Hong Kong managers urged to stay compliant

ComplianceA law firm has told Hong Kong-regulated asset managers to address deficiencies before they face regulatory action. Akin Gump issued the advice after the Hong Kong regulator, the Securities and Futures Commission (SFC), sent a circular to managers highlighting problematic practices. “In light of the issuance of the Circular, all SFC-licensed asset managers would be well advised to revisit their internal governance structures and operational policies and procedures in order to ensure that these are compliant with applicable standards and requirements,” said Akin Gump. The SFC circular was based on findings from routine inspections of 250 licensed organisations and highlighted problems including inadequate liquidity risk management, poor governance, and the failure of suitability analysis for high-net-worth and unsophisticated investors. The SFC also drew attention to a potential conflict of interest caused by Hong Kong managers receiving rebates from their brokers. These rebates may have incentivised managers to trade more frequently than was in the interests of their investors, warned the regulator. The circular, said Akin Gump, “is a reminder that the SFC is vigilant regulator”. ©2017 funds global asia

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