Applying for an SFC License in Hong Kong

If you plan to offer financial services in Hong Kong, you may need to be licensed by the Securities and Futures Commission (SFC). Whether you’re starting a brokerage, managing funds, or providing investment advice, this licence is a legal requirement under the Securities and Futures Ordinance (SFO).

This guide covers:

• Who needs an SFC licence (including overseas firms marketing into Hong Kong)
• Types of Regulated Activities (RAs) under SFO Schedule 5
• Key requirements for firms and individuals
• Application steps via SFC WINGS
• Timelines, capital rules, exemptions, and ongoing obligations
• The separate VASP licensing regime under AMLO

Who Needs an SFC Licence in Hong Kong

You must be licensed if you:

• Carry on a regulated activity (RA) in Hong Kong
• Actively market regulated services to Hong Kong investors, even if based overseas (SFO s.115; SFC “Do you need a licence” page)

Some exemptions exist (e.g., incidental and group company exemptions), but they are narrow.

Virtual Asset Service Provider (VASP) Licensing – AMLO Regime

• Separate from SFO RAs
• Covers operating a virtual asset trading platform in Hong Kong
• Administered by the SFC under AMLO, effective 1 June 2023
• Transitional arrangements apply; “deemed-to-be-licensed” applicants are listed on the SFC VATP page

Type 1 vs Type 2 – Key Differences

• Type 1 – Dealing in securities: Covers making/offering agreements to acquire or dispose of securities, as principal or agent. Client asset handling depends on licence conditions.
• Type 2 – Dealing in futures contracts: Covers dealing in futures as principal or agent. Brokers may handle client funds/orders if permitted under licence and FRR — there is no blanket ban.

Core Requirements for an SFC Licence

For Corporations

• Must be a Hong Kong-incorporated company or a non-Hong Kong company registered with the Companies Registry
• Appoint at least two Responsible Officers (ROs) per RA

a) At least one RO must be an executive director

b) At least one RO must be resident in Hong Kong and available at all times for supervision

• Appoint Managers-In-Charge (MICs) for each Core Function (one person can cover multiple)
• Have adequate internal controls, risk management, compliance, and record-keeping systems

For Individuals

• At least 18 years old
• Meet Fit and Proper Guidelines (financial soundness, integrity, competence)
• Pass the Licensing Examination for Securities and Futures Intermediaries (LE) or have recognised equivalent
• Comply with Guidelines on Competence and any one-off extra CPT when upgrading scope

Capital Requirements (Common Type 1 Scenarios)

How to Apply for an SFC Licence in Hong Kong

Applying for an SFC licence involves five key stages. Most rejections or delays happen because applicants either choose the wrong licence type, fail to prepare complete documentation, or overlook SFC’s competence and structural requirements.

1. Confirm Scope and Regulated Activities

• Identify exactly which Regulated Activities (RAs) your business will carry out, referencing SFO Schedule 5.
• Check if any incidental or group company exemptions apply to avoid unnecessary applications.
• Remember: Overseas firms actively marketing into Hong Kong (SFO s.115) must also be licensed.

2. Appoint Qualified ROs and MICs

• At least two ROs per RA (one must be an executive director and Hong Kong resident).
• Map each Core Function to a Manager-In-Charge (MIC) — one person can hold multiple roles if competent.
• Ensure all ROs and MICs meet Fit and Proper and Guidelines on Competence standards, including the LE Exam where applicable.

3. Prepare Your Application Package

Compile and verify all supporting materials before logging into WINGS:

• Business plan – RA-specific activities, client types, operational model, compliance systems
• Organisational structure – directors, shareholders, group chart, controllers
• Financials – latest audited accounts (corporate and holding company), projected budgets
• Internal controls – AML/CFT policies, risk management, client asset safeguards
• Proof of capital – to meet the FRR requirements for your RA type

4. Submit via SFC WINGS

• Register a WINGS account (corporate or individual).
• Upload all forms and supporting documents in the required format.
• Pay the application fee online.
• Assign an authorised signatory for formal submission.

5. SFC Review and Queries

• Performance pledge: 15 weeks for corporations, 8 weeks for representatives/ROs, 7 business days for provisional reps.
• Respond to any SFC queries promptly and in full — incomplete answers can restart the review clock.
• Track updates through WINGS and email; the SFC will not chase you if deadlines are missed.

6. Approval and Onboarding

• Receive your approval letter with RA type(s), licence number, and any conditions.
• Register for SFC e-services for ongoing compliance filings.
• Put compliance monitoring, CPT tracking, and FRR reporting into effect immediately — the SFC expects full compliance from Day 1.

Timelines – SFC Performance Pledge

The SFC sets target processing times for licence applications, known as its Performance Pledges. These are not statutory deadlines but service targets, and actual processing can take longer if your application is incomplete or complex.

What Affects the Timeline

• Completeness of documents – Missing business plans, financials, or RO competence proofs can pause the review.
• SFC queries – Delays in responding to requests for clarification can restart the review clock.
• Multiple RA applications – Applying for several RAs at once often requires more review time.

Pro tip: The SFC does not follow up if you miss a query deadline — regularly check your WINGS account and registered email.

Common Exemptions

Some activities may be exempt from licensing, but exemptions are narrow and conditional. The most common are:

Ongoing Obligations

Once licensed, compliance is continuous — approval is the start of regulatory oversight, not the end.

1. Continuous Professional Training (CPT)

• Licensed Representatives (LRs): 10 hours per calendar year
• Responsible Officers (ROs): 12 hours per calendar year (including at least 2 hours on regulatory compliance)
• All licensed individuals: At least 2 hours on ethics or compliance annually
• CPT can be met through SFC-recognised courses, in-house training, or approved online modules.

2. Regulatory Reporting & Notifications

• Notify the SFC in advance of significant changes (e.g., business address, ROs, shareholding structure).
• File periodic financial returns and maintain ongoing Financial Resources Rules (FRR) compliance.
• Report breaches or suspected breaches promptly.

3. Operational & AML/CFT Compliance

• Maintain robust anti-money laundering and counter-terrorist financing systems (AMLO compliance).
• Keep proper records of transactions, client communications, and internal approvals.
• Ensure MICs and ROs maintain active oversight of their respective functions.

4. Annual & Ad-hoc Reviews

• Internal control systems and policies should be reviewed at least annually.
• Update risk management procedures to reflect new products, markets, or regulations.

Conclusion

Securing an SFC licence in Hong Kong involves strict requirements, detailed paperwork, and ongoing compliance. From choosing the right Regulated Activities to meeting capital, RO, and MIC standards, every step matters.

Air Corporate can handle the entire process — ensuring your application is complete, compliant, and processed efficiently.

Contact Air Corporate today for expert guidance from start to finish.