SFC Signs Memorandum of Understanding with German Regulator

The deal will see the two regulators sharing an increasing amount of information

Hong Kong’s Securities and Futures Commission (SFC) announced on Friday that it has signed a memorandum of understanding (MoU) with the German Federal Financial Supervisory Authority (BaFin). Despite announcing the signing of the MoU only today, the agreement went into effect earlier in May.

Today’s announcement will see the German and Hong Kong regulators cooperate in a number of ways to ensure companies are meeting regulatory requirements. It comes just under a year after the SFC signed a similar deal with the UK’s Financial Conduct Authority.

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The MoU reflects the growing level of regulation across the financial services industry. The SFC noted in today’s announcement that technological developments combined with growing cross-border activity mean regulators have no choice but to work together to achieve their goals.

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Increased information sharing

Beyond increasing the general supervisory capabilities of the two regulators, the SFC noted that it would be particularly helpful in sorting through companies’ applications for regulatory approval. For instance, if a business regulated by the SFC applies for BaFin’s approval, the two regulatory bodies can share information pertaining to that business.

In fact, information sharing lies at the heart of this new MoU. The two bodies will now be able to share, amongst other things, the compliance reports, capital reserves and liquidity levels of companies under their jurisdiction.

For bodies such as the SFC, this will likely prove a useful set of information to have. In recent weeks the regulator has been cracking down on a variety of firms which it deemed had breached its rules. Just yesterday, the regulator fined Hang Seng Investments HK$3 million for failing to pay interest on some of its funds.

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