Competence requirements for individuals
For the purposes of these FAQs, where references to “corporation” are made, the term covers “registered institution”; similarly, where references to “responsible officer” are made, the term covers “executive officer” of a registered institution, references to the term “licensed representative” covers “relevant individual” of a registered institution.
(Q1 to Q5, Q7, Q9, Q11 and Q13 were either obsolete or elaborated in the Guidelines on Competence1 and removed on 26 January 2022)
(Q6, Q8, Q10 and Q12 were updated on 26 January 2022)
(Q14 to Q16 were added on 26 January 2022)
(Q17 was added on 21 March 2023)
(Q18 was added on 30 April 2024)
Q1 : FAQ removed on 26 January 2022
Q2 : FAQ removed on 26 January 2022
Q3 : FAQ removed on 26 January 2022
Q4 : FAQ removed on 26 January 2022
Q5 : FAQ removed on 26 January 2022
Q6 : Regarding the exemption criteria as set out in paragraph 4.4.3.2 of the Guidelines on Competence, to what extent will an applicant’s activities be considered as “limited scope”?
Examples of applicants’ involvement in “limited scope of activities” include:
- Regional Research Head coming to Hong Kong occasionally and is accompanied by other local licensed staff in client meetings, or
- persons only providing technical advice to clients on the structuring of corporate finance deals.
The above examples are not intended to be exhaustive.
Q7 : FAQ removed on 26 January 2022
Q8 : Referring to the re-entrant exemption in paragraph 4.4.4 of the Guidelines on Competence, how many CPT2 hours does a former practitioner who had left the industry for four years and two months need to take before the former practitioner is eligible for this exemption?
The requirement is five CPT hours per regulated activity for each year of absence. In this case, the former practitioner would have to complete 25 CPT hours for each applicable regulated activity (any fraction of a year would be rounded up for this purpose). The former practitioner should complete the required 25 CPT hours before lodging the application.
Q9 : FAQ removed on 26 January 2022
Q10 : What types of CPT would be relevant for the exemptions as set out in paragraph 4.4.2 and 4.4.3 of the Guidelines on Competence? When should the applicant complete the additional CPT hours and what are the consequences if the applicant fails to do so?
To be eligible for the RIQ3 exemptions in paragraph 4.4.2 of the Guidelines on Competence, the additional CPT hours to be taken should be in industry or product knowledge in respect of the regulated activity applied for.
To be eligible for the LRP4 exemptions in paragraph 4.4.3 of the Guidelines on Competence, the additional CPT hours to be taken should be in local regulatory knowledge in respect of the regulated activity applied for.
The additional CPT hours may either be taken: (1) within 6 months preceding the application, or (2) within 12 months after the approval is granted. For (1), both the applicant and the sponsoring corporation should provide confirmation that the applicant has already completed the required CPT hours; for (2), both the applicant and the sponsoring corporation should provide undertakings to this effect.
If the applicant fails to complete the additional CPT hours as required, the fitness and properness of both the sponsoring corporation and the applicant may be impugned, and the applicant’s licensing status may be adversely affected.
Q11 : FAQ removed on 26 January 2022
Q12 : An applicant is currently licensed for Type 1 regulated activity. The applicant took HKSI5 LE6 Paper 1 before being licensed 4 years ago. Will the applicant be required to re-take Paper 1 before applying to additionally engage in Type 2 regulated activity?
To apply for another type of regulated activity, the applicant should have passed the LRPs required for the new type of regulated activity.
Generally, applicants should pass the LRPs within three years preceding the application (see paragraph 4.1.5 of the Guidelines on Competence). However, the SFC may also recognise LRPs obtained more than three years ago if the applicant is a current licensee or has been licensed by the SFC within the past three years (see paragraph 4.1.6 of the Guidelines on Competence). In the above example, the applicant will not be required to re-take HKSI LE Paper 1 even if the exam was taken more than three years ago.
