How to apply for an SFC license?

After taking the Hong Kong Securities and Futures Practitioners Qualification Examination, how do I get licensed?

Many people ask, after passing the HKSI LE, how do I get licensed? What is the relationship between the HKSI LE exam and obtaining an SFC license?

In Hong Kong, individuals engaged in financial businesses regulated by the Securities and Futures Commission (SFC) need to possess the relevant qualifications, i.e., obtain the appropriate license. To obtain a license, one must meet the requirements of the SFC’s “Guidelines on Fit and Proper Persons” and “Guidelines on Competence”: in addition to financial status, reputation, character, reliability, educational or professional qualifications, and relevant industry experience, one must also possess recognized industry qualifications and pass the local regulatory framework examination.

So, how do individuals apply for an SFC license for regulated activities?

First, determine the type of license you need to apply for:

What kind of regulated activity does the license you want to apply for correspond to? Are you applying to be a licensed representative or a responsible officer? You need to determine the type of license to apply for based on the financial business you will be engaged in.

For example: Securities trading corresponds to the first type of regulated activity, i.e., License 1; futures contract trading corresponds to the second type of regulated activity, i.e., License 2, etc.

Second, pass the relevant qualification exams of HKSI LE.

Please note that the exam paper number and the license category you will apply for do not correspond one-to-one. It is not the case that you should take Paper 2 for License 2, nor that passing Paper 2 will guarantee you License 2.

HKSI LE’s relevant qualification exams are divided into two parts:

1)Local Regulatory Framework Examination

The local regulatory framework examination mainly consists of HKSI LE’s regulatory papers. Both licensed representatives and responsible officers must pass Paper 1. Responsible officers also need to pass the corresponding papers from Paper 2 to Paper 6. For example, a responsible officer applying for a securities trading license must pass Paper 1 and Paper 2; whereas a responsible officer applying for a futures contract trading license must pass Paper 1 and Paper 3.

Licensed representatives do not need to take Papers 2 to 6.

Regulatory papers cannot be exempted.

2)Recognized Industry Qualification Examination

Before applying for an individual license, you also need to possess a recognized industry qualification. Recognized industry qualifications are mainly related to HKSI LE’s application papers.

Among them, Paper 7 “Financial Markets” is mandatory.

In addition, you also need to pass the corresponding HKSI LE application paper based on the license type you want to apply for, such as taking Paper 8 for securities trading and Paper 9 for futures contract trading.

HKSI LE’s application papers 7 to 12 can be exempted under certain conditions. For details, please refer to our article on exemptions.

The local regulatory framework examination and recognized industry qualification examination are the tests you need to pass for the HKSI LE examination when applying for an SFC license. For example, if you were not previously a licensed representative for Type 9 and do not have a university degree, but have a pass in Chinese or English + Mathematics in the Hong Kong Diploma of Secondary Education Examination or an equivalent qualification, and have 3 years of relevant industry experience and 2 years of management experience within the past 6 years, you will need to pass Paper 1 + Paper 6 + Paper 12 to apply for Type 9 RO.

The commonly heard term “Exam 178” is actually a misnomer. 178 does not refer to the license, but rather a combination of HKSI LE exam papers, i.e., Paper 1 + Paper 7 + Paper 8. Among them, Paper 1 is for passing the local regulatory framework examination, while Papers 7 and 8 are for obtaining the corresponding recognized industry qualifications. The main purpose of taking Papers 178 is to apply to become a licensed representative for the first type of regulated activity—securities trading, which is the Type 1 license.

After passing the exams mentioned above, you can start preparing to apply for a license. At this point, you need to find employment opportunities with a financial institution regulated by the SFC. Once you have secured a position, the company will act as your supervisor and assist you in applying for your individual license.

Your supervisor will assist you in preparing the required documents, including personal information forms, proof documents, qualification certificates, etc., and submit your individual license application and required documents through the SFC’s online application system (WINGS).

You will also need to pay the individual license application fee specified by the SFC.

During the application process, the SFC may request additional information or explanations, and you should actively cooperate and respond promptly.

After the SFC’s review, if you meet the requirements, you will be granted the corresponding individual license, allowing you to engage in regulated financial business in Hong Kong.

In addition, according to the SFC’s “Licensing Handbook,” only licensed representatives can apply to be approved as responsible officers. Individuals applying to become licensed representatives can apply to be approved as responsible officers simultaneously.

What happens to the license when you leave your job?

Since the individual securities license is under the company’s name, if the licensed individual (including licensed representatives LR and responsible officers RO) terminates the employment contract with the company, they must apply to transfer the license affiliation to another corporation within 180 days; otherwise, their license will be revoked.

However, licensed individuals who reapply for a license for regulated activities for which they were previously licensed within three years of leaving their previous position can be unconditionally exempted from relevant qualification examinations. In other words, no exams are needed.

If you have been out of the industry for 3-8 years and wish to apply for exemption, it is conditional. According to the “Guidelines on Competence,” you need to submit records of 5 hours of continuing education per year, of which the continuing education hours for local regulatory knowledge should account for 50%.

If you want to know more details, you can visit the SFC website or consult our team.

How can we help?

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