SFC Type 3 Licence · Leveraged foreign exchange trading

01 / BUSINESS SCOPE

Business Scope and Application Value

Regulates the business of leveraged foreign exchange trading as defined by law, commonly conducted by forex margin dealers and related introducing businesses. Ordinary spot currency exchange, remittance and leveraged trading are not the same regime. Contracts for difference must be analysed according to their underlying assets and structure; do not claim that Type 3 covers all CFDs. [1] [2]

• Lawfully conducting regulated activities within the approved types and conditions allows clients and counterparties to check the licence and restrictions through the SFC Public Register. Licensed representatives are subject to ongoing regulation; this does not mean the SFC guarantees their business performance, investment returns or solvency.[1] [2]
• Securities dealing, investment advice and asset management services may be combined according to business needs to establish clearer lines of responsibility. An incidental business exemption may be available if the specific conditions are met, but one licence should not be understood as automatically covering all products, sales channels or investment activities. [2]
• Type 9 can support compliant discretionary investment management; Type 6 can be used for eligible corporate finance advisory business; and Type 13 provides a direct regulatory framework for depositaries of relevant public funds. Each business must still comply with the applicable product codes, client restrictions and specific personnel requirements. [1] [7]
• Establishing appropriate segregation of client assets, conflicts-of-interest controls, record-keeping and capital monitoring helps an institution demonstrate its governance arrangements to investors and service providers. Bank account opening, exchange participation rights and cross-border business activities remain subject to separate approvals and must not be promoted as automatic benefits of obtaining a licence.[1] [2]

02 / ENTRY REQUIREMENTS

Entry Conditions and Core Requirements

• In addition to the general requirements for two ROs and fit and proper status, you must demonstrate leveraged foreign exchange experience, examination eligibility and risk oversight capability, and prepare arrangements for quotations, counterparties, margin and client money. An RO for discretionary account management under Type 3 is also subject to a direct foreign exchange trading experience requirement. [1] [9] (4.2.1.4)

• The applicant may be a company incorporated in Hong Kong or an overseas company registered with the Hong Kong Companies Registry; a sole proprietorship or partnership is not an accepted structure for a licensed corporation. Confirm the operating entity, ultimate control chain and Hong Kong business arrangements first, then prepare the corresponding licence application.[1] (3.2.1)[2]
• Explain item by item who the clients are, the legal nature of the products, whether trading instructions are accepted, whether investment discretion is exercised, and whether client assets are held. Exemptions for ancillary business, intra-group activities and other cases must be assessed against the statutory conditions; professional investor status alone is not a general basis for exemption from licensing. [1] [2]
• The corporation, substantial shareholders and relevant senior personnel must continuously satisfy the fit and proper requirements, covering financial soundness, integrity, reputation and business competence. Past disciplinary action, litigation, bankruptcy or other adverse matters must be disclosed truthfully as required by the forms. Do not promise that a person with a record will necessarily be approved or rejected. [1] [3]
• Establish internal controls and risk-management systems proportionate to the scale of the business, with procedures for customer due diligence, sanctions screening, escalation of suspicious transactions, conflicts of interest and complaints. Purchasing a generic compliance manual alone cannot replace actual procedures, designated responsible persons and implementation records available for inspection.[1]
• The business plan must set out the target market, sources of income, execution and settlement processes, systems, outsourcing arrangements and oversight. A new applicant must provide a forecast of operating expenses for the first six months after being licensed. If its capital surplus is insufficient to cover the forecast expenses, it should propose a credible additional financing arrangement. [1] (3.2.2, 3.2.20)
• A corporation subject to a condition prohibiting it from holding client assets must design its funds and securities flows accordingly, rather than simply ticking “does not hold” on the application form. Appointing an independent custodian does not automatically resolve every issue of control; account mandates, payment authorisations and related contractual arrangements should be reviewed.[1] [6]
• A proposed exchange participant under Type 1 or Type 2 should check the Securities and Futures (Insurance) Rules and the applicable master insurance policy. Insurance for other businesses should be assessed according to the specific regulatory requirements and risk arrangements; it should not be stated that all types are subject to a uniform requirement to purchase the same professional indemnity insurance.[1] (3.2.21)

