Consultation on proposed amendments to Hong Kong Professional Investor Regime

A consultation paper on the Proposed Amendments to the Professional Investor Regime and the Client Agreement Requirements on May 15 2013 was issued by the Hong Kong Securities and Futures Commission (“SFC”).

The main proposals in order to amend the professional investor regime in Hong Kong are the followings:

  • Treatment of professional investors of category B ( i.e individuals who meet certain requirements as to their level of sophistication and understanding of the product sold), together with their wholly owned investment vehicles and investment vehicles owned by family trusts as non-professional investors for the purposes of the Code of Conduct for Persons Licensed By or Registered with the SFC;
  • It is intended to amend the current monetary thresholds set out in the Securities and Futures (Professional Investor) Rules;
  • Treatment of corporations as professional investors for the purposes of the Code of Conduct if they get some knowledge and investment experience and agree with this treatment;
  • Prohibition for intermediaries to put inconsistent terms, according to the Code of Conduct, in client agreements;
  • Incorporation of suitability requirements set out in the Code of Conduct into client agreements as a contractual term.