In the event that the applicant has never passed the LRPs required for the new type of regulated activity (e.g. the applicant was migrated to the Securities and Futures Ordinance regime by way of transitional arrangements and has never attempted HKSI LE Paper 1), the applicant will not be eligible for an LRP full exemption, but may apply for an appropriate conditional exemption (e.g. LRP Conditional Exemption 6 under paragraph 4.4.3.7 of the Guidelines on Competence) if the relevant eligibility criteria is satisfied.
Q13 : FAQ removed on 26 January 2022
Q14 : An applicant was last licensed on 30 June 2020 under Option 3 of the Guidelines on Competence (March 2003 version) and has left the industry since then. The applicant now rejoins the industry and applies for a new licence. Will the applicant be required to meet the academic qualification requirements under the Guidelines on Competence?
No. Applicants who previously qualify under Option 3 and have been a licensee before 1 January 2022 may be grandfathered under paragraph 4.2.1.3 (for RO7) or 4.3.1.3 (for LR8) of the Guidelines on Competence, provided that they satisfy the other competence requirements stated therein, such as having recent and relevant industry experience, and meeting the RIQ and LRP requirements as applicable.
The grandfathering arrangement would also apply to situations where these applicants apply for addition of regulated activity or approval as RO.
Q15 : Under paragraph 4.1.10 of the Guidelines on Competence, the SFC may consider an applicant’s overall career history within the industry in totality. Does this mean an applicant need not accumulate industry experience within the period prescribed in paragraph 4.2.1.2 (for RO) or 4.3.1.2 (for LR)?
“Recency” is a key element to demonstrate that an applicant is on top of market developments and familiar with the regulatory landscape. While we may consider an applicant’s overall career history within the industry in totality on a case-by-case basis as mentioned in paragraphs 4.1.10 and 4.1.11 of the Guidelines on Competence, this approach mainly covers dated experience for applicants who cannot entirely satisfy the recency test.
For example, if an applicant will be assuming the role of the Manager-In-Charge of the Overall Management Oversight function and has not accumulated sufficient relevant industry experience entirely within the prescribed period, we will holistically take into account how the dated experience is relevant to the applicant’s proposed duties, and whether, for example, sufficient infrastructure and human resources are available to the applicant’s proposed accredited principal. If we accept the relevancy of the dated experience, the applicant may be granted a licence subject to licensing conditions.
Q16 : What kind of “management experience” would the SFC consider as relevant for an RO application?
We consider that “management experience” should refer to the hands-on experience in supervising and managing essential regulated functions or projects in a business setting, including the management of staff engaging in these functions or projects.
This may include –
- experience as senior management (e.g. Chief Executive, Business Head or Chief Operating Officer) of a licensed corporation, registered institution or a corporation within the financial industry supervising the performance of regulated activities or financial services;
- experience in supervising an investment team in the performance of an investment function, whether regulated or not; or
- experience acquired from managing another type of regulated activity.
The above examples are not intended to be exhaustive.
Q17 : Can an LR applicant who is experienced in the private fund management industry apply for LRP Conditional Exemption 4 under the Guidelines on Competence?
Q18 :
Are temporary licensed representatives and full licensed representatives who are itinerant professionals subject to the requirements under the Guidelines on Continuous Professional Training?
No. They are not subject to the CPT requirements.
However, paragraph 4.1 of the Code of Conduct for Persons Licensed by the Securities and Futures Commission requires licensed corporations to ensure that any person they employ or appoint to conduct business is fit and proper and otherwise qualified to act in the capacity so employed or appointed (including having relevant professional training or experience).
1 “Guidelines on Competence” means Guidelines on Competence (January 2022 version).
2 “CPT” means continuous professional training.
3 “RIQ” means recognised industry qualification.
4 “LRP” means local regulatory framework paper.
5 “HKSI” means Hong Kong Securities and Investment Institute.
6 “LE” means Licensing Examination for Securities and Futures Intermediaries.
7 “RO” means responsible officer.
8 “LR” means licensed representative.
Last update: 30 Apr 2024