August 10, 2018

SFC published a circular warning against facilitating the setting up or operation of securities margin financing arrangements by unlicensed persons to circumvent regulatory requirements.

SFC has observed that some licensed corporations carrying on asset management activities may have aided and abetted unlicensed affiliates or third parties to provide securities margin financing in the guise of investments. SFC warns that the provision of margin financing in the guise of investments under such an arrangement is illegal. These suspected margin financing arrangements are set up or operated in different forms. Additionally, the HKMA letter announcing the release of this SFC circular states that registered institutions should pay attention to the issues highlighted in the circular and be mindful that aiding and abetting the conduct of illegal activities may also call into question the fitness and "properness" of a licensed/registered person.

Keywords: Asia Pacific, Hong Kong, Securities, Margin Financing Activities, Asset Management, HKMA, SFC

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