The Financial Industry Regulatory Authority (FINRA), a United States non-government self-regulatory organization (SRO), has entered into a memorandum of understanding (MoU) with Hong Kong’s Securities and Futures Commission (SFC), in order to enhance mutual oversight of cross-border regulated entities, as per an SFC announcement.
The MoU came into effect on May 9th, 2016, and aims to improve the supervision and oversight of regulated entities that operate on a cross-border basis in the US and Hong Kong, and covers financial services companies that are regulated either by the SFC or FINRA. The news comes barely a week after SFC’s CEO Ashley Alder became IOSCO’s new Chairman of the board.
Cross-border regulatory synergy
The definition of a cross-border regulated entity includes firms that are regulated in one jurisdiction yet are a related corporation to an entity regulated in the other jurisdiction.
Such ties can be common across financial services companies that have multiple subsidiaries, affiliates or entities with the similar or common ownership – among other structures – whether under a parent or group company. Often staff in the home country may be assigned or relocated to work in other parts of the world where the organization has a presence, such as in Hong Kong for U.S. firms, and vice versa.