Concurrent SFC-HKMA Thematic Review of Spread Charges and Other Practices

The SFC and HKMA have issued a circular (attached) announcing that they will commence a concurrent thematic review in the second half of this year to access intermediaries’ spread charges and other practices, as well as their compliance with requirements governing the disclosure of trading capacity and monetary benefits under the Code of Conduct. The review is to cover the selected intermediaries policies, procedures, systems and controls as well as management oversight of the distribution to clients of non-exchange traded investment products such as bonds and structured products.

The findings of the concurrent thematic review will form the basis for the SFC and HKMA to assess intermediaries’ compliance and to take regulatory action in the event of a breach. They will also be shared with the industry and further guidance will be considered if deemed appropriate.