Circular Issued by the Securities and Futures Commission on Irregularities and Deficiencies in Managing Private Funds and Discretionary Accounts

Our Ref: B1/15C G16/1C 2 August 2017 The Chief Executive All Registered Institutions Dear Sir / Madam, Circular Issued by the Securities and Futures Commission (“SFC”) on Irregularities and Deficiencies in Managing Private Funds and Discretionary Accounts I am writing to draw your attention to the attached circular issued by the SFC highlighting some irregularities and deficiencies identified during the course of its supervision of licensed corporations engaged in managing private funds and discretionary accounts. In a number of cases, private funds and discretionary accounts with concentrated, illiquid and interconnected investments were found to have irregular features. Registered institutions which engaged in asset management business should have regard to the captioned circular, and maintain adequate management oversight of the institution’s business activities, to ensure maintenance of appropriate standards of conduct and proper risk management measures. Yours faithfully, Carmen Chu Executive Director (Banking Conduct) Encl.

c.c. SFC (Attn: Ms Julia Leung, Executive Director (Intermediaries))