Licensing related matters in light of the COVID-19 pandemic

The SFC is aware that intermediaries or licensing applicants faced with restrictions on travel, public gatherings and lockdowns due to the COVID-19 pandemic locally and overseas may encounter difficulties in fulfilling their obligations in licensing matters. The SFC would continue ongoing dialogue with the industry and provide regulatory flexibility to help intermediaries cope with the COVID-19 pandemic while ensuring that market integrity and investor protection principles are maintained. The examples provided in the following FAQs are not exhaustive and licensed corporations (LCs) are encouraged to contact our case officers in case of specific issues.

(Q3 was outdated and removed on 26 January 2022)

(Q9 was outdated and removed on 1 March 2022)

(Q10 was updated on 1 March 2022)

(Q1 and Q2 were updated on 2 March 2022)

(Q11 was added on 4 March 2022)

Q1 :
The Hong Kong Securities and Investment Institute (HKSI) has recently announced that all in-person examination sessions are cancelled until 30 April 2022. Will the SFC grant any time extension for licensed individuals who are required to pass the regulatory examinations within a prescribed timeframe?

Yes. For all licensed individuals who are originally required, by way of licensing conditions or otherwise, to pass regulatory examinations within a prescribed timeframe which falls due on or before 31 May 2022, the SFC agrees to allow an extended period of three calendar months for them to fulfil the examination requirement. This time extension automatically applies to all licensed individuals concerned, so they need not submit any application to the SFC in this regard.

For example, if a licensed individual is required to pass the local regulatory framework papers on or before 15 April 2022, the deadline to fulfil this requirement will be extended to 15 July 2022.

In the meantime, please note that although in-person examination sessions of the HKSI have been cancelled due to the recent developments of COVID-19, the HKSI is administering special online examinations during the period. For details, please contact the HKSI on +852 3120 6100 or refer to its website at https://www.hksi.org/en/online-special-examination-arrangement/.

Q2 :
If a licensed individual undertakes to complete additional Continuous Professional Training (CPT) hours within a prescribed timeframe, but he or she is not able to attend CPT courses in person, or the CPT courses have become unavailable temporarily, will the SFC grant any extension of time to fulfil the undertaking?

Yes. The SFC will allow an extended period of three calendar months for all licensed individuals who have undertaken to complete additional CPT hours on or before 31 May 2022 to fulfil their undertaking. This time extension automatically applies to all licensed individuals concerned, so they need not submit any application for time extension to the SFC in this regard.

For example, if a licensed individual provided an undertaking to complete additional CPT hours on or before 15 April 2022, the deadline to fulfil this undertaking will be extended to 15 July 2022.

In this connection, please be reminded that the SFC accepts CPT hours completed through attending the relevant training courses either in person or online.

Q3 : Removed on 26 January 2022

Q4 : What are the situations which would require an LC to notify the SFC of changes implemented by the LC, to its organisational structure, operations, contingency plans or otherwise, as a result of the COVID-19 pandemic?

Under section 4 of and paragraph 9 of section 1 of Schedule 3 to the Securities and Futures (Licensing and Registration) (Information) Rules (collectively as Notification Requirement), an LC is required to notify the SFC of significant changes in its business plan covering internal controls, organisational structure, contingency plans and related matters.

In view of the substantial disruptions caused by the COVID-19 pandemic, an LC is expected to notify the SFC immediately of the following situations (these examples are non-exhaustive):

Confirmation of staff infection which may have an impact on the LC’s operations
Closing of office premises as a result of staff infection or government lockdown, including overseas office premises, if the closure has implications for the LC’s operations or the carrying on of its regulated activities (eg, temporary closing of overseas office premises which handles back and middle office functions)
Changes to its organisational resources (eg, split team arrangements, staff relocation to overseas offices)
The triggering of the LC’s business continuity plan

Q5 : If as a contingency measure an LC deploys a licensed individual to work in an overseas office to provide trading services to its clients, is it acceptable to the SFC? Likewise, is it acceptable if a licensed individual who is unable to come back to Hong Kong due to quarantines or airport closures conducts regulated activities for Hong Kong clients at an overseas location?

