Open for applications

On 27 July 2023, the Securities and Futures Commission (SFC) began accepting applications for Type 13 regulated activity.  Firms which provide depositary services for public funds in Hong Kong are required to submit their corporate licence or registration applications for Type 13 regulated activity on or before 30 November 2023.

Depositary services for collective investment schemes

Commencing on 2 October 2024, trustees and custodians (i.e., depositaries) of SFC – authorised collective investment schemes (CISs), unless exempted, will be required to be licensed by or registered with the SFC for Type 13 regulated activity under the Securities and Futures Ordinance (SFO).

Who needs to be licensed or registered for Type 13 regulated activity?

Corporations

Upon commencement of the new regime any depositary of an SFC-authorised CIS which is at the top of the custodial chain is required to be licensed or registered for regulated activity 13 in order to provide depositary services for the CIS in Hong Kong, unless the CIS is:

1. A registered mandatory provident fund scheme or a constituent fund or such scheme; or
2. An approved pooled investment fund, which is not offered to retail investors.

Depositary services refer to:

1. Custody and safekeeping of relevant CIS property; and
2. The oversight of a relevant CIS to ensure that it is operated in accordance with its scheme documents.

The licensing requirement only applies to top-level depositaries operating in Hong Kong, it does not apply to their delegates or sub-delegates.  Further, the licensing regime does not restrict a licensed or registered Type 13 from conducting other business – such as acting as trustee of family trusts or private investment funds.

Individuals

Who are required to be licensed or registered?

1. Staff members of the depositary assuming oversight duties to ensure that a relevant CIS is operated in accordance with the scheme documents; and
2. Staff members of the depositary who are empowered to approve transactions or transactions for custody-related purposes.

Key takeaways

In today’s increasingly complex regulatory landscape, it is essential to keep abreast with the latest regulatory changes. 

Our team specializes in advising clients on issues related to licensing and regulatory compliance.  To learn more about our services and how we can assist, please contact us.

Alfred Leung, Partner 

(alfredleung@hkytl.com; 852 3468 7202)

YTL LLP is a law firm headquartered in Hong Kong, China.  This article is general in nature is not intended to constitute legal advice.