SEC Establishes Oversight Cooperation Agreement with Hong Kong’s SFC

The arrangement is part of the SEC's strategy to enhance the supervision of regulated entities operating across national borders.

The US Securities and Exchange Commission (SEC) has established a comprehensive arrangement with the Hong Kong Securities and Futures Commission (SFC) as part of its long-term strategy to enhance the oversight of regulated entities operating across national borders.

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The new supervisory cooperation arrangement will boost the SEC’s and the SFC’s ability to share information about regulated entities operating in the US and Hong Kong, including investment advisers, broker-dealers, securities exchanges, market infrastructure providers, and credit rating agencies, and is an extension to a previous agreement in 1995 that was limited to just investment management activities.

Paul A. Leder, Director of the SEC’s Office of International Affairs, commented: “By creating a formal channel for exchanging supervisory information with the SFC, this new arrangement will enhance the SEC’s ability to supervise firms on a cross-border basis.”

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Cross-Border Cooperation

SEC’s approach to supervisory cooperation with its overseas counterparts builds on more than three decades of experience with cross-border cooperation, starting in the late 1980s with memoranda of understanding (MOUs) facilitating information sharing between the SEC and other securities regulators in securities enforcement matters.

Enforcement cooperation MOUs assist the SEC to collect information abroad to investigate securities-law violations and compensate victims of securities fraud where possible.

Supervisory cooperation arrangements establish mechanisms for ongoing consultation and the exchange of information regarding the oversight of global firms and markets.

Such information may include routine supervisory information as well as information regulators need to monitor risk concentrations, identify emerging risks and better understand a globally active regulated entity’s compliance culture. These arrangements also facilitate the ability of SEC and its counterparts to conduct on-site examinations of registered entities located outside the US.

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