OFC COURSE (2ND INTAKE)
Certificate in Operation Finance and Compliance
Level III - Final, Second Intake 12/09/2019 - 28/11/2019 - 12 Thursdays x 3 hours 7pm-10pm
To enroll: please scan the QR code or click on the link below:
https://icohk.typeform.com/to/u2mxoo
In the last 4 months, our Course has aroused tremendous discussions amongst ROs and MICs in town how useful it is to apply all those practical applications being taught during those 12 lectures. Traditionally, Responsible Officers are qualified through, amongst other things, passing certain designated HKSI examination papers and gaining certain years of relevant industry experience. This experience requirement may many-a-time be quite different from other professions, which involve thorough job-rotations during apprenticeship in order to attain considerable exposure in every aspect of their professions. The lack of thorough operational, in front-middle-back offices or sell-side or buy-side oriented, experiences may hinder the ability of an RO in overall management and oversight of a licensed corporation.
This Certificate Course aims to equip students in understanding a comprehensive compliance framework, in which a licensed corporation is operating, as required by the Securities and Futures Ordinance, as well as other operational aspects of the regulated activities (RA) industry. The course will also help students to systematically identify, manage and reduce risks in the elements or components of the operation. The codes of conduct and guidelines published from time to time by SFC and other rules and regulations like the Listing Rules of HKEX, the Anti-Money Laundering Ordinance, the Personal Data (Privacy) Ordinance and the new Fund Manager Code of Conduct etc. are often being referenced to. Responsible Officers are a pivot to balance between undergoing dynamic business activities and ever-changing gatekeeping for more stringent regulatory requirements, which nowadays hinges on personal civil as well as criminal liabilities. We believe that this course will help them achieve a good balance in their career development.
Target Students: This course (Level III – Final) is suitable for newly-licensed/potential ROs, OMOs and other Manager-In-Charge (MIC) officers, including compliance officers and CFOs, etc in the RA industry; those who are interested, and with relevant background knowledge, to know more about integrating compliance requirements with Regulated Activities and its operation aspects of a licensed corporation, will inevitably benefit.
Course Instructors: The Lecturing Team will comprise specialized barristers and solicitors, qualified accountants and very experienced ex-SFC Senior Officers and RA practitioners.
Certificate Awarded: A certificate will be awarded to students having a minimum of 80% attendance and a pass in the examination at the end of the course.
Duration: 12th September – 28th November, 12 sessions each 7pm – 10pm
Venue: ONC Lawyers, 19/F, Exchange Square III, Central.
Teaching Language: Cantonese and English (teaching materials in English and Chinese).
Cost: $8,800 per Level III-Final course, with a discount to be given to members of the iCFRo or iCo-HK and early-bird applicants. (Exemptions to taking the requisite Level I-Fundamental and Level II-Intermediate will be granted to existing ROs and MIC Compliance Officers presently in position, and other exemptions will be granted to other Qualified Persons, on a case-by-case basis).
Enquiry: 2866-2866 (Ivan Lo 9096-6989), info@ico-hk.org, www.ico-hk.org
Level III (Final) – Tentative Course Outline
1. Overview of the Compliance Infrastructure
- SFO and SFC; Reguatory framework; Code of Conduct in a nutshell; Snapshot of recent disciplinary cases;
- Who is senior management? Their authorities, responsibilities and liabilities; Typical organization chart and reporting lines;
- Compliance as an emerging profession; Opportunities and threats;
2. Responsible Officers versus Compliance Officers – the do’s and don’ts concept
Ping An case clearly indicates that the RO is the person who bears the primary responsibility for compliance with all applicable standards. As such, ROs should therefore be familiar with all the “Do’s” of regulated activities, while Compliance Officers shall be the gatekeepers for ensuring no “Don’t” or “red-line crossing wrong-doings” shall emerge from the daily activities of a licensed corporation. And the implications of the ultimate Don’ts are re-active in nature, and many a times, will result in enforcement or disciplinary actions or proceedings against some or all of those persons involved. We outline the many do’s which ROs shall be familiar with, and the Don’t which are the Compliance Officers shall never forget.
- Ultimate RO Responsibilities; Recent major cases of RO and sponsors; Do’s and Don’ts re S 183 SFC Notices;
- Why Best Execution? The Best Execution Flower (The DO’s) vs The Compliance Landmine (The DON’Ts);
- Common internal control failures and breaches; Review of SFC disciplinary actions and reasons;
3. Business Operation and Internal Control
- Internal Control Guidelines and its applications; Code of Conduct and its implementation
- Major issues in Risk Mitigation Controls (or “Internal Controls”): Managing various conflicts of interest and confidential information; Protection of client assets; Complaint handling; Record keeping; Personal Data (Privacy) Ordinance
4. Business Operation and Risk Management
- New version of Business and Risk Management Questionnaire For Licensed Corporation (“BRMQ”) and its significance;
- Managing Risks: Credit Risk: Securities Margin Financing (“SMF”); Liquidity Risk: proprietary trading; Borrowing Risk: bank re-pledging; Operational Risk: to protect client assets; Hacking Risk: to avoid law suits and loss of clients etc.