03 / PEOPLE & GOVERNANCE

Shareholders, directors and compliance personnel

• At least two approved responsible officers (ROs) are required for each type of proposed regulated activity, at least one of whom must be an executive director. At all times, at least one person must be available to supervise the relevant business. One person may cover multiple types of activity, but must be competent for each and have no role conflicts; a name cannot simply be borrowed to meet the numerical requirement. [1] (3.2.3—3.2.8) [4]
• All executive directors who actively participate in or directly supervise regulated activities must apply to become the corresponding RO; other ROs are not necessarily directors. The regulatory focus is on actual authority, time commitment and the effectiveness of supervision. It should not be stated as a universal hard requirement that every RO be an executive director or have a fixed employment relationship.[1]
• An RO must select the applicable qualification route under the Guidelines on Competence. A common route requires three years of relevant industry experience and two years of management experience within the preceding six years. Alternative routes are also available, based on qualifications, professional credentials and longer experience. A general three years of financial-services experience cannot substitute for the assessment.[9] (4.2)
• Recognised industry qualifications and the local regulatory framework examination papers should be checked individually against the relevant activity, role and exemption conditions. Type 3 also involves examination arrangements for leveraged foreign exchange. CFA, accounting or legal qualifications do not automatically exempt a person from all examinations. Pay special attention to the specific competence requirements for sponsors, takeover advisers and Type 13. [1] [9]
• A person performing regulated functions on behalf of a corporation must become a licensed representative accredited to that corporation. Compliance personnel performing only administrative or accounting work, or not performing regulated functions, do not automatically require a licence based on their job title. Relevant bank personnel are entered in the HKMA register under the registered institution regime.[1] [2]
• Identify the heads of the eight core functions (MICs), covering overall management oversight, key business lines, operations, risk management, finance, information technology, compliance and anti-money laundering. Reasonable dual-hatting may be permitted depending on the size of the firm; the law does not necessarily require eight different individuals. The board should approve the structure and confirm each person’s responsibilities. [1] (3.2.9—3.2.14)
• The Compliance Officer and Money Laundering Reporting Officer should be given sufficient authority and resources. Responsibility should also be assigned for financial resource calculations, settlement, system maintenance and complaints. Outsourcing may supplement professional capabilities, but the board and management cannot transfer their ongoing oversight and regulatory responsibilities to consultants.[1]
• An RO must perform their duties in practice and be contactable. Appropriate internal controls and reasonable cover arrangements are required during short-term absences from Hong Kong. Exchange participants are generally expected to have two ROs in Hong Kong at all times to directly supervise brokerage business; ordinary corporate arrangements should not be mechanically applied to exchange brokerages.[4]

04 / CAPITAL & PREMISES

Capital and business address requirements

Financial resources and sources of funds

An approved introducing agent must have minimum paid-up share capital of HK$5,000,000 and fixed liquid capital of HK$3,000,000. Other Type 3 business requires minimum paid-up share capital of HK$30,000,000 and fixed liquid capital of HK$15,000,000. The lower capital thresholds for ordinary brokers or firms not holding client assets must not be applied. [1] (3.2.18)

Statutory share capital, net assets, liquid capital and other financial resources are not the same concept. Capital is not a government fee or consultancy fee, and must not be conflated with client assets or reserve funds.

Hong Kong Business Address and Substantive Operations

• The business premises must be suitable for the actual business, consistently available, and protect client privacy and confidential information. The SFC does not categorically exclude business centres or shared offices. The key considerations are a dedicated area that can be separately locked, equipment and communications security, avoiding client confusion, and access for regulatory inspections.[5]
• A virtual address that merely provides a mailing address, with no actual business operations or security-record arrangements, will generally be difficult to establish as suitable premises. Depending on the business needs, prepare evidence of the right to occupy the premises, a floor plan, and access-control and visitor arrangements, rather than claiming that a uniform official minimum floor area must be met.[5]
• Premises where statutory regulatory records are kept or can be accessed must be handled in accordance with the approval requirements under section 130 of the Securities and Futures Ordinance. Before adding a business location or branch, assess the application for approval of the records premises; periodically sending paper records back to headquarters does not, by itself, remove the need for approval of the branch premises.[3] [5]
• If regulatory electronic records are stored only with an external data-storage provider or in a group data centre, check the approval requirements and regulatory access conditions even if the location is overseas. Cloud outsourcing does not relieve the corporation of its responsibility to maintain complete records, ensure they remain readable and provide information to the SFC promptly.[1]（3.4.5）[5]

