The differences between a SFC Responsible Officer (RO), HKMA Executive Officer (EO) and a Sale Representative (Rep)

 

The different regulatory agencies

 

Before explaining the differences between a responsible officer (RO), HKMA’s executive officer (EO) and sales representative (Rep), you must first know that there are two regulatory agencies that regulates companies that are engaging in securities business: the Securities and Futures Commission (SFC) and Hong Kong Monetary Authority (HKMA).The regulatory body that regulates the securities industry is the Securities and Futures Commission; However, there is one circumstance where the HKMA will jointly supervise with the SFC; that is, when banks are looking to engage in securities business. 

 

Licensed corporation vs registered institution

 

Generally speaking, companies that are not banks and non-approved financial institutions wishing to conduct securities-related businesses need to apply for a license from the Securities Regulatory Commission and become licensed corporations. Since banks are supervised by the Hong Kong Monetary Authority, in order to avoid complicating the regulatory framework, banks engaged in securities business will register with the SFC instead of directly applying for licenses, so they are called registered institutions. Some banks will set up subsidiaries to apply for a license directly from the Securities and futures Commission and become a licensed corporation, but some will choose to register as a registered institution, or to use two different companies to do both simultaneously. Therefore a natural person will have the chances of having both a SFC license, as well as Monetary Authority registration. 

 

Responsible Officer vs Executive Officer 

 

For the time being, there are 10 types of regulated activities that require licensing or registration. If a licensed corporation wants to carry out these regulated activities, at least 2 Responsible Officers (RO) are needed to be assigned as a senior management person, to supervise the operation of such activities and whether employees are legally compliant. As per registered institutions, they are also required to employ at least two senior managers that are responsible for the same job, but in a registered institution these people are named Executive Officers(EO). Each RO or EO can be responsible for more than 1 regulated activity. In other words, suppose a license  corporation applies for type 1, 2, 4, 5 and 9 activity licenses, the organisation must employ 2 responsible officers who are eligible to apply for a type 1、2、4、5、9 license to partake in the management role, or an organisation can decide to separate the different types of activities management and arranged at least two responsible officers to supervise each type of activities as a stand alone. 

 

If you want to be an RO or EO, you need to refer to the Guideline on Competence issued by the Securities and Futures Commission, including obtaining a passing results in a designated exam combination(s) of the Hong Kong Licensing Examination organised by the HKSI  ; it is also required that one must have 3 years of experience in the securities industry and 2 years of experience in managing subordinates, before one may be qualify as an RO or EO. For details, please refer to: Guidelines on Competence 

 

What is a licensed/technical representative?

 

In licensed corporations or registered institutions, employees who are not responsible for supervisory roles, but are required to obtain/register for a license due to conduction of regulated activities, are called licensed representatives.

 

How to find SFC records to verify the identity of its responsible officer/licensed representative? 

 

You can visit the Public register of licensed persons and registered institutions on the SFC website:

1. Link: https://apps.sfc.hk/publicregWeb/searchByName?locale=en
2. Enter the person’s full name in Chinese or English, or CE number
3. Search 

 

How to find HKMA records to verify the identity of its supervisor/sales representative?

 

You can visit the HKMA Register of Securities Staff of AIs

1. Link: https://apps.hkma.gov.hk/eng/index.php？c=search&m=search_by_name
2.  Read and agree to the statement before proceeding
3. Enter the person’s full name in Chinese or English (the first or last name cannot include extra spaces), or the registration number; for example: Chan Tai Man, if you enter ”  Chan Tai Man” or “Chan Tai Man  “, the appropriate search results can’t be displayed
4. Enter confirmation code
5. Search

 

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