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78.1

Supervisory Co-operation

The HKMA and the Securities and Futures Commission (SFC) work very closely to ensure that there is an open market with a level playing field for all intermediaries in the securities industry of Hong Kong. The HKMA has entered into a revised Memorandum of Understanding (PDF File, 307KB) with the SFC, which elaborates on the legal framework and sets out the operational details relating to the respective roles and responsibilities of the two regulators regarding the securities related activities of authorized institutions. The HKMA and the SFC hold regular meetings under the Memorandum of Understanding to discuss matters of mutual interest. The training programmes of either regulator are also made available to the staff of the other where relevant.

The HKMA and the Insurance Authority have signed a Memorandum of Understanding (PDF File, 1.1MB) to enhance the co-operation, exchange of information and mutual assistance between the two authorities. Under this Memorandum of Understanding, the HKMA and the Insurance Authority agree to work together to co-ordinate the supervision of the insurance-related activities of authorized institutions (such as when they act as insurance intermediaries) and authorized insurers that are connected to them and to promote information exchange and sharing, as permitted under the Banking Ordinance and the Insurance Ordinance, between the HKMA and the Insurance Authority in order to assist each other to exercise their respective statutory functions.

Under the statutory regime for the regulation of Mandatory Provident Fund (MPF) intermediaries effective since 1 November 2012, the Mandatory Provident Fund Schemes Authority is the lead regulator in respect of regulation of MPF intermediaries whereas the Monetary Authority, the Insurance Authority and the SFC are the frontline regulators of the MPF intermediaries.  A Memorandum of Understanding Concerning the Regulation of Regulated Persons with Respect to Registered Schemes under the Mandatory Provident Fund Schemes Ordinance (PDF file, 116KB) has been signed by the four regulators.  It sets out certain administrative and operational arrangements among the four regulators regarding the exercise of their respective functions under the Mandatory Provident Fund Schemes Ordinance concerning regulation of MPF intermediaries.  Meanwhile, the Memorandum of Understanding Concerning the Regulation of MPF Intermediaries (PDF file, 1.9MB) updated on 1 January 2004 is only applicable to the handling of complaints concerning the conduct of MPF intermediaries prior to 1 November 2012, and has ceased to apply to all other matters with effect from 1 November 2012 where those matters are covered by the Memorandum of Understanding Concerning the Regulation of Regulated Persons with Respect to Registered Schemes under the Mandatory Provident Fund Schemes Ordinance.

The HKMA, Commissioner of Customs and Excise, Insurance Authority and Securities and Futures Commission have signed a Memorandum of Understanding (PDF file, 28KB) to set out the framework for co-operation and exchange of information between them concerning implementation of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Cap. 615).

The Hong Kong Deposit Protection Board (HKDPB) is a statutory body established under the Deposit Protection Scheme Ordinance to administer the Deposit Protection Scheme in Hong Kong. The Scheme provides a protection for deposits of up to HK$500,000 per depositor per bank. The HKMA and the HKDPB share the objective of promoting the stability of the banking system and have agreed on how the two organisations should co-operate in performing their respective functions. Since the Ordinance requires the HKDPB to perform functions through the HKMA, detailed arrangements for co-operation have been set out in a Memorandum of Understanding between them.

The Financial Reporting Council (FRC) is a statutory body established by the Financial Reporting Council Ordinance to investigate into auditing and reporting irregularities in relation to listed entities, and to enquire into non-compliances with relevant accounting requirements in listed entities' financial reports. The Ordinance provides that the FRC shall notify the HKMA where the listed entity that is the subject of investigation or enquiry is an authorized institution or its related company (i.e. controller, subsidiary or fellow subsidiary), and that the investigator or enquirer has to consult the HKMA prior to exercising the relevant powers under the Ordinance for the purpose of such investigation or enquiry. The HKMA and the FRC have entered into a Memorandum of Understanding (PDF File, 274KB) to elaborate on the mechanisms for communication and information exchange between the two entities, as well as to enhance the ongoing cooperation and mutual assistance.

