Hong Kong SFC Licence Types 1 to 13: Regulated Activities Under the Securities and Futures Commission
Explore the 13 types of Hong Kong SFC licences for regulated activities, from dealing in securities to asset management.
Hong Kong SFC Licence Types 1 to 13 for Regulated Activities
Carrying on a business in Hong Kong that involves securities, futures, or other financial instruments requires a licence. The hong kong sfc licence types 1 to 13 are issued by the Securities and Futures Commission (SFC) under the Securities and Futures Ordinance (Cap. 571). Operating a regulated activity without the appropriate SFC licence is a criminal offence.
What Are the 13 Regulated Activities Under the SFC Licence Regime?
The Securities and Futures Ordinance defines 13 regulated activities. Each activity corresponds to a numbered type of licence. A licence holder is authorised to carry on only the specific activities that appear on its licence. The 13 types are set out in Schedule 5 to the SFO.
| Type | Regulated Activity |
|---|---|
| 1 | Dealing in securities |
| 2 | Dealing in futures contracts |
| 3 | Leveraged foreign exchange trading |
| 4 | Advising on securities |
| 5 | Advising on futures contracts |
| 6 | Advising on corporate finance |
| 7 | Providing automated trading services |
| 8 | Securities margin financing |
| 9 | Asset management |
| 10 | Providing credit rating services |
| 11 | Dealing in over-the-counter derivatives products |
| 12 | Advising on over-the-counter derivatives products |
| 13 | Providing investor-communication services |
The table covers all 13 types. A brief description of each follows.
Type 1 - Dealing in securities covers arranging or executing transactions: buying or selling shares, bonds, or exchange-traded funds for a client. Banks and brokerages hold a Type 1 licence.
Type 2 - Dealing in futures contracts covers trading futures and options on futures, including on exchanges such as the Hong Kong Futures Exchange.
Type 3 - Leveraged foreign exchange trading applies to firms that offer clients leveraged foreign exchange contracts traded on a non-exchange basis. It is narrower than general forex dealing.
Type 4 - Advising on securities covers giving advice, research reports, or recommendations on securities. A firm that advises clients on which shares to buy needs this licence.
Type 5 - Advising on futures contracts mirrors Type 4 but for futures rather than securities.
Type 6 - Advising on corporate finance includes advising on mergers, acquisitions, takeovers, equity raisings, debt raisings, and stock exchange listings. Investment banks and corporate advisory firms require this licence.
Type 7 - Providing automated trading services covers operating an electronic platform that matches orders or provides execution services. A dark pool or a trading algorithm system both fall under Type 7.
Type 8 - Securities margin financing applies to firms that lend money to clients to buy securities, where the loan is secured by the purchased securities. It does not cover margin lending by banks that already hold a banking licence.
Type 9 - Asset management covers managing a portfolio of securities or futures on behalf of a client. Fund managers, including family offices and hedge funds, require a Type 9 licence unless they fall under a specific exemption.
Type 10 - Providing credit rating services covers issuing credit ratings or opinions on creditworthiness. This is a specialist activity primarily relevant to rating agencies.
Type 11 - Dealing in over-the-counter derivatives products covers arranging or executing OTC derivatives, such as swaps, options, and forward contracts that are not traded on an exchange.
Type 12 - Advising on over-the-counter derivatives products covers advising clients on OTC derivatives strategies or recommendations.
Type 13 - Providing investor-communication services was introduced in 2024. It covers processing investor subscriptions, redemptions, and record-keeping for collective investment schemes.
Hong Kong Securities and Futures Commission Licence: Who Needs One?
A Hong Kong securities and futures commission licence is required by any person who, in the course of a business, performs a regulated activity. The definition of "business" is broad. Even a single transaction carried out for profit may constitute a business. Exemptions exist for certain professional investors, overseas principals, and registered institutions such as banks. The SFC expects most intermediaries and advisers to obtain a licence.
Hong Kong Regulated Activity Licence: The Fit and Proper Criteria
The SFC must be satisfied that the applicant is a "fit and proper" person before granting a Hong Kong regulated activity licence. The assessment covers financial soundness, including solvency and available capital. It examines educational or professional qualifications and relevant industry experience. The SFC reviews the applicant's past compliance record, including any criminal convictions or regulatory sanctions. It also assesses the ability to manage conflicts of interest and protect client assets.
For corporate applicants, the SFC also assesses the directors, officers, and substantial shareholders. Every licence application requires a designated responsible officer for each regulated activity.
Hong Kong Type 1 SFC Licence: Common Example
A Hong Kong type 1 SFC licence is the most widely held licence type. It authorises the holder to deal in securities: executing trades for clients, introducing clients to brokers, or arranging securities transactions. Many firms that hold a Type 1 licence also apply for Type 4 (advising on securities) and Type 9 (asset management) to offer a full range of services.
Hong Kong SFC Licence Application: Key Steps
The Hong Kong SFC licence application is submitted through the SFC's online portal (e-Application). The application includes completed forms, such as Form 1 (corporation) or Form 2 (individual). Supporting documents must accompany the forms: audited accounts, a business plan, a compliance manual, and organisational charts. Pay the prescribed application fee.
The SFC processes applications within roughly 12 to 16 weeks for a straightforward case. During processing, the SFC may request further information or interview the proposed responsible officers.
Business Registration Certificate Also Required
Holding an SFC licence does not replace the requirement to obtain a Business Registration Certificate from the Inland Revenue Department. A Business Registration Certificate is a general business registration, not a trade licence. Every business in Hong Kong must register. The SFC licence is the specific authorisation to conduct a regulated activity. Have both documents in place before commencing business.
Further Information
The Securities and Futures Commission publishes detailed guidelines on each regulated activity on its website (sfc.hk). The SFO itself is available on the Hong Kong e-Legislation database. For advice on whether a particular activity requires a licence, consult a solicitor or a licensed SFC intermediary.
Sources
More on licences & permits.