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Obtaining a Financial Services License in Hong Kong Really Matters if You Are a Professional
In Hong Kong, you will need to obtain a financial services license if you want to conduct business related to financial services regulated activities.
Financial services activities in Hong Kong are activities in relation to the following:
- Securities dealing
- Futures dealing
- Leverage foreign exchange trading
- Providing advice on corporate financing matters
- Securities and futures
- Providing automated trading services
- Asset management
- Securities margin financing
You must obtain this license under the Securities and Futures Ordinance (SFO) of Hong Kong. If you are participating in any of the activities above, then you must obtain a financial services license in Hong Kong if you intend to fully operate. A partnership and sole proprietorship lack the qualifications for a financial services license in Hong Kong.
If you are carrying out the above-listed activities on behalf of a licensed corporation, you will require a Representative’s License. This license can get accreditations to more than a single corporation.
If you are a licensed representative responsible for overseeing a licensed corporation involved in the activities above, you must first secure approval as a “responsible officer” of the licensed corporation.
If you are an individual or an overseas corporation that operates in the same nature as the ones above but doing business outside Hong Kong, you must apply for a temporary license if you want to carry out these same activities in Hong Kong. However, a temporary license is not applicable to the following activities:
- Leverage foreign exchange trading
- Automated trading services
- Securities margin financing
- Asset management services
A temporary license also does not permit you to hold onto your client’s asset. Meanwhile, the validity period of a temporary license is 3 months at any given time, and not exceeding 6 months in total within a period of 24 months.
Exemptions for Financial Services License in Hong Kong
You will get an exemption from the need to have a financial services license in Hong Kong if the following categories apply to you:
- Securities Dealing & Margin Financing – If you have a license for dealing in securities, then you’ll need a separate license to carry out margin financing activities. Authorised financial institutions do not need to register to participate in margin financing activities.
- Professional Investor – You are exempt from needing a license for futures and security dealing activities. This is only if you conduct your dealings with professional investors and you are acting as principal.
- Incidental Regulated Activities – Exemption for certain regulated activities may be possible if your activities are incidental to other regulated activities for which you already have a license.
- Professional Practice – Those who are active in certain professional practice will be the exemption from the need for a financial services license in Hong Kong. However, the advice that they provide should be incidental and part of their job requirements. These professions include trust companies which offer advice relating to securities, futures, asset management, corporate finance, accountants and lawyers, journalists and broadcasters who offer investment advice via publications.
- Investment Advisory Services – If your business provides investment advisory services to your wholly owned subsidiaries, or to your holding company, or even to other whole owned subsidiaries of a holding company, then you will not need a financial services license in Hong Kong.
- Authorised Financial Institutions – These institutions that provide leveraged foreign exchange trading need not obtain a financial services license in Hong Kong.
Prerequisites and Requirements
To obtain a financial services license in Hong Kong, you must fulfil the following pre-requisites before lodging an application:
- You must satisfy the Securities and Futures Commission (SFC) of Hong Kong’s Fit and Proper Criteria. Further, you may find more information about it here. Factors include your financial status, education, qualifications, experience, ability to conduct regulated activities competently, reputation, reliability, financial integrity and character.
- You must demonstrate strong internal compliance systems which satisfy the SFC’s Compliance Guidelines. If you are a corporation, then you must either be a company which has been incorporated in Hong Kong, or an overseas company that is registered with the Companies Registry of Hong Kong.
- You must be able to maintain the minimum paid-up share capital and liquid capital required by the Securities and Futures (Financial Resources) Rules. Moreover, you may find out more information about those rules here.
You will then need to complete the following steps to apply for your financial services license in Hong Kong:
- Complete the applications forms and supporting documents. Submit them either in person at the SFC or via post, along with a non-refundable application fee.
- Successful applications will wait for processing within 2-4 months.
- If successful, you will be issued with written notification from the SFC. You will receive a license or certificate of registration.
License of Registration
Your certificate or license of registration will contain the following details:
- Your name
- Central Entity number
- The effective date of license registration
- Types of regulated activity your license permits you to conduct
- Any conditions which are imposed on your license type
- If you are a representative, the details of your licensed corporation where you are accredited for as principal will be noted.
You must prominently display your financial services license on your premise. To ensure no delays occur with your application, you must provide a complete set of documents which meet all the SFC’s requirements.
Meanwhile, if your documents meet all the necessary requirements, then you can expect a successful application outcome. However, the SFC does reserve the right to reject your application if you fail to meet statutory requirements. In the case of rejected applications, then you will have a timeframe of 21-days to submit an appeal with the Securities and Futures Appeals Tribunal. Do note that the review process can take up to several weeks to be processed.