SFC’s proposals for classification of professional investors

Hong Kong’s Securities and Futures Commission (SFC) has published a consultation paper on proposed amendments to the Securities and Futures (Professional Investor) Rules (PI rules). The consultation includes proposals to expand the categories of persons who may qualify as a professional investor, permit aggregation of certain assets and introduce alternative forms of evidence to satisfy the asset or portfolio thresholds under the PI rules.

The proposals are intended to enhance market consistency in the application of the PI rules and provide greater flexibility to meet the business needs of intermediaries. The proposals relate only to the professional investor assessment under the PI rules and do not seek to further review the professional investor regime under the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. The authors expect that intermediaries will welcome the clarity and guidance offered by the proposals, which, if adopted, are likely to facilitate more efficient and accurate professional investor classification.

In the past, the SFC has granted a number of modifications to the PI rules, in response to applications from intermediaries for greater flexibility in carrying out a professional investor assessment under the PI rules. The proposals reflect the SFC’s aim to consolidate the most commonly sought modifications and make them generally available to all industry participants by incorporating them in the PI rules.

Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Danian Zhang (Shanghai) at: danian.zhang@bakermckenzie.com