Consultation on New Type 13 Regulated Activity

Consultation on New Type 13 Regulated Activity

Consultation on New Type 13 Regulated Activity 1400 788 Charing

On 22 February 2022, the Securities and Futures Commission (“SFC”) released its Consultation Conclusions on the Proposed Regulatory Regime for Depositaries of SFC-authorised Collective Investment Schemes and also a further consultation on the proposed amendments to the relevant subsidiary legislation, SFC codes and guidelines to implement the regime.

In September 2019, the SFC issued a Consultation Paper (the “2019 Consultation”) proposing a framework for a new regulated activity, Type 13 (“RA 13”), to regulate top-level trustees and custodians (ie, the depositaries) of SFC-authorised collective investment schemes (“Relevant CIS”) under the Securities and Futures Ordinance (“SFO”).

Under the proposed scheme, entities will need to be licensed for RA 13 if they carry on an activity of providing depositary services in Hong Kong for one or more Relevant CIS.  An applicant for a RA 13 license will be subject to similar requirements as other SFC licensed entities, including the need for responsible officers, managers-in-charge and compliance with relevant SFC codes, guidelines and circulars.  RA 13 licensed corporation will be required have a minimum paid up share capital of HK$10,000,000 (which is similar to the current financial resources requirement under the Product Codes) and a minimum liquid capital of HK$3,000,000.

In order to implement the proposed scheme, the SFC is proposing amendments relevant legislations and codes such as Schedule 11 to the Code of Conduct for Persons Licensed By or Registered with the Securities and Futures Commission (“Code of Conduct”) to include RA 13. Various subsidiary legislation under the SFO will also be amended to reflect the introduction of RA 13.

The deadline for submitting comments to the further conclusion is 30 April 2022.  To find out more about the proposed regime for RA 13, please contact us today.

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