05 / APPLICATION DOSSIER

Application Document Checklist

• Company information includes incorporation and business registration documents, articles of association, director and shareholder details, a group structure chart and the chain of ultimate interests. Overseas companies should also provide proof of Hong Kong registration and information about the head office. If a newly established company has no historical audited annual reports, state this truthfully; do not fabricate three consecutive years of statements. [1] [3]
• The business plan should match each category of activity to specific services and describe client locations, products, fees, client-acquisition methods and expected business volume. Attach procedures for transactions, investment management, client assets or custody oversight so that regulators can understand who makes decisions, who executes them and who is responsible for review. [1] [3]
• Personnel information includes proof of identity, CVs, academic qualifications, professional qualifications, examination results and detailed evidence of work experience, together with details of duties and authority, concurrent appointments and conflicts of interest. Any additional recommendations or background documents required will depend on the case. A police certificate should not be treated as a fixed document required in every application. [1] [3] [9]
• Prepare a board-approved organisation chart and allocation of MIC responsibilities, RO oversight arrangements, a list of representatives and role descriptions. Personnel résumés should describe relevant products and actual responsibilities and be consistent with the proposed business activities. For sponsor or takeover advisory work, submit separate information on relevant experience and team capabilities.[1] [9]
• Financial information includes details of capital injection and the source of funds, bank account information, capital calculations and an operating budget for the first six months. Bank account information need not be complete at the initial submission, but must be provided to the SFC before licensing; the time required to open an account should be factored into the project plan.[1] [3]
• Compliance documents must cover client onboarding, suitability, risk disclosures, personal account dealing, conflicts of interest, complaints and breach reporting. Add procedures for anti-money laundering, segregation of client assets, margin, investment restrictions or rating independence as relevant to the business, and retain usable forms and sample records.[1]
• System and outsourcing documentation should cover the architecture, access rights, security, backups, business continuity and incident-handling procedures, and explain supplier due diligence, contracts and ongoing oversight. Electronic trading, automated trading or fund custody projects must provide additional testing and control documentation proportionate to their risks.[1] [5]
• Apply through WINGS-LIC using the current forms and applicable supplementary information. A new corporation will generally need Form 1 and personnel Forms 5 and 6, applicable supplementary documents and questionnaires. Follow the system’s current checklist; do not substitute the conflicting A/B/C form numbers mentioned in older articles on the same website for the official requirements.[3]

06 / APPLICATION ROADMAP

Application process and required time

The SFC states that typical processing times for new applications are approximately 15 weeks for corporations, 10 weeks for responsible officers and 8 weeks for ordinary licensed representatives. These are general processing times, not statutory deadlines or approval commitments. Preparation, account opening, visas, requests for additional documents and complex business reviews may require additional time. No application timeframe can currently be promised for Types 11 and 12. [3]

