FAQs – Licensing: Insurance requirements applicable to certain licensed corporations

The Securities and Futures Commission of Hong Kong (SFC) has published revised frequently asked questions (FAQs) regarding the license holders insurance scheme. The scheme provides mandatory insurance to license holders type 1 (dealing in securities) and 2 (dealing in futures contracts) which participate in the Stock Exchange of Hong Kong Limited or the Hong Kong Futures Exchange Limited, respectively. The FAQs currently address the
(1) applicability – who must take out insurance and
(2) timeframe – when must the insurance coverage be requested.
The two related FAQs read as follows – as quoted:
Q1: Is every licensed corporation required to take out insurance for the purposes of licensing?
A: No. Currently, the following two categories of licensed corporations are required to take out insurance:
(1) Participants of The Stock Exchange of Hong Kong Limited and licensed for Type 1 regulated activity;
(2) Participants of Hong Kong Futures Exchange Limited and licensed for Type 2 regulated activity.
For more information, please refer to the latest Circular to Licensed Corporations which are Participants of The Stock Exchange of Hong Kong Limited or Hong Kong Futures Exchange Limited issued by the SFC.
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Q2: If a corporation applies or is licensed for Type 1 or Type 2 regulated activity and intends to become an exchange participant, when does it need to take out the required insurance?
A: A corporate licence applicant or licensed corporation should take out the required insurance under the relevant approved master policy before or at such time when it becomes an exchange participant and is licensed for Type 1 or Type 2 regulated activity.
For related administrative matters, it may approach the scheme administrator directly. The related contact information is set out in the latest Circular to Licensed Corporations which are Participants of The Stock Exchange of Hong Kong Limited or Hong Kong Futures Exchange Limited issued by the SFC.
Please, also see the latest circular in this context (EventID #20920).