What Is the Securities And Futures Commission?
The Securities And Futures Commission (SFC) is anon-governmental statutory body responsible for regulating Hong Kong's securities and futures markets. The SFCwas established by the Securities and Futures Commission Ordinance (SFCO). The commission is independent and not under the purview of theGovernment of the Hong Kong Special Administrative Region. Itisfunded by licensing fees and transaction levies.
Understanding the Securities And Futures Commission (SFC)
The SFC administers the laws governing Hong Kong's securities and futures marketsand facilitates the development of these markets. The SFC's statutory objectives are to maintain and promote fairness, efficiency, competitiveness, and transparency in the securities and futures markets; promote public understanding of investing and corporate finance policy; protect investors by enforcing regulations; reduce crime and misconduct and reduce the risks toHong Kong's financial stability.
The History of the SFC
The markets in Hong Kong were unregulated until 1974. After a stock market crash in 1973, there was legislation to introduce a new system to oversee the stock and commodity trading industry. An additional stock market crash in1987 prompted the formation of the six-member Securities Review Committee. In May 1988, theCommittee recommended that a single, independent statutory bodyregulate the markets and, in May 1989, theSecurities and Futures Commission Ordinance (SFCO) was enacted, which created a new regulatory framework for Hong Kong's markets.
The Asian Financial Crisis of 1997 prompted additional regulations and, in May 1989, the SFC was created following the enactment of the Securities and Futures Commission Ordinance (SFCO). By April 2003, the SFCO and nine other securities and futures-related ordinances were consolidated into theSecurities and Futures Ordinance (SFO).
Since the SFC'sinception, the number of listed companies in the Hong Kong markets has grownfrom 290 in 1989 to more than 1,700 while the number of licensees has increasedfrom about 1,900 to almost39,000.
SFC Organization and Operations
Hong Kong's SFC'soperational units include corporate finance, policy, China and investment products, enforcement, supervision of markets, licensing and intermediaries supervision. Each of the SFC's operational units is supported by the legal services department and corporate affairs division. The SFC regulates licensed corporations and individuals. According to the commission,itsactivitiesinclude the following:
- Setting and enforcing market regulations and investigating any breaches ormisconduct;
- Licensing and supervising market participants that fallunder the SFC's regulatory responsibility;
- Managingmarket operators such asexchanges, clearing houses, share registrars, and alternative trading platforms;
- Authorizing investmentproducts and providing associated documentsto investors;
- Overseeing takeovers and mergers of public companies and of The Stock Exchange of Hong Kong Limited's regulation of listing matters;
- Assistinglocal and overseas regulatory authorities; and
- Educatinginvestors on markets includingtheirrisks,rights, and responsibilities.
