2026 Guide to SFC Type 9 Asset Management Licensing

An overseas asset management group with an established track record in its home jurisdiction sought to establish a regulated presence in Hong Kong to conduct discretionary asset management activities for professional investors.

The firm’s Hong Kong activities were limited to investment decision-making and portfolio management, while custody, settlement, and client asset holding functions would be performed by independent third-party custodians.

Accordingly, the firm proposed to apply for Type 9 (asset management) regulated activity subject to a licensing condition restricting it from holding client assets.

Applying for SFC Type 9 and Structuring a Full Licensed Corp

Following an initial regulatory assessment, the proposed activities were characterised as Type 9 (asset management) regulated activity under the SFO. As the applicant was not an authorised financial institution, the appropriate structure was a Full SFC Licensed Corporation under section 116 of the SFO.

At the application stage, the SFC’s fit-and-proper assessment extended beyond the applicant entity to its controllers, senior management, and proposed Responsible Officers. The firm submitted detailed information on:

• Group structure and regulatory history
• Senior management and personnel qualifications
• Internal governance and compliance arrangements

All policies were aligned with the SFC’s Fit and Proper Guidelines and Guidelines on Competence.

1. Incorporation and Corporate Structure

The firm incorporated a Hong Kong subsidiary to act as the licensed entity. This structure allowed:

• clear regulatory accountability at the Hong Kong level;
• direct supervision by locally approved Responsible Officers; and
• effective enforcement of SFC requirements relating to records, inspections, and ongoing compliance.

The corporate structure and reporting lines were documented in a board-approved organisational chart submitted with the licence application.

2. Governance, Senior Management, and MICs

Consistent with SFC expectations, senior management responsibility was clearly allocated across:

• directors of the licensed corporation;
• Responsible Officers; and
• Managers-In-Charge (MICs) of Core Functions, including Overall Management Oversight and Key Business Line.

Each MIC formally acknowledged their appointment and responsibilities. The board approved the management structure and established procedures to ensure that any subsequent changes to MIC appointments or particulars would be notified to the SFC within the prescribed timeframe.

3. Appointment of Responsible Officers

Two Responsible Officers were appointed for Type 9 regulated activity, each with substantial Hong Kong asset management experience.

Key considerations included:

• ensuring that at least one Responsible Officer was an executive director of the licensed corporation;
• demonstrating that Responsible Officers possessed real authority over investment decision-making and risk management; and
• avoiding “name-only” appointments by clearly documenting supervisory responsibilities.

All Responsible Officer applications were submitted together with the licence application, enabling the SFC to assess governance holistically.

4. Financial Resources: Capital and Liquidity in the Case Study

In line with prevailing market practice, the firm applied for Type 9 (asset management) regulated activity subject to a licensing condition restricting it from holding client assets. This approach reflects how most boutique asset management firms operate in practice, whereby discretionary portfolio management is conducted in Hong Kong, while custody, settlement, and client asset holding functions are outsourced to independent third-party custodians.  As a result, the firm was subject to a minimum liquid capital requirement of HKD 100,000 under the Securities and Futures (Financial Resources) Rules.

5. Six-Month Operating Expense Projection

As a newly licensed firm, the applicant was required to demonstrate that it had sufficient financial resources to commence and maintain operations. A detailed projection of operating expenses for the first six months post-licensing was submitted.

Where projected expenses exceeded excess liquid capital, the firm provided:

• a documented funding plan; and
• evidence of shareholder support to ensure that additional capital would be injected when required.

This approach addressed the SFC’s focus on financial sustainability, rather than formal capital compliance alone.

6. Internal Controls and Competence

The SFC examined whether the firm’s internal control framework was proportionate to its proposed activities. Particular attention was paid to:

• investment decision-making processes;
• conflict management and disclosure;
• risk management and valuation controls; and
• compliance monitoring and reporting lines.

Policies were aligned with the Code of Conduct and the Management, Supervision and Internal Control Guidelines, with clear implementation responsibility assigned to senior management.