Yes. These contingency measures to cope with the COVID-19 pandemic are acceptable as temporary arrangements. As these measures would affect the resources of the LCs, an LC is expected to notify SFC as set out in Question 4. When a licensed individual conducts activities for an LC in a jurisdiction outside Hong Kong, it is important that both the LC and the licensed individual are able to comply with the relevant legal and regulatory requirements in that jurisdiction. Furthermore, notwithstanding that the licensed individual is overseas, the LC remains responsible for the regulated activities performed by that individual for the LC. The LC should, therefore, exercise adequate oversight over the licensed individual’s conduct.

Q6 : An LC initially planned to obtain a temporary representative licence for a staff of its overseas affiliate, who intended to come to Hong Kong to carry on regulated activities when meeting with Hong Kong clients of the LC. However, due to the COVID-19 pandemic, he or she would instead like to hold teleconferences or video conferences with Hong Kong clients from overseas. Does this overseas individual still need to obtain a temporary representative licence before interacting with the Hong Kong clients?

As this overseas individual intends to conduct regulated activities servicing Hong Kong clients, he or she should consider obtaining a temporary representativelicence even though he or she will not come to Hong Kong to perform such activities. The SFC will be pragmatic in considering the grant of such licence to him or her in view of the current exceptional circumstances.

Q7 : If the trading desk of an LC has to be temporarily shut down due to the COVID-19 pandemic, can the traders of its overseas affiliate, who are based outside Hong Kong and not licensed by the SFC, cover the trading functions of the LC such that the LC could continue to serve its existing clients?

An LC is normally expected to maintain a back-up office and have remote access to trading facilities so that it can continue to provide trading services if the main dealing office is shut down. However, in the event that the back-up facilities fail and orders need to be routed to an overseas affiliate for execution, the LC is required to notify the SFC immediately, as with any exceptional contingency arrangement (see Question 4 above), and seek approvals from the SFC and overseas authorities for trading offshore where necessary. Under these exceptional circumstances, the SFC would provide flexibility and assistance to ensure continued service to clients.

Q8 : In view of the COVID-19 pandemic, if an LC has arranged for its staff to work from home, its overseas offices or the overseas offices of its affiliates, does the LC have to seek approval of those premises which are being used by its staff to conduct its business or regulated activities?

An LC is required to keep records and documents under the Securities and Futures Ordinance (Cap 571) (SFO) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap 615). It is also required to seek the SFC’s prior written approval under section 130 of the SFO for using any premises for the keeping of records or documents relating to the carrying on of the regulated activities for which it is licensed.

In view of the COVID-19 pandemic, the SFC understands that an LC may arrange for its staff to work from home or from its overseas offices which are not premises approved under section 130 of the SFO. In such circumstances, the LC should ensure that the staff will be able to remotely access the LC’s trading or other systems, and that the activities conducted by the staff will be captured in the records and documents generated by these systems. If certain records and documents need to be kept in unapproved premises on a temporary basis, the LC should send them back to the approved premises of the LC as soon as practicable.

Q9 : Removed on 1 March 2022

Q10 : Owing to the COVID-19 pandemic, certain LCs or associated entities (AEs) may encounter operational difficulties in making the required submission of their audited accounts within four months after the end of the financial year. Will the SFC grant any extension to these LCs or AEs for submitting their audited accounts?

If an LC or AE anticipates delays in preparing its audited accounts or other documents, it may apply for an extension of the submission period by using Form 2 (LCs) or Form 9 (AEs) and submit the application through WINGS as soon as practicable. The SFC will consider these applications pragmatically.

Q11 : Due to the current coronavirus situation, the directors of certain LCs or AEs, particularly those located outside Hong Kong, may have difficulties in physically signing the audited accounts and hence the LCs or AEs may not be able to submit the original copy of the audited accounts with wet-ink signatures by the submission deadline, which is four months after the end of the financial year. Will the SFC accept submission of a scanned copy of the audited accounts by LCs or AEs?

A: As a temporary measure amid the pandemic situation, LCs and AEs can submit a scanned copy of their audited accounts by the submission deadline and submit the original copy as soon as reasonably practicable after the submission deadline.

Last update: 4 Mar 2022