The Financial Dispute Resolution Centre Limited (FDRC) is a non-profit making organisation which provides individual customers with an independent and affordable avenue, as an alternative to litigation, for resolving monetary disputes with financial institutions. The FDRC administers a financial dispute resolution scheme (the Scheme) by way of “mediation first, arbitration next”. All financial institutions authorized/licensed by the HKMA/SFC are members of the Scheme and agree to abide by the rules and procedures in respect of the Scheme. The HKMA, together with the SFC, has signed a Memorandum of Understanding (PDF File, 417KB) with the FDRC to delineate the respective roles and responsibilities between the FDRC and the two regulators as well as the information sharing arrangements, including the FDRC providing information relating to systemic issues and/or suspected serious misconduct cases to the regulators. The information will assist the HKMA in identifying systemic and/or misconduct issues as soon as practicable, and appropriate supervisory actions can be taken on a timely basis.

Co-operative Arrangements with Supervisory Authorities Outside Hong Kong

To enhance the exchange of supervisory information and co-operation, the HKMA has entered into Memoranda of Understanding (MoUs) or other formal arrangements with a number of banking supervisory authorities outside Hong Kong:

Jurisdictions

Supervisory Authorities

Types of Arrangements

Australia

Australian Prudential Regulation Authority

MoU

Belgium

Financial Services and Markets Authority

National Bank of Belgium

Letters on Co-operations and Sharing of Information

Canada

The Office of the Superintendent of Financial Institutions

MoU

Mainland China

China Banking Regulatory Commission

MoU

Denmark

The Danish Financial Supervisory Authority

MoU

France

Autorité de contrôle prudentiel et de résolution

Letters on Co-operation and Sharing of Information

Germany

Bundesanstalt fur Finanzdienstleistungsaufsicht

MoU

India

Reserve Bank of India

MoU

Indonesia

Bank Indonesia

MoU

Japan

Financial Services Agency

Letters on Co-operations and Sharing of Information

Liechtenstein

The Financial Market Authority Liechtenstein

MoU

Macau

Autoridade Monetaria De Macau

MoU

Mauritius

Bank of Mauritius

MoU

Pakistan

State Bank of Pakistan

MoU

Philippines

Bangko Sentral ng Pilipinas

MoU

South Africa

The South African Reserve Bank

MoU

South Korea

The Financial Supervisory Commission of Korea

MoU

Switzerland

Swiss Financial Market Supervisory Authority

MoU

Taiwan

Financial Supervisory Commission

MoU

Thailand

The Bank of Thailand

Statement of Co-operation

United Kingdom

Financial Conduct Authority
Prudential Regulation Authority

MoU & Side Letter

United States

New York State Department of Financial Services
The Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation

MoU
Statement of Co-operation

Vietnam

State Bank of Vietnam

MoU

 

In general, the co-operative arrangements provide the formal framework under which the HKMA and its counterparts agree to:

  1. share and exchange, to the extent permitted by law, supervisory information so as to assist in the supervision of banks that operate in both signatories' jurisdictions;
  2. hold regular meetings and have informal contacts to discuss matters of common interest;
  3. consult each other regarding any cross-border establishment or investment by the banks; and
  4. keep the supervisory information shared confidential and to restrict the sharing, use and onward disclosure of such information in accordance with the provisions of the arrangements.

The HKMA continues to extend its bilateral co-operation with banking supervisors in other economies, and contact or hold regular meetings with other supervisory authorities to discuss matters of common interest where necessary.

The HKMA has entered into MoU with competent authorities of 30 European Union or European Economic Area jurisdictions respectively (Note 1) concerning consultation, cooperation and the exchange of information related to the supervision of authorized institutions acting as depositaries appointed for alternative investment funds under the Alternative Investment Fund Managers Directive ("AIFMD MoU").  The AIFMD MoU, as required by the AIFMD (Note 2), are in identical terms and conditions. 


Notes:
1The 30 European Union or European Economic Area jurisdictions are Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Ireland, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Sweden, Slovak Republic, the United Kingdom, Spain and Gibraltar.

2AIFMD refers to the Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010.

Last revision date: 26 June 2017
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