Hong Kong is one of the world’s most important financial centers and its financial services industry remains one of its key pillars, contributing to around 23.4% of its GDP. In 2022, Hong Kong was ranked 4th in the Global Financial Centres Index (GFCI) released by Z/Yen Group and the China Development Institute.
The Securities and Futures Commission (SFC) of Hong Kong is the independent statutory body charged with regulating Hong Kong’s securities and futures markets. The SFC is also accountable for updating the Competence Guidelines and Continuing Professional Training (CPT) Guidelines, which have been in place for over 18 years.
With one of the world’s most active and liquid securities markets, Hong Kong’s financial industry is one that is fast-changing and highly competitive. Financial institutions that are unable to keep up with the ever-changing financial regulations may be exposed to unnecessary risks, resulting in loss of trust from customers and investors. The same concept applies to professionals working in financial institutions as well as those looking to enter this industry.
One way to ensure compliance with legal and regulatory requirements is to rely on the organisation’s internal compliance as well as external auditing companies to conduct audit checks. At the same time, organisations can ensure that its own employees comply with financial regulations through CPT.
Objectives of CPT
Based on the definition of CPT outlined by the SFC, the key requirements of the CPT is to ensure that an individual engaging in regulated activities remains “fit” for the role. This can be done by undergoing training that enhances his or her technical skills and professional expertise. Concurrently, it enforces that an individual is “proper” by periodically refreshing himself or herself about the relevant ethical standards and regulatory knowledge. The Guidelines on Continuous Professional Training (Guidelines) are published under section 399 of the Securities and Futures Ordinance, Cap. 571 (SFO) by the Securities and Futures Commission. They provide general guidance for individuals to comply with the CPT requirements.
There are 3 key objectives of the CPT programme, namely:
- To maintain and enhance their technical knowledge and professional expertise
- To provide reasonable assurance to investors at large that they have the technical knowledge, professional skills and ethical standards required to perform the regulated activities efficiently, effectively and fairly; and
- To maintain and enhance Hong Kong’s international reputation for high professional standards.
Depending on the size and nature of the business as well as the responsibilities to be undertaken by an individual, the requirements for CPT will vary. Instead of mandating the specific programmes that individuals have to undergo, these guidelines aim to describe the general attributes of the CPT programme. Nonetheless, the objectives of CPT could not be achieved solely through work experience or on-the-job training. Individuals are required to undertake CPT programmes if they are to remain fit and proper.
Relevant CPT activities
Individuals are required to clock in a minimum number of CPT hours per calendar year, with the minimum number of hours dependent on the type of regulated activities the individual is carrying out. CPT hours refer to time spent by individuals in undertaking CPT activities. The CPT activities should be relevant to the functions to be performed by them and should incorporate significant intellectual and practical content and involve interaction with other individuals.
As defined by the SFC, the following are acceptable means of obtaining CPT:
- Attending courses, workshops, lectures and seminars
- Distance learning which requires submission of assignments
- Self-study or online learning courses
- Industry research;
- Publication of papers
- Delivery of speeches
- Giving lectures or teaching
- Providing comments to industry consultation papers
- Attending meetings or undertaking activities as members of the SFC’s regulatory committees or formal working group
- Attending luncheon talks which normally last for one to two hours in total (0.5 hour will be counted)
Normal working activities, general reading of financial press or technical, professional, financial or business literature and activities which do not involve interaction with other individuals are generally not regarded as CPT activities.
There are various topics that professionals and senior management can focus on as part of clocking their CPT hours. Relevant topics for individuals at professional levels include:
- Applicable compliance, legislative and regulatory standards
- Business conduct and ethical standards
- Market developments, new financial products and risk management systems
- Business communication skills and trade practices
- General law principles
- Basic accounting theories
- Fundamental economic analysis
- Environmental, social and governance (ESG)
- Information technology
For individuals who play a crucial role in ensuring effective corporate governance and control may, in addition to the above topics, include the following:
- Business management
- Risk management and control strategies
- General management and supervisory skills
- Macro and micro economic analysis
- Financial reporting and quantitative analysis
However, the list of topics above are not exhaustive.
The AAAC has endorsed a list of recognised institutions for providing CPT. Individuals can also sign up for CPT courses provided by iInstitutions which provide recognised industry qualifications for competence purposes.
The list of recognised institutions will be updated and posted on the SFC’s website as and when changes occur.
CPT is a key element in ensuring that individuals engaging in financial regulatory activities remain fit and proper.
It helps to ensure the compliance of individuals and institutions to local financial laws and regulations. It also keeps individuals updated with the latest financial regulation practices, knowledge, and ethics to perform regulation with optimal levels of efficiency and fairness. All financial institutions in Hong Kong are also responsible for ensuring their employees undertake CPT periodically to enhance their industry knowledge, skills and professionalism.