18 May, 2018
In the latest issue of its SFC Compliance Bulletin: Intermediaries published on 16 May 2018, the Securities and Futures Commission (SFC) provides an update on the implementation of the Manager-in-Charge (MIC) regime and announces that it will conduct a thematic review of licensed corporations' (LC) management structure and effectiveness.
Upcoming thematic review
The upcoming thematic review of LCs' management structure and effectiveness will consider:
- board governance;
- the responsibilities of MICs, including those based in and outside Hong Kong; and
- how those responsibilities will be discharged.
The SFC has yet to provide details as to the timing of this review.
Update on implementation of MIC regime
The SFC noted that it was approached by many firms in the lead up to the implementation of the MIC regime to discuss their specific management structures. It provided examples of the steps which firms had taken to strengthen corporate governance and senior management accountability.
For example, the SFC noted a Mainland financial group with several LCs operating in Hong Kong:
- proactively reviewed and enhanced the management structures of its LCs by appointing a number of group-level senior management personnel as MICs; and
- sought the SFC's approval of the applications of the MICs responsible for overall management oversight (who were previously licensed as representatives) to become responsible officers.
In addition, the SFC observed that as of 31 March 2018, there were approximately 10,600 MICs, about 38% of which were not licensed persons as they were involved in compliance, control and operational functions.
The SFC noted that the MIC regime enables it to more easily keep track of information about a firm's senior management, who are required to comply with the conduct requirements under SFC codes and guidelines, regardless of whether they are licensed.
For further information, please contact:
William Hallatt, Partner, Herbert Smith Freehills
William.Hallatt@hsf.com
