Management, Supervision and Internal Control Guidelines for Persons Registered with or Licensed by the Securities and Futures Commission

The Securities and Futures Commission (SFC) today publishes the Management, Supervision and Internal Control Guidelines.

The SFC also issues today a Consultation Conclusions document which summarises the main areas of comments which the SFC received during the consultation period after the publication of a consultation paper on the proposed Guidelines, and which explains the conclusions the Commission has reached and the changes it has made to the proposed Guidelines.

A total of 13 written submissions were received, including those from self-regulatory bodies, industry representative bodies, professional bodies, legal and accounting firms, international brokerage firms, and fund management firms.

Seminars attended by about 1,200 people altogether were held for industry practitioners and professional bodies. The seminars provided a forum for Commission staff to explain the Guidelines to, and to discuss them with, the industry practitioners.

The Guidelines provide guidance to registered persons and licensed traders with regard to the SFC's expectations in relation to internal management and internal control systems of their businesses. The individual codes of conduct issued by the Stock Exchange of Hong Kong and the Hong Kong Futures Exchange and the SFC require registered persons and licensed traders to maintain satisfactory internal control systems.

The Guidelines apply to all securities dealers, dealing partnerships, investment advisers, commodity trading dealers and advisers, investment advisers' partnerships, and licensed leveraged foreign exchange traders.

The Guidelines do not have the force of law, but a failure to comply could reflect adversely on the fitness and properness of the registered person/licensed trader to continue to be registered/licensed.

Mr Anthony Neoh, Chairman of the SFC, said, "The Commission staff have the benefits of comments from industry practitioners and professional bodies before the Guidelines were finalised for publication. We are confident that the Guidelines will assist in enhancing market integrity and also professionalism of the industry participants. These Guidelines will become an important foundation in achieving improved operations and risk control practices."

Copies of the Guidelines are available at the SFC. They can also be found on the SFC's website at http://www.hksfc.org.hk.