How long is the SFC license valid for?

May 11, 2021

Do I need to renew my license every year? Where should I apply for renewal?

Will the SFC license become invalid?

We often hear people mention the 178 license. What does that mean exactly? In fact, “178 license” is a common misnomer. 178 does not refer to a license, but a combination of exam papers that need to be taken by a person that is looking to enter the securities industry; that is, the three exam papers of HKSI LE Paper 1, paper 7 and paper 8 combination. In addition to HKSI LE Papers 1, 7, 8, there are other test paper combinations for students who wish to engage in different activities/products to partake in. If a company (not a bank or an authorized financial institution) wants to be qualified for regulated activity, it needs to be licensed by the Securities Futures Commission (SFC) for the regulated activity under the legal requirements. 

In the previous articles, we have mentioned that after completing an exam combination and successfully applying for a license, as long as the license is not terminated or revoked, there is no need to retake the exam again, whilst the license can remain valid. However, to maintain a valid license does not mean that it can be done once and for all after a successful application; In fact, there are some basic requirements for license maintenance:

  1. License Fee$$$ 

According to section 138(2) of the Securities and Futures Ordinance, regardless of whether it is a licensed representative or a responsible officer, the SFC requires a licensee to pay a license fee every year after the license is issued or registered. The yearly registration fee shall be settled within 1 month from the licensed/registration month and date each year, hence if a candidate is unable to make their annual registration fee accordingly, a surcharge will be levied for late payment. The licensing fees for representatives and responsible personnel are different. 

The annual fee for licensed representatives who conduct Type 1, 2, 4-10 regulated activities is HK$1,790; the annual fee for Type 3 activities is HK$2,420.

The annual fee for responsible officers conducting Type 1, 2, 4-10 regulated activities is HK$4,740; the annual fee for Type 3 activities is HK$5,370.

Role \\ License Type1/ 2/ 4/ 5/ 6/ 7/ 8/ 9/ 103
Responsible Officer (RO)HKD $4,740HKD$5,370
Representative (Rep)HKD$1,790HKD$2,420

Please Reference: https://www.sfc.hk/sfc/doc/TC/intermediaries/licensing/licensing_fees_chn.pdf

  1. Submit annual return

According to section 138(4) of the Securities and Futures Ordinance, both licensed representatives and responsible officers must submit an annual return every year after their license is granted or registered. The date of the payment is calculated from the previous year of the licensed date, one must submit their returns within 30 days of their licensed month and date. If there is a payment overdue, one’s license will be temporarily revoked. 

  1. Continuous training

In accordance with the Guidelines on Continuous Professional Training issued by the Securities Futures Commission (SFC) in order to ensure that licensed/registered persons can keep up with the fast-changing environment and products of the financial industry, besides from type 7 activity licensees – providing automated trading services, Licensees/registrants of other regulated activities are required to participate in at least 5 hours of continuous professional training (CPT), for each type of activity each year. However, Type 1, Type 4, and Type 8 activities are similar in nature and belong to the same ability group, so they only need to meet the number of hours for one type of activity. As long as the subject is related to the individual’s responsibilities and can improve their performance in their duties, it will meet the requirements of continuous training. If a candidate can prove that a course is related to more than one competency group, he/she can consider the course as a continuous training involving all related regulated activities. Examples include compliance-related courses.

Who will provide the courses?

Licensed corporations and registered institutions (companies of licensees/registered persons) are responsible for designing and implementing continuing education courses that best meet the training needs of licensed or registered persons they employ. However, training programmes can be courses offered by profit-making third parties. In terms of how the CPT points are counted, it mainly depends on the judgment of your company’s compliance personnel or HR department.  In order to prove your attendance, you also need to provide proof for your company to keep as a record. 

https://www.sfc.hk/-/media/EN/assets/components/codes/files-current/web/guidelines/guidelines-on-continuous-professional-training/Guidelines-on-Continuous-Professional-Training.pdf
  1. Continue to meet the conform to the Guidelines on Competence issued by the Securities and Futures Commission 

In addition to applying for license or registration, one must comply with the requirements of this guideline. It is necessary for a person to maintain the fitness and properness, such as not being bankrupt currently, possess appropriate abilities and skills, otherwise it will affect the ability to continue working in  the securities industry as a licensee/registrant.  

https://www.sfc.hk/-/media/EN/assets/components/codes/files-current/web/guidelines/guidelines-on-competence/Guidelines-on-Competence.pdf

If I resign, How long can I stay unemployed without retaking the exams?  

In the financial industry, the turnover rate is quite high, therefore we are often asked this question. Prior to changing your job, it is important for you to know how long you can stay unemployed without having to retake the exams. According to the  information on the SFC website, it indicates that within 8 years after leaving a licensed corporation or registered institution, if an individual reapplies for a license or is hired again, he can be exempted from taking the relevant competency exams (including HKSI LE paper 1 to 12).However, if you leave a licensed corporation or registered institution and reapply (transfer) to another company within six months, the process will be faster. For details, please refer to https://www.sfc.hk/web/TC/faqs/intemediaries/licensing/licensing-examinations.html#1

BUT

this information is not 100% accurate. Actually, the 8-year period is not inevitable. The Case Officer of the Securities and Futures Commission will evaluate each individual’s profile before deciding whether the person needs to retake the exam.

How can we help?

2CExam provides HKSI LE, IIQE, EAQE and SQE related exam preparation materials. We sell mock question banks for HKSI LE Papers 1, 2, 3, 5, 6, 7, 8, 9, 12 in Chinese and English; and bibles for HKSI LE Papers 1, 2, 6, 7, 8 in Chinese. We also offer 1 on 1 tutorial services. Besides, we have also made free tutorial videos for HKSI LE Papers 1, 2, 6, 7, 8, 12 and posted on public channels such as Youtube/ Bilibili/ Tencent/ Iqiyi. 2CExam has been an exam training expert for years. Should you need any help please visit www.2cexam.com or contact us through:

Phone +852 2110 9644 Email: [email protected] Wechat: hk2cexam WhatsApp: +852 9347 2064

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