The Hong Kong Competition Commission (CC) has signed a Memorandum of Understanding (MoU) with the Securities and Futures Commission (SFC) to enhance cooperation and the exchange of information between the two agencies, particularly on competition issues relating to the securities and futures industry.
Under the terms of the MoU, the two agree to notify and consult each other on issues which may have a significant implication for the other, including the development of policies and guidelines. Where appropriate and permitted by law, the two agencies will share information pertaining to the other agency's functions or objectives regarding relevant market players in the securities and futures industry, including information regarding specific investigations, proceedings and processes.
The MoU also includes an acknowledgement that:
- Persons licensed by or registered with the SFC;
- Entities authorised or approved by the SFC (including authorised automated trading services providers);
- Applicants for listing or issuers listed on the stock market, companies or trusts subject to the SFC's Codes on Takeovers and Mergers, and Share Buy-backs; and
- Collective investment schemes authorised by the SFC
are also subject to the Competition Ordinance.
Investigations in recent years into cases relating to the handling of forex benchmark rates and HIBOR provide examples of the types of conduct which might fall within the jurisdictions of both agencies (not to mention others like the Hong Kong Monetary Authority) and inter-agency collaboration on these types of cases going forward may help to address thorny issues relating to competing jurisdiction, overlapping investigations, duplication of work and also difficult questions such as how the grant of leniency by say the CC might (or might not) immunise an investigated party from prosecution by another agency like the SFC in its exercise of different powers.
This is the CC's first MoU signed with a financial regulator, and represents a milestone in its endeavours to adopt a joined-up approach with relevant sector regulators in promoting competition and combating anticompetitive practices.
After several years of pursuing cases against what might be considered easier targets, it may also indicate the CC is preparing to focus its attention on the financial services sector as it matures as an agency and operates with increased confidence.
Originally published May 19 2020
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