Hong Kong’s securities watchdog takes the unusual step of highlighting its licensing regime as a growing number of financial professionals ostensibly make their way back to the city. 

In certain circles of finance, the apocryphal «half-full» or «half-empty» glass that divides optimists and pessimists can be seen by some as overly simplistic.

It doesn’t include, for example, that hardened segment of risk and control specialists, or compliance and financial crime professionals, who like to maintain that stop lights, street signs, and roundabouts are put in certain places for a reason.

Pragmatic Regime

Reading between the lines of an announcement sent by the Hong Kong Securities and Futures Commission (SFC) on Monday, you would have to count them among the latter.

They published two new «quick reference» guides that are there to help «visiting» and «returning» professionals understand what they call a «pragmatic» licensing regime.

Exempt or Not

In the case of the returning category, the exemptions start at just under three years and extend to a maximum of eight, where I guess the hapless banker has to start from zero and retake everything.

In other words, if you have been away for less than three years, you are completely exempt from having to retake any examinations if you return to a similar function or role.

Case Studies

The case studies in this guide are particularly instructive. In the first, they indicate a certain Ms A who decided to join a single-family office as an in-house researcher in Singapore two years ago and now wants back - as well as a Mr B who is being transferred from the UK to support a new securities trading desk after being away for the same period.

So far so good - the odd business jab made in Singapore’s direction notwithstanding. However, they also discuss a certain Mr. C, a portfolio manager of a hedge fund based in Australia, who left four years ago and now also plans to come back.

Vexing Situation

He is likely to become slightly more vexed with everything. Although he was licensed for asset management when he left, he will need to apply for and undergo at least 20 hours of continuous professional training.

Moreover, at least 10 hours of that must be about local regulatory knowledge before he can think of applying to be re-instated (there is an exemption related to private funds serving professional investors but that is another story for another day).

Come and Go

Here is where all that talk of traffic lights at the start of the article should start to make sense. 

The unwritten impression left here is that several broad-accented Australian masters of the universe thought they could pull up stakes and come back like nothing had ever happened - and the SFC has caught them like deer in the headlights about to hit the enter key on their trading desks.

Short Meetings

But the examples in the visiting professionals guide are just as instructive. Here again, we have a Ms A visiting the Hong Kong office of a New York-based international asset management group.

As she is participating in investment-decision-making meetings of a fund and making several trips to the city to do so, each of which will last two days, she needs to apply for an itinerant professional license (ITP) - provided the total days of her visits in one year is less than 30 days.

Bonds from Paris

Then there is Ms B from Paris who works at a global financial group and is on a daring foray to the Hong Kong office to help distribute a newly issued bond which will require her to be here for a week.

She will need to have a license to deal in securities and should therefore apply for a temporary one (Temp LR) as a licensed representative, provided her stay in no way goes beyond three months or six months (over 24 months).

Oui et Non

Here the impression the SFC gives is that a certain kind of French bank may have been implicitly doing a «Moi non» to the regulator while cheerfully hawking «bons du tresor» locally on behalf of the French Treasury.

Still, the sentiment the SFC has in getting these kinds of things under better control is a laudable one, but it does not mean they will necessarily be closely followed, particularly if they hail from financial centers that aren’t as accustomed to the prescriptive nature of regulation in Hong Kong.

Regulating Attendance

As an example of that, the supervisory policy manual of SFC-registered Authorized Institutions has for years required the appointment of at least two EOs, or executive officers, for each regulated activity.

Moreover (see page 20), at least one of them needs to be «available at all times» to supervise the activity.

Empty at Christmas

Yet that has never stopped the combined mass of senior management, local and expat, at overseas offices of foreign banks from heading straight for the door at Christmas - even in large franchises with two or more EOs for each regulated activity. 

On a positive note, the guides are evidence that the financial industry is getting back on its feet, as Dr Eric Yip, the SFC’s executive director of intermediaries maintains. «We see a growing trend of financial talents coming to Hong Kong and we offer a pragmatic licensing regime to accommodate such demand,» he said.

Workshops in Store

But you also have to wonder how handy the guides are seen by industry practitioners if the SFC feels a need to organize workshops later this year to get everyone to better understand its licensing policies and recent initiatives.