Circular to licensed corporations – Management of operational and remote booking risks of trading activities

The SFC has provided guidance to licensed corporations (LCs) on managing operational and remote booking risks that may arise from trading activities. The circular highlights the importance of having adequate risk governance, controls, and monitoring to identify and mitigate operational risks that can arise from internal processes, people, and systems. It also emphasizes the need for sound risk governance and coordination to manage remote booking risks, which involve transferring trading risks to offshore affiliates through a group-wide arrangement. The SFC’s report provides detailed guidance and an overview of industry practices to help LCs refine their risk management processes. LCs are expected to establish a sound risk governance framework, implement appropriate controls and monitoring practices, and ensure proper management of loss allocation under transfer pricing arrangements.

resource: https://apps.sfc.hk/edistributionWeb/gateway/EN/circular/intermediaries/supervision/doc?refNo=23EC14

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