Securities and Futures Commission of HK Net Profit Rises 62% for 2015-16

Hong Kong's SFC released its latest annual report today for its 2015-16 year.

Hong Kong’s financial markets regulator, the Securities and Futures Commission (SFC), today released its 2015-16 annual report, as per an official announcement.

The SFC reported a 62% increase in net profit as total operating income rose by 18% compared to the prior year, apparently driven by the total value of securities transactions which increased by 46% to $87.78 trillion during the reported period from $57.97 trillion during its 2014-15 year.

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The annual report summarized the SFC’s recent work during a period that experienced high levels of market volatility and a greater degree of connection with markets in mainland China, as described in the update.


Hong Kong’s traditional role is as a place where the world interacts with a rapidly changing China, and further capital market integration is clearly the future.


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Source: SFC 2015-16 Annual Report
Source: SFC 2015-16 Annual Report

Mainland ties strengthened

For example, the SFC had extended its cooperation further with China’s mainland regulator – the China Securities Regulatory Commission (CSRC), among other regulatory counterparts, with the aim of supporting new cross-border initiatives.

Last year the SFC launched the Mututal Recognition of Funds (MRF) initiative with Mainland China, leading to 27 funds with over $10 billion  in assets under management (AuM) being reported in its figures in the report as of March 31st 2016. The SFC took a number of additional measures to expand the range of retail renminbi (RMB) products as China’s currency becomes more integrated globally.

As the regulator strives to make its local markets more efficient, the SFC highlights that the annual report details regulatory developments still underway.

For example, a thematic review of listings jointly carried out with Hong Kong Exchanges and Clearing, and developing an asset management strategy for Hong Kong.

The SFC is also currently implementing the second phase of its over-the-counter (OTC) derivatives regimes, after the first phase was completed last July. It is clarifying the requirements related to making sure that investment products are suitable for clients across different intermediary business models.

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Regulation is the cornerstone of Hong Kong’s position as a leading international financial centre.

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Commenting in a statement, SFC CEO Ashley Alder explained: “We keep an open mind to new proposals and reforms that promote market development provided that they are consistent with the protection of investor interests and rest on sound regulatory principles,”

Ashley Alder Source: SFC
Ashley Alder
Source: SFC

Mr. Adler added: “Hong Kong’s traditional role is as a place where the world interacts with a rapidly changing China, and further capital market integration is clearly the future. This lays the groundwork for Hong Kong to further develop as a centre for managing Mainland risk.”

Finance Magnates reported recently when Mr. Adler was appointed chairman of the board for the International Organization of Securities Commissions (IOSCO).

SFC Chairman Carlson Tong added in a corporate statement regarding the report: “Regulation is the cornerstone of Hong Kong’s position as a leading international financial centre. Our priority is to promote the soundness and competitiveness of our financial markets. We must ensure that our regulatory regime can operate well in an unpredictable environment.”

SFC Annual Report highlights

The report highlighted key areas of progress that the SFC made during the period, including its handling of  7,975 license applications – which was higher by 13% year-on-year (YoY). This increase brought the total number of SFC license holders to over 41,000.

Using a risk-based approach, the SFC conducted inspections on-site of 306 intermediaries, and supervised 435 transactions and application for related takeover deals.

During the period 2015-16 period in the report, the SFC reviewed listing applications for 218 companies under the dual-filing regime, which was higher by 33% year-on-year. In addition, the SFC noted that it had 142 inquiries with listed companies, as explained in the report highlights.

As part of the SFC’s market surveillance work, there were 7,997 requests made for trading records and account records from intermediaries during the period.

As a result of its enforcement efforts, the SFC collected fines amounting to $87.1 million related to disciplinary action against 41 licensed companies and individuals. The number of complaints also fell during the period, compared to the SFC’s prior annual report, even as the number of firms licensed rose as can be seen in the excerpt below:

Source: SFC 2105-16 Annual Report
Source: SFC 2105-16 Annual Report


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