The Securities and Futures Commission (SFC) will proceed with legislative amendments to prevent unregulated entities from using names that falsely suggest they hold regulatory authorisation.
Hong Kong’s securities regulator published its consultation conclusions after respondents broadly supported the proposals. The SFC plans to finalise the amendments before introducing a bill to the Legislative Council (LegCo) for consideration and approval.
The proposals would expand the list of restricted titles under the Securities and Futures Ordinance (SFO) and introduce similar restrictions under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO).
Respondents also called for a mechanism to allow the SFC to update the list of restricted titles more quickly. The regulator accepted the suggestion and amended its proposals accordingly.
Proposed restrictions on misleading names
The amendments aim to stop unregulated entities from using names that could mislead the public. Such names may give the impression that these businesses hold regulatory authorisation.
Under the proposed AMLO provision, the SFC would extend similar protections to virtual asset activities. Existing SFO restrictions do not cover these activities.
The changes would broaden the regulatory framework and allow the SFC to update its list of restricted titles more quickly.
Next steps for the SFC bill
The SFC will work to finalise the legislative amendments before introducing a bill to LegCo for consideration and approval.
“The broad support received underscores the importance of protecting investors from names that may falsely imply regulatory status. The proposed amendments will strengthen the restrictions and allow the list of restricted titles to be updated more promptly. This will reinforce investor protection as financial markets and the terminology used by market participants continue to evolve,”
said Rico Leung, the SFC’s Executive Director of Supervision of Markets.
The regulator will also work with the Investor and Financial Education Council to strengthen investor education on the changes.
Featured image credit: Edited by Fintech News Hong Kong, based on image by Md Abdullah2024 via Magnific
