The Securities and Exchange Commission has announced a comprehensive arrangement with the Hong Kong Securities and Futures Commission (SFC) as part of its long-term strategy to enhance the oversight of regulated entities that operate across national borders.

Hong Kong is a major financial center and the new supervisory cooperation arrangement will augment the SEC’s and the SFC’s ability to share information about regulated entities that operate in the U.S. and Hong Kong, including investment advisers, broker-dealers, securities exchanges, market infrastructure providers, and credit rating agencies. The new arrangement expands upon the one from 1995 that was limited to investment management activities.

 “By creating a formal channel for exchanging supervisory information with the SFC, this new arrangement will enhance the SEC’s ability to supervise firms on a cross-border basis,” Paul Leder, director of the SEC’s Office of International Affairs, said in a  statement

The SEC’s approach to supervisory cooperation with its overseas counterparts builds upon more than three decades of experience with cross-border cooperation, starting in the late 1980s with memoranda of understanding (MOUs) facilitating information sharing between the SEC and other securities regulators in securities enforcement matters.

Enforcement cooperation MOUs help the SEC collect information abroad to investigate securities-law violations and compensate victims of securities fraud when possible. Supervisory cooperation arrangements establish mechanisms for ongoing consultation and the exchange of information regarding the oversight of global firms and markets. 

The cooperative efforts typically include routine supervisory information as well as information regulators need to monitor risk concentrations, identify emerging risks, and better understand a globally active regulated entity’s compliance culture.

Topics