SFC Signs Cooperation Agreements on FinTech with UK’s FCA and Australia’s ASIC

The Securities and Futures Commission (“SFC”) signed its first Co-operation Agreement with the UK’s Financial Conduct Authority (“FCA”) in May this year, followed by another similar Co-operation Agreement with the Australian Securities and Investments Commission (“ASIC”) in June.

Although the cooperation agreements are not legally binding, they set forth a statement of intent for the regulators in different places to provide “the fullest possible mutual assistance to one another” in the following three aspects.

1. Referral Mechanism

The agreements enable the regulators to refer to each other innovative businesses which intend to operate in the other’s jurisdiction. The regulator receiving those referrals will then assist the businesses in understanding the regulatory regime and how such regime may be relevant to them.

2. Information Sharing

The agreements also provide a framework for sharing information among regulators. The regulators will share information about innovations in financial services in their respective markets, such as news on emerging FinTech trends, developments and related regulatory issues as well as information on organisations which promote innovation in financial services.

3. Potential Joint Innovation Projects

The agreements also signal a shared intent to explore joint innovation projects, especially those with potential for cross-border applicability.

Fostering Innovation

The cooperation agreements follow a flurry of recent activity in relation to FinTech on the part of Hong Kong’s regulators. For example, the SFC established a “Fintech Contact Point” in March 2016 to “enhance communication with businesses involved in the development and application of [FinTech] in Hong Kong”. The HKMA has also taken action, most notably in establishing a “FinTech Facilitation Office” in March 2016 to “facilitate the healthy development of the fintech ecosystem in Hong Kong and to promote Hong Kong as a fintech hub in Asia”. In December 2016, the HKMA apparently stole a march on the SFC by entering into its own Co-operation Agreement with the FCA to “foster collaboration … in promoting financial innovation”.

Perhaps more than any other sector, the FinTech industry requires a regulatory environment which will not stifle innovation and development. The reality is that many FinTech businesses are willing and able to shop around for a favourable regulatory regime in which to operate. Concerns have previously been raised that Hong Kong’s regulatory regime has been too conservative to attract technology entrepreneurs and allow the healthy development of the FinTech industry.

These latest international cooperation agreements represent a recognition on the part of Hong Kong’s regulators that, if Hong Kong is to realise its potential as Asia’s FinTech hub, they will need to work closely with overseas regulators such as the UK’s FCA (which regulates a jurisdiction widely regarded as one of the most “FinTech-friendly” in the world). Those involved in Hong Kong’s FinTech industry should see these developments as an encouraging sign.


RPC, Senior Associate in Commercial Disputes

Ben Yates is an experienced commercial litigation and arbitration solicitor in RPC’s Hong Kong office. His practice focuses on complex disputes involving cyber law, data protection and fintech, often with a cross-border element.

RPC, Trainee Solicitor

Rico Chan is trainee solicitor in the Insurance and Commercial Disputes teams at RPC handling a wide range of contentious matters covering contractual and shareholder disputes, employment, professional negligence, insurance coverage, international arbitration, regulatory advisory, debt recovery, liquidation proceedings and China-related litigation. He has a particular interest in cyber law and data protection.