Member Article

The SFC published its conclusions on the Consultation Paper on Proposed Amendments to the Schedule 5 to the Securities and Futures Ordinance in September. The Consultation Paper had proposed amendments to the definitions of certain regulated activities as set out in the SFO. The main proposals were: • To extend the definition of "asset management" to include management of real estate investment trusts. • To amend the definition of "dealing in securities" so that: (a) the dealing activities of approved money brokers on behalf of authorised financial institutions are excluded; and (b) the exemption for disposing of securities as a principal would no longer apply. • To amend the definitions of "advising on securities" and "advising on futures contracts" so that the giving of advice by a licensed asset manager, solely for the purposes of carrying on fund management activities pertaining to collective investment schemes under his management, is to be excluded. This carve out enables managers to introduce their products to the market without having to obtain a separate licence for advising on their products. It only applies to products which they themselves manage. In the light of comments received, the SFC has decided not to implement the proposal to remove the exemption for disposing of securities as a principal for the time being and will reconsider such amendment in a separate consultation exercise. Subject to the legislative process, the other proposed amendments will become effective on 9 December 2005.