1. Step 1: Define the regulatory scope. First map the services, products and asset flows, and determine which activities require an application and whether any incidental exemption applies. Confirm whether separate product authorisation, exchange eligibility or other regime approvals are also required. Types 11 and 12 are not included in ordinary licensing applications that can be submitted at present.[1] [2]
2. Step 2: Put the entity, shareholding, RO and MIC arrangements in place, and assess each proposed appointee’s suitability, experience, examinations and conflicts of interest by name. Plan banking, capital, office and systems at the same time to avoid discovering after submission that there is a fundamental gap in key personnel or business capability. [1] [3]
3. Step three is to prepare a business plan, financial budget and compliance procedures suited to the business, and obtain the company’s required board resolutions. Cross-check the business descriptions and résumés in the corporate, RO and representative applications to avoid contradictory statements about client assets or authority for the same business across different application documents.[3]
4. Step 4: Submit the complete application and supporting documents through WINGS-LIC; after the application is accepted, pay the applicable application fee as instructed by email from WINGS. Insufficient information, an incorrect category or the lack of a qualified RO may result in the application being returned. A consultant’s receipt of documents does not mean that the SFC has accepted the application. [3]
5. Step 5: Respond to regulatory enquiries and attend interviews as required, explaining how business risks, internal controls, and staff supervision operate in practice. Provide supplementary information within the deadline specified by the regulator. If the business, shareholders, or personnel change, update the information promptly; do not treat a fixed number of days for providing additional documents as a rule applicable to every case.[3]
6. Step 6: Complete the SFC’s requirements concerning capital injection, bank accounts, premises or other arrangements, and verify the final licence type and conditions. Begin the relevant business only after formal approval has been received and its effective date confirmed. An application acknowledgement, communication in principle or payment to a consultant does not constitute authorisation to operate.[3]
7. Step 7: Check the public register details and establish a calendar for annual fees, annual returns, audits and financial resources returns. Arrange staff training and ongoing capital monitoring. A licensed corporation must notify the SFC of its financial year-end date within one month after obtaining its licence. [3] [4]

07 / ACQUISITION & CHANGES

Acquisitions, Changes to Shareholders and Directors, and Completion

• What the market calls buying or selling an SFC licence usually means acquiring shares in a licensed corporation. The licence remains with the original legal entity and cannot be sold separately to another company. An acquisition also does not automatically remove client restrictions, pending regulatory matters or existing liabilities. The transaction target and scope of liabilities to be assumed should be clarified first.[1] [3]
• A person intending to become a legal substantial shareholder should, in principle, obtain the SFC’s approval first. The definition includes a person who, together with their associates, holds more than 10% of the relevant interests or voting rights, as well as relevant indirect control chains formed through 35% or more of the voting rights in an upper-tier company. These should be traced through and verified, rather than assessed solely by nominal percentages.[1] (Footnote 32 in the section on changes to forms) [3]
• It is inadvisable to promote phased acquisitions of 33/33/34 or 34.9% as automatically avoiding prior approval. Voting agreements, associates, indirect interests, and concert arrangements may affect the assessment. A professional should assess approval and notification obligations based on the complete transaction terms; marketing claims for a sale must not substitute for legal analysis.[1] [3]
• The buyer should examine the public register and licence conditions, regulatory inspections and disciplinary matters, client assets, capital calculations, historical audits, complaints and litigation, and tax liabilities. The absence of published matters on a public page or a seller’s statement that there has been no business is not sufficient to prove that there are no undisclosed liabilities or compliance records. [1] [3] [4]
• The sale and purchase agreement should make the required regulatory approvals, capital adequacy, retention of the RO and transfer of client assets conditions precedent, and clearly specify who bears compliance and operating costs during the transition. Approval of a substantial shareholder does not amount to approval of new business, removal of conditions or approval of the buyer’s personnel as RO.[3] [4]
• For approval of a substantial shareholder, the SFC must examine whether the corporation continues to meet the fit-and-proper requirements. An approval granted is initially valid for six months in general, and the relevant transfer must be completed during that validity period. It cannot be promised that an acquisition will be faster or completed in a few weeks; after completion, all licensing and reporting obligations must still be met on an ongoing basis.[1] [3]

