Regulatory Alerts2019-11-22
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Feedback from Recent Reviews on Selling of Investment Funds
The Securities and Futures Commission and the Hong Kong Monetary Authority issued this document to outline key observations and good practices from recent regulatory reviews of investment fund sales by Registered Institutions. The regulators identified critical control deficiencies, including inappropriate suitability assessments, inadequate monitoring of suspicious trading patterns, and incentive structures that encouraged excessive fund churning. Expected standards require institutions to implement robust pre-trade controls, effective post-trade monitoring systems, and fair incentive mechanisms to ensure customer best interests are protected and misconduct risks are mitigated.
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