- Detailed study of SMF and proprietary trading
5. Global Trend of Major Compliance Issues (AML, CTF, KYC, CDD, FATCA & CRS)
- LC obligations: Customer DD; Ongoing Monitoring; Suspicious Transaction Reporting (“STR”); Record Keeping; Training;
- Client risk assessment; KYC for overseas clients; Exceptional reports; Red-flag indicators; Procedure of STR, Case studies;
- CRS and AEOI, Requirements on LC, comparison with FATCA requirements
6. Risk-Profiling and Suitability Concepts – History and Latest Development
- Client DD: Financial situation, Risk tolerance, Investment objective and background; Risk assessment & scoring system;
- Professional investor: Definition and assessment; institutional, corporate and individual PIs
- Product DD: Exchange and non-exchange traded products; Risk level determination mechanism; Case studies
- Solicitation and recommendation triggering suitability assessment; Discretionary accounts;
- Client agreement; Senior management responsibilities; Complaint handling, Record keeping
7. Securities and Futures (Financial Resources) Rules (“FRR”)
- FRR: SFO requirements, history and submission
- Activities in: margin financing, proprietary trading, rights issue, placing and underwriting …
- Different types of capital, accounts and products (securities, options, futures, OTC derivatives ...)
- FRR assets: cash, margin, counterparties, clearing houses; FRR liabilities and payables
- Miscellaneous: guarantees, pre-payment, deposit, pledging
8. Practical Features of the 4 key Type 1,4,6,9 RA licences and their Interactions
RA1: Various Conditions of licence: 7 functional sub-activities: their interaction and potential conflicts
- HKEX participantship, versus bond trading, and the additional virtual assets dealing requirements
- Segregation of duties: front, middle and back desks and their check-and-balance functions
- Discretionary management accounts, Placing and Underwriting and Private vs Public Side Concepts
- Reconciliation of CCASS accounts, house accounts, client accounts
RA4: Conditions of licence: interaction relationship with Type 1, Type 6 and Type 9
- Licensing Requirements and Necessity/Importance of Type 4, Financial Advisorship versus Investment Advisorship
- Suitability Requirements and Investment Products Acceptance Procedures
- European MiFid II Requirements influence in Hong Kong wealth management market
RA6: 5 Levels of Type 6 licence: PI only, listing rules, take-over code, shares buy-back, sponsorship
- Sponsors’ responsibilities and liabilities and the expected standard of sponsor work
- Code of Conduct, and the Sell-Side Due Diligence concepts / Professional Charging-out Services concept
RA9: 5 Levels of Type 9 licence: Discretionary A/C, CIS, hold client assets, retail vs professional investors only
- Special requirements for asset management industry; supervisory regime for trustees, custodians and investment companies
- Setting up offshore PE funds (cost, procedure, structure, documentation, marketing, distribution)
- Authorization of Collective Investment Scheme (“CIS”); investment and ongoing requirements for CISs
- Open Ended Fund; Fund Manager Code of Conduct (Nov 2018); Buy-vs-Sell Side Dual Concepts
9. Dealing with Regulators
- SFC site visit, investigation, enforcement, penalty and appeal mechanism; The SFC’s recent enforcement focus and trend;
- The RO accreditation system, change of jobs, from LR to RO; Application for new licence; Documentation;
- Addition of new type of RA; Managing relationship with regulators, CPT requirements
10. Blockchain and Fintech Compliance
- Principles of blockchain technology and its application in finance industry; ICO as a Collective Investment Scheme;
- Regulations on financial technology and products; Virtual assets and latest SFC guidelines; opportunities in HK
- Sandbox application and arrangements in SFC, HKMA and HKIA
11. Cross-Border and OBOR SuperAgency Role of HK / GuangdongHongKongMacao Great Bay Area implications
SFC welcomed (3/12/2018) China Securities Regulatory Commission’s (CSRC) new rules to facilitate Mainland Investors and Fund Managers’ access to SFC-licensed corporations’ securities advisory service. CSRC published new rules governing the distribution of research reports issued by SFC-licensed corporations through: Mainland securities companies and the engagement by Mainland fund managers of SFC-licensed corporations as their investment advisors. The rules enable Mainland investors and funds, who participate in the Hong Kong capital market, to have better access to research reports and advice on those Hong Kong-listed companies which can be traded by them through Stock Connect. At the same time, eligible SFC-licensed corporations will have more opportunities to provide securities advisory services to Mainland investors and fund managers, and many others….
12. Examination and Conclusion Commentaries
Certificate in Operation Finance and Compliance
Level III - Final, Second Intake 12/09/2019 - 28/11/2019 - 12 Thursdays x 3 hours 7pm-10pm
To enroll: please scan the QR code or click on the link below:
https://icohk.typeform.com/to/u2mxoo
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