Shareholders, Directors and Other Material Changes

• An application to add a regulated activity or to vary or revoke a licence condition must be made in advance under the applicable procedure. An existing licence does not automatically cover new products or business. The relevant RO, capital, systems and compliance arrangements should also be put in place. Do not commence the additional business before formal approval is granted.[3]
• Becoming or continuing as a substantial shareholder of a licensed corporation requires checking the prior approval requirement under section 132; a post-completion filing is not a substitute. Shareholding tiers, aggregated interests of associates, voting rights and indirect control may all affect the assessment; the rules are not limited to direct share purchases.[1] [3]
• A change of business address generally requires at least seven business days’ prior notice. If the new location will be used to keep regulatory records, approval under section 130 is also required. After signing a new lease, check the relocation notification and application for approval of the records premises together; do not assume that changing the business registration address completes the SFC process. [3] [4] [5]
• Changes to particulars such as the departure of an RO or representative, directors, MICs, bank accounts and shareholding structure generally must be notified within seven business days, but each matter should be assessed under the applicable rules. If a departure leaves too few ROs or results in inadequate supervision, the business cannot continue as usual merely by filing a notice. [3] [4]
• For new business models involving virtual asset trading, virtual asset management or automated investment advisory services, discuss the matter with the SFC and complete any applicable notifications or variations of conditions before commencing. A Type 1, 7 or 9 licence does not automatically permit all related services, nor does it replace a platform licence under the Anti-Money Laundering Ordinance.[2] [4]
• A proposed cessation of business must be notified as early as possible and no later than seven business days before cessation, with client assets, outstanding transactions and record retention addressed. After all activities have ceased completely, audit materials up to the cessation date must be submitted within four months from that date. The company or licence must not simply be abandoned.[4]

08 / ONGOING COMPLIANCE

Post-approval maintenance and ongoing responsibilities

• Continuously monitor foreign-exchange exposure, counterparty risk, client margin and capital, and handle client money and risk disclosures in accordance with applicable requirements. Monthly financial resource returns are generally required. Using an overseas trading system, liquidity provider or outsourced customer service does not relieve the corporation of its regulatory responsibilities.[1] [4]

• A general licence has no fixed expiry date, but the holder must continue to satisfy the fit-and-proper requirements and licence conditions. The annual fee and annual return are generally due within one month after the licence anniversary date. Late filing may trigger surcharges, suspension or even revocation; a new licence is not reapplied for every year.[4]
• Maintain the required paid-up share capital and required liquid capital at all times, calculating them based on asset haircuts, liabilities and business risks. Liquid capital is not the same as a bank balance. If you discover that you cannot maintain, or are unable to determine whether you can maintain, the required financial resources, notify the regulator in writing as soon as possible and cease the relevant business as required by law. [1] [6]
• Monthly financial resources returns are generally required. Only corporations holding Type 4, 5, 6, 9 and/or 10 licences with a condition that they must not hold client assets are generally subject to half-yearly returns. Half-yearly reporting does not reduce the obligations to maintain capital and internal controls on an ongoing basis.[4]
• Submit audited accounts and the prescribed documents within four months after the end of each financial year. If an extension is required for special reasons, apply as early as possible in accordance with the procedures. Audit, financial resources reporting and annual licence returns are separate obligations; completing one does not replace the others.[3] [4]
• Licensed individuals generally must complete 10 hours of continuous professional training in each calendar year, of which 5 hours must be directly relevant to their regulated activities. RO must complete an additional 2 hours of regulatory compliance training. Sponsorship or Takeovers Code work is subject to additional relevant-topic requirements; the outdated guidance stating 5 hours annually should not be relied on.[4]
• Within 12 months after first becoming a licensed individual, two hours of ethics training must be completed. Thereafter, two hours of ethics- or compliance-related training must be completed each year. Institutions and individuals must retain training records for at least three years and confirm in the annual return whether they complied with the applicable training requirements in the preceding calendar year.[4]
• Continue to implement client asset segregation, due diligence, suitability, anti-money laundering and conflict-of-interest controls, and retain transaction, communication and supervision records according to the business. Different records have different retention periods; do not state a blanket seven-year period for all documents and thereby omit specific requirements or exceptions.[1]
• Review outsourcing, system access rights, cybersecurity and business continuity regularly, and track regulatory circulars, material complaints and misconduct incidents. The maintenance budget should cover RO, compliance, audit, systems and actual operating costs. Minimum liquid capital should not be used as a proxy for annual compliance expenditure. [1] [4] [5]

09 / FREQUENTLY ASKED

Frequently asked questions

10 / OFFICIAL REFERENCES

Official references and information verification

Information compilation date:3 November 2026The regulatory websites below are used to verify applicable laws, the latest forms, fees and registration status. Primary legislation, current requirements of the competent authorities and case-specific decisions take precedence.

Prepared by Rengangyongsheng (Hong Kong) Limited; professional explanation provided by Business Manager Tang Shangyong (Drew). This does not constitute legal, tax or investment advice for any specific case.