SFC circular warning asset managers on margin financing activities disguised as investments: wider market implications

The Securities and Futures Commission said in a circular issued earlier this month that it believes some licensed corporations carrying out asset management may have assisted “unlicensed affiliates or third parties” to provide securities margin financing in the guise of investments and notes that this arrangement is illegal.

The latest circular appears to be part of the SFC’s on-going supervision of asset managers. Nevertheless, the circular was addressed to “Licensed Corporations” so it would be prudent for asset managers and LCs carrying on other regulated activities to consider the scope of application of this circular and its effect on their business. 

Read the effect of the SFC circular.