SFC and the Competition Commission signed a MoU to promote their collaboration and co-operation

With the purposes of exercising their respective powers in achieving regulatory objectives.

10 September 2020 | by LexisNexis Hong Kong

In April 2020, the Hong Kong Securities and Futures Commission (“SFC”) and the Hong Kong Competition Commission (“CC”) signed a memorandum of understanding (“MoU”) to strengthen collaboration and co-operation between the two parties and exchange of information for the purposes of exercising their respective powers in achieving regulatory objectives.

However, both authorities are subject to certain restrictions or limitations under the MoU. For instance, either party may refuse to share information to one another when disclosing such details is not allowed by the law or it would hinder one’s performance in carrying out its objectives.

The Scope

The MoU does not and is not intended to have any legal effect or to amend or supersede any law, regulation, guideline or policy issued by either parties. Under the MoU, both parties agree to inform, consult, share information and exchange views with one another (subject to certain provisos and safeguards).

Further, both authorities accept that the following entities are subject to the Competition Ordinance when they are involved in an economic activity and fall out of an express statutory exception:

  • persons carrying on a regulated activity or are licensed by or registered with the SFC;
  • entities authorized or approved by the SFC (including authorized automated trading services providers);
  • applicants for listing or issuers listed on the stock market of The Stock Exchange of Hong Kong Limited;
  • companies or trusts subject to the SFC’s Codes on Takeovers and Mergers and Share Buy-backs; and
  • collective investment schemes authorized by the SFC.

Categories (a)-(e) are collectively referred to as “Relevant Entities” and/or a “Relevant Entity” for one.

Under the MoU, both the SFC and the CC will pursue to achieve a complementary and consistent approach so far as it is compatible with their independent roles.

Notification and Consultation

Both parties have agreed to notify each other on issues that they believe may significantly affect the other party, like where any of the CC’s proposed policies or guidelines are likely to significantly affect on the securities and futures industry or investors, or where any of the SFC’s proposed policies or guidance are likely to have significant impact on competition issues. The parties will seek advice from each other and take into consideration their views following a notification.

Information Sharing

Exchanging information with one another is specifically provided for when appropriate and necessary with regards to issues arising in specific investigations, proceedings and processes relating to the Relevant Entities or their officers and employees. For example, the CC may be interested in an SFC investigation concerning competition law issues, and vice versa.

Further, either parties may also share related information and provisions to one another. For instance, the SFC agrees to share its latest publications, and any revised regulatory requirements to the CC that the SFC considers relevant to the performance of functions or the carrying out of CC’s objectives, and vice versa.

Consent for Relevant Entities to inform the SFC

Under the MoU, upon the request of a Relevant Entity or its officer whose conduct is or has been the subject of the CC’s investigative powers, the CC will allow the Relevant Entity or officer to inform the SFC regarding the exercise of the CC’s powers and to provide the SFC with the details of the investigation as the CC considers to be necessary and appropriate.

Request for Information

A party may formally request for information to the other party, along with a statement explaining the purpose for obtaining such information, confirming how such information would help or would likely to help the requesting party in accomplishing its functions and objectives, and assuring such information received will be kept confidential (subject to certain provisos and safeguards of MoU).

Future meetings and discussions

Both parties agree to meet yearly (or at intervals to be agreed), and hold ad hoc meetings (where necessary) to communicate matters about the implementation of this MoU, any issues to which the notification or consultation arrangements apply, any further opportunity for collaboration and co-operation, any proposed statutory changes or policy approaches and changes that may impact the performance of their respective functions or objectives, together with any other matter of mutual interest.

Conclusion

To conclude, the SFC and the CC may now take advantage of this MoU to better achieve their objectives. This may also make it easier and more effective for both parties should they join hands and investigate certain financial institutions and/or listed companies.

For more details on other provisions of the MoU, please visit the original copy here.


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