HKMA Outlines New Securities Rules For Banks

by Mary Swire, Tax-News.com, Hong Kong

10 July 2002

In a circular released on Monday, Hong Kong's Monetary Authority (HKMA) outlined the principal points of new regulations governing securities business undertaken by banks.

Currently, Hong Kong's banks are known as 'exempt dealers', because their securities departments are not regulated by the Securities and Futures Commission. However, under the Banking (Amendment) Ordinance 2002 and the Securities and Futures Ordinance - approved by lawmakers in March and soon to be implemented - a raft of new rules governing banks' securities business will be introduced.

According to a report in the South China Morning Post on Tuesday, the circular will be followed by a series of guidelines, to be issued over the next few months.

However, the main points of the new regulations, as outlined in the HKMA circular are as follows:

- Banks and any of their staff involved in securities business must register with the HKMA, and personnel must meet the SFC's fit and proper person requirements

- Banks will need to appoint two senior executives to supervise the way in which securities activities are conducted

Under the new regulatory regime, the Monetary Authority will be in charge of the day-to-day supervision of banks' securities divisions, but cases of suspected malpractice will be handed to the Securities and Futures Commission for investigation.

'This is in line with the concept that the SFC remains the ultimate authority to regulate the securities and futures industry,' the circular explained.

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