Which SFC Licence You Need for Regulated Activities in Hong Kong

Which SFC Licence You Need Hong Kong: A Decision Framework

The licence your company needs turns on one question: which regulated activities will it actually carry out? The Securities and Futures Commission (SFC) divides the industry into 13 regulated activity types, numbered Type 1 through Type 13. A company may need one licence or several. The answer follows the business model, nowhere else. Money movement licences, the Money Service Operator (MSO) licence and a money lender's licence under the Money Lenders Ordinance (Cap. 163), sit outside the SFC regime entirely.

Hong Kong SFC Licence Types Explained

The SFC licence types are defined in the Securities and Futures Ordinance (Cap. 571). Each type corresponds to a specific activity. Types 1 to 10 are active. Types 11, 12 and 13 have not been brought into force. A company must hold the relevant licence for each activity it performs.

The full list:

SFC Regulated Activity Type 1 to 13: Mapping Your Business

Start with the core activity.

Dealing in securities (Type 1). A company that buys, sells or solicits orders for shares, bonds, warrants or other securities on behalf of clients requires a Type 1 licence. Operating a trading platform or acting as a broker falls here too.

Dealing in futures contracts (Type 2). Trading futures or options on futures needs a Type 2 licence. Firms offering both securities and futures dealing commonly hold Types 1 and 2 together.

Leveraged foreign exchange trading (Type 3). This covers margin trading in foreign exchange. It is a narrow category, rarely combined with other types.

Advising on securities (Type 4). Giving recommendations or advice on securities, research reports, investment recommendations, triggers the need for a Type 4 licence. This is separate from dealing. A firm that both deals and advises needs Types 1 and 4.

Advising on futures contracts (Type 5). The same activity as Type 4, but for futures contracts. Advising on both securities and futures means holding Types 4 and 5.

Advising on corporate finance (Type 6). Covers advice on mergers, acquisitions, takeovers and capital raising. Investment banks and corporate advisory firms hold this licence.

Providing automated trading services (Type 7). Operating an electronic platform that matches buy and sell orders automatically requires a Type 7 licence. Some fintech trading platforms fall into this category.

Securities margin financing (Type 8). Extending credit to clients to buy securities. This is distinct from a money lender's licence under the Money Lenders Ordinance (Cap. 163), which covers general lending not tied to securities.

Asset management (Type 9). Managing a portfolio of securities or futures for clients, discretionary or non‑discretionary, requires a Type 9 licence. It is one of the most common licences for fund managers.

Credit rating services (Type 10). Applies to agencies that issue credit ratings. A specialised licence held by a small number of firms.

Hong Kong Securities Licence Requirements: Who Must Apply

Any corporation that carries on a business in a regulated activity in Hong Kong must hold a licence. The test is whether the activity is carried on "in the course of business". A one‑off transaction is unlikely to trigger the requirement. Repeated or systematic activity will.

Exemptions exist. A company dealing only with professional investors (as defined in the Securities and Futures Ordinance) may be exempt from certain licensing requirements, but the exemption is narrow and subject to conditions. Most commercial firms should assume they need a licence.

The SFC also imposes fit and proper criteria. The company must have adequate financial resources, competent management and proper internal controls. Each individual responsible for the regulated activity, directors, responsible officers, must also be licensed or registered with the SFC.

Where the Hong Kong Monetary Authority (HKMA) Fits

For activities involving banking, the Hong Kong Monetary Authority (HKMA) is the primary regulator. A company that intends to take deposits or operate as a bank must be authorised by the HKMA under the Banking Ordinance. An SFC licence does not replace a banking licence.

Some activities sit at the boundary. A virtual bank licensed by the HKMA may also need an SFC licence if it offers securities dealing or asset management services. Conversely, an SFC‑licensed firm providing securities margin financing is not required to hold a money lender's licence under the Money Lenders Ordinance (Cap. 163), the SFC regime covers that activity.

The HKMA also regulates stored value facilities and payment systems. A company issuing a stored value facility or operating a payment system may need a licence from the HKMA, not the SFC. This is separate from the regulated activity regime.

Money Movement Licences Are Separate

SFC licences and licences for moving money are different things. The following are not SFC licences:

• Money Service Operator (MSO) licence. Issued by the Commissioner of Customs and Excise. Required for money changing or remittance services, governed by the Anti‑Money Laundering and Counter‑Terrorist Financing Ordinance (AMLO).
• Money lender's licence. Issued under the Money Lenders Ordinance (Cap. 163). Required for carrying on business as a money lender. Covers general lending, not securities‑related margin financing.

A company whose business model includes both securities activities and money transmission may need an SFC licence and an MSO licence. The two regimes are independent.

Customer Due Diligence and Compliance

All regulated firms must comply with the AMLO, regardless of which licence applies. That means conducting customer due diligence on clients, identifying beneficial owners and significant controllers, and maintaining records of source of funds. The SFC publishes guidelines on anti‑money laundering that apply to all licensed corporations.

A company applying for an SFC licence must also provide its Certificate of Incorporation, Business Registration Certificate, and details of its directors, shareholders and significant controllers. The SFC assesses the ownership structure and may decline applications where the beneficial ownership is opaque.

Practical Steps to Identify Your Licence

Follow this process:

1. List every activity your company will perform for clients.
2. Match each activity to the Type 1-13 descriptions above.
3. If an activity falls outside the list, money changing, general lending, it is not an SFC regulated activity.
4. Check whether any exemption applies (e.g., dealing only with professional investors).
5. If a licence is required, prepare the application with the SFC, including the fit and proper documentation for the company and its responsible officers.

The SFC publishes a licensing handbook and a list of frequently asked questions on its website. For complex business models, seek legal advice.