Legal update: SFC and CSRC signs Memorandum to Enhance Cooperation and Exchange of Information


The Securities and Futures Commission (“SFC”) has announced on 3 December 2018 that it has entered into a memorandum of understanding (“MoU”) with the China Securities Regulatory Commission (“CSRC”), regarding the cooperation and exchange of information in connection with the supervision and oversight of regulated entities which are operating on a cross-boundary basis in Mainland China and Hong Kong.

According to the announcement, the MoU facilitates the CSRC and the SFC to cooperate with each other in the interests of fulfilling their respective mandates, particularly in the areas of investor protection, promoting the integrity and financial prudence of cross-boundary regulated entities, fostering fairness of markets, reducing systemic risk and maintaining financial stability.

The signing of the MoU is part of the SFC’s on-going attempts to strengthen its relationship with its Mainland China counterpart in the cross-boundary cooperation. Previous co-operation included:

  1. On 17 October 2014, the SFC and the CSRC entered into a memorandum of understanding to enhance their regulatory and enforcement cooperation under the Shanghai-Hong Kong Stock Connect pilot programme.

  1. On 22 May 2015, the SFC announced that it had signed a memorandum of regulatory cooperation with the CSRC on Mainland-Hong Kong mutual recognition of funds, which allowed eligible Mainland China and Hong Kong funds to be distributed in each other’s market through a streamlined vetting process.

  1. On 29 December 2017, the SFC and the CSRC entered into a Memorandum of Understanding on Supervisory and Enforcement Cooperation on Matters Concerning Futures, which facilitated regulatory and enforcement cooperation in the Mainland China and Hong Kong futures markets.

It remains to be seen whether the new MoU will cause any significant impact on the SFC’s supervisory role regarding cross-boundary regulated entities. However, with the increasing connection between Hong Kong and the Mainland China financial markets, it will not be a surprise to see more frequent collaboration between the SFC and the CSRC and potentially joint as well as co-ordinated actions conducted by the two regulators.

Russell Bennett / Peter Tang

The above is not intended to be relied on as legal advice and specific legal advice should be sought at all times in relation to the above.

If you would like to discuss any of the matters raised in this article, please contact:

Russell Bennett
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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.