On 20 May 2016, the Securities and Futures Commission (SFC) announced it had entered into a memorandum of understanding (MoU) with the United States’ Financial Industry Regulatory Authority (FINRA). The MoU records the authorities’ willingness to provide mutual assistance in the supervision and oversight of regulated entities that operate on a cross-border basis in Hong Kong or the United States. The MoU came into effect on 9 May 2016.
The MoU applies to: (i) each entity regulated by the SFC and FINRA; and (ii) each entity that is regulated by either the SFC or FINRA which is a related corporation of an entity regulated by the other authority. The MoU records the authorities’ expectation that the increased supervision of relevant regulated entities will be achieved primarily through continuous and informal dialogue. The informal dialogue will be supplemented by the written exchange of non-public information and periodic consultation.
Our take: Given the increased globalization of the world’s financial markets, regulatory authorities will look to increase ways to share information. Now, more than ever, regulated entities that operate cross-border business should be cognisant of the SFC’s co-operation and information sharing with various overseas regulatory authorities.
If you are interested in reading a full copy of the MoU, it can be accessed from here.