24 September 2021
If you are a SFC-licensed intermediary, then you are subject to the self-reporting obligation as set out in paragraph 12.5 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the “Code”).
In essence, the obligation under Paragraph 12.5 prescribes that a licensed or registered person, as a firm, should report to the Securities and Futures Commission (the “SFC”) immediately upon the happening of any material breach, infringement or non-compliance with any laws, rules regulations, and codes administered or issued by the SFC, exchange or clearing house of which it is a member or participant of, and requirement of any regulatory authority applicable to that intermediary. This encompasses both actual and suspected breaches, infringements or non-compliances. In the self-report, particulars of the actual/suspected breach, infringement or non-compliance, and relevant information and documents must be included in order to fulfil the obligation.
The SFC has issued numerous circular reminders to intermediaries with regards to their self-reporting obligation. We take this opportunity to summarise and highlight the following:-
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The obligation is an immediate The SFC expects intermediaries to report as soon as practicable after identification of a reportable event i.e. before, and not after the intermediary has already completed internal investigation, obtained legal advice or taken remedial action.
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Registered Institutions are required to fulfil their reporting obligation by making the report to the SFC in addition to the HKMA.
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The SFC launched an online form for intermediaries to submit notifications under Paragraph 12.5 of the Code. The e-form requires information including the details of the actual/suspected breach and the precise time of such actual/suspected breach. Such information may lead to review by the SFC of whether intermediaries have made immediate reporting and whether they have in place proper systems and controls for self-reporting.
Intermediaries should note that a failure to comply with the reporting obligation may result in disciplinary action being taken against the intermediaries and their management. It is therefore crucial for intermediaries to keep in mind that their obligation under Paragraph 12.5 is a matter of priority and not as an afterthought mitigation action.
For further information, please contact:
Charing Yu, Hauzen LLP
charingyu@hauzen.hk
