SFC publishes Quarterly Report July – September 2025
The Securities and Futures Commission (SFC) issued its Quarterly Report for the period from July to September 2025 on 17 December 2025 (Report). The SFC described the quarter as “a quarter of connecting, innovating and diversifying Hong Kong markets”. This article focuses on the development and innovation and issues which are more relevant to the asset management industry.
Development and Innovation
In addition to the noticeable growth/increase in terms of assets under management (including tokenised retail money market funds authorised by the SFC), sales of collective investment schemes, number of Hong Kong-domiciled funds and registered open-ended fund companies and so on, the SFC has highlighted, among others, the following areas:
- In order to strengthen the asset management business, the SFC has signed six memoranda of understanding so far this year (three of them were signed in the quarter);
- The SFC reduced processing time of simple funds from jurisdictions with a mutual recognition of funds arrangement with Hong Kong under Fund Authorisation Simple Track;
- The first cross listing in Hong Kong of an active exchange traded funds (ETF) provides Hong Kong investors with access to the largest active ETF strategy of the world;
- The order routing service of the Integrated Fund Platform launched by Hong Kong Exchanges and Clearing Limited (HKEX) enhances efficiency of the fund distribution ecosystem; and
- The number of Type 9 (asset management) firms increased by 38 to 2,308, compared to 30 June 2025.
Disciplinary actions and breaches
With regard to actions against intermediary misconduct, the SFC revoked the licences of two corporations (one was an asset management company and the other was a corporation licensed for Types 1 (dealing in securities), 2 (dealing in futures contracts), 3 (leveraged foreign exchange trading) and 9 (asset management) regulated activities). The SFC had also prohibited the related regulated persons (who were unlicensed) from applying to be licensed or registered for life.
The SFC commenced 56 on-site inspections in the quarter. Same as last quarter, the top 4 breaches are:
1. Internal control weaknesses
- “Comprised deficiencies in management review and supervision, operational controls over the handling of client accounts, segregation of duties, information management, adequacy of audit trail for internal control purposes, among other weaknesses”;
2. Breach of Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Code of Conduct)
- “Commonly related to risk management, record keeping, client agreements, safeguarding of client assets and information for or about clients and reasonable advice”;
3. Non-compliance with anti-money laundering (AML) guidelines; and
4. Breach of Fund Manager Code of Conduct.
| Areas | Quarter ended 30.9.2025 | Six months ended 30.9.2025 |
|---|---|---|
| Internal control weaknesses | 176 | 341 |
| Breach of Code of Conduct | 72 | 180 |
| Non-compliance with AML guidelines | 55 | 113 |
| Breach of Fund Manager Code of Conduct | 40 | 99 |
The SFC has kept on issuing circulars reminding asset managers about the irregularities and deficiencies found in managing funds and discretionary accounts. Therefore, in order to mitigate the above regulatory risks, apart from the Code of Conduct and Fund Manager Code of Conduct, asset managers should assess their compliance by referring to the circulars issued by the SFC from to time such as the “Circular to licensed corporations engaged in asset management business – Deficiencies and substandard conduct noted in the management of private funds and discretionary accounts” dated 9 October 2024 and our related article of 30 October 2024.
Source: SFC Quarterly Report July – September 2025
