Regulatory Alerts2024-02-23
Added · Updated
Guidance on Adoption of Portfolio-based Approach to Suitability Assessment
The Hong Kong Monetary Authority issues this guidance to clarify standards for regulated institutions adopting a portfolio-based approach to suitability assessment under the Securities and Futures Commission Code of Conduct. The framework allows institutions to establish a holistic investment agreement defining portfolio parameters, thereby obviating the need for transaction-by-transaction suitability checks provided outcomes remain consistent with the agreement. Specific controls are mandated for handling deviations, monitoring portfolio performance, and implementing additional safeguards for retail banking customers, including audio-recording requirements and supervisory approvals for non-compliant transactions.
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