering commitment to competence, independence, impartiality and public accountability is the foundation of the SFC’s work,” said Mr Ashley Alder, the SFC’s Chief Executive Officer. “In the years ahead, concerted global action on the part of regulators and the industry will be essential to address the formidable challenges we face.”

The report also reviews the progress of the SFC’s front-loaded approach which over the past few years has helped it address misconduct and market irregularities through pre-emptive, timely regulatory intervention.

Other highlights during the year include the introduction of a regulatory framework for licensing virtual asset trading platforms and a proposed new type of regulated activity for trustees and custodians of SFC-authorised collective investment schemes. Together with Hong Kong Exchanges and Clearing Limited and the Federation of Share Registrars, the SFC concluded a joint consultation on a proposed operational model for an uncertificated, or paperless, securities market.

The report also features the SFC’s initiatives to develop Hong Kong as a hub for green and sustainable finance, including a survey report on integrating environmental, social and governance factors and climate risks in asset management (Note 1).

Key statistics for the year (Note 2) include the following:

  • The number of licensees and registrants increased to 47,167, of which the number of licensed corporations rose to 3,109
  • The SFC authorised 126 collective investment schemes and 146 unlisted structured products for public offering
  • It authorised the world’s first iron ore futures exchange-traded fund (ETF) and the first authorised ETF structured as a public open-ended fund company (OFC) was listed and two private OFCs were registered
  • It reviewed 303 listing applications and supervised 359 takeovers-related transactions and applications
  • It directly intervened in 35 initial public offering applications and 12 post-listing cases using its regulatory powers under the Securities and Futures (Stock Market Listing) Rules
  • It conducted 317 risk-based on-site inspections of intermediaries and noted 1,489 incidents of breaches of the SFC’s rules
  • It made 8,767 requests for trading and account records from intermediaries as a result of market surveillance
  • It disciplined 20 firms and 24 individuals and imposed fines totalling $479 million for intermediary misconduct

The Annual Report is available on the SFC website.

End

Notes:

  1. Survey on Integrating Environmental, Social and Governance Factors and Climate Risks in Asset Management, published in December 2019.
  2. The report covers the period from 1 April 2019 to 31 March 2020.

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Regulator Information

Abbreviation: SFC
Jurisdiction: Hong Kong

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