King & Wood Mallesons

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The Hong Kong Sevens: tackling seven issues in the licensing of 'regulated activities'

Regulators across the globe have been increasingly proactive in detecting and taking action against unlicensed activities. Take the Hong Kong Securities and Futures Commission (SFC) as an example: in the past three years, the SFC has initiated more than 90 investigations into suspected unlicensed activities, resulting (so far) in 19 criminal prosecutions in which 16 persons were convicted and only two were acquitted. Conducting unlicensed activities is a serious offence with a potential jail term of up to seven years. This client alert identifies some non-obvious ways in which you can fall foul of the SFC’s licensing regime and previews the new issues raised by the proposed over-the-counter derivatives regime.

Under the Securities and Futures Ordinance (SFO), there are currently 10 types2 of “regulated activities” (each an RA), the conduct of which in Hong Kong requires a licence from the SFC. The RA definitions are wide, and there are a few non-obvious risky areas that we highlight below…

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