On 23 June 2017, the Securities and Futures Commission (the SFC) issued a circular clarifying certain competency requirements for market participants seeking to be licensed for Type 9 (asset management) regulated activity (Type 9 RA).
Pursuant to the circular, the SFC has provided public guidance on the circumstances in which an applicant’s existing experience could expedite their application to be approved as a responsible officer for Type 9 RA. In particular, the SFC clarified that:
- where a responsible officer already conducts wholly incidental Type 9 RA in their capacity as a responsible officer for Type 1 (dealing in securities) regulated activity (Type 1 RA), such discretionary activity will be relevant to their application. The SFC also acknowledged that it considers other industry experience, such as research, private equity and proprietary trading to be relevant experience for a Type 9 RA application; and
- it may waive the requirement for an applicant to pass the local licensing papers as a condition to being licensed for Type 9 RA. Specifically:
- where the applicant only intends to manage discretionary accounts, the SFC will consider granting an exemption where the applicant is already a responsible officer for Type 1 RA and has five or more years of related experience in managing discretionary accounts; or
- where an applicant intends to manage private investment funds, the SFC will consider granting an exemption where the applicant has at least eight years of industry experience in recognised local or overseas markets or alternatively is registered in the United Kingdom or the United States for investment management or advisory services.
In both cases, where an exemption from the licensing papers is granted, the applicant would need to complete additional continuous professional training hours after being approved by the SFC.
The circular offers helpful guidance on the SFC’s licensing practices for Type 9 RA. It shows the SFC’s flexibility and willingness to take into account relevant experience of market participants. It also demonstrates a continuation of the pragmatic approach for Type 9 RA licensing previously announced by the SFC in a circular dated 11 June 2007.
A copy of the circular is available at the SFC website.