Oversight April 2019 - Offline distribution of Complex Products

Offline distribution of Complex Products

On 04 October 2018, the Securities and Futures Commission (SFC) issued its Consultation Conclusions on Offline Requirements Applicable to Complex Products (Consultation Conclusions). In the Consultation Conclusions, the SFC confirms that it will apply the same requirements applicable for the distribution of complex products online in an offline context. Accordingly the SFC said it would proceed with the proposed amendments to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (Revised Code). The Revised Code is the primary non-statutory code which governs all intermediaries licensed or registered with the SFC, including - following the update to the Fund Manager Code of Conduct (FMCC) - Type 9 (asset management) licensed corporations managing funds from Hong Kong.

On 22 March 2019, the SFC further updated its set of Frequently Asked Questions on implementation of additional protective measures for complex products (FAQ) to address the confusion surrounding the definition of “complex products”, including its application to funds, whether authorised by the SFC for retail distribution under section 104 of the Securities of Futures Ordinance (SFO) or not.

The Revised Code incorporates the definition and requirements for complex products as stipulated in Chapter 5 of the Guidelines on Online Distribution and Advisory Platforms (Guidelines) and the new provisions in the Revised Code will take effect at the same time as the Guidelines on 06 July 2019 (which was extended by the SFC from the original effective date of 06 April 2019 by way of a notice issued by the SFC on 19 March 2019).

This edition of Oversight focuses on offline distribution of funds and supplements the Oversight of November 2018 in relation to the SFC consultation conclusions on online distribution and complex products.

Read this edition of Oversight in full.