Several financial institutions were investigated for divestment after the National Security Law

After the implementation of the “Hong Kong version of the National Security Law“, a number of financial institutions have withdrawn their headquarters and practitioners from Hong Kong one after another. The Financial Times, citing three sources, reported that it is unusual for fund managers and bankers to be queried by financial regulators about the reasons for leaving Hong Kong for development elsewhere.

The report quoted the sources as saying that the SFC, HKMA, the Treasury Bureau and the HKMA had directly called the top bank and asset management executives who had left Hong Kong for Singapore, Tokyo and other places to ask them about the reasons for leaving Hong Kong, the decision-making process and the relevant timing.

The SFC told the Financial Times that in the past it would also make inquiries to licensed corporations or individuals who had changed their place of business to find out whether they still needed a license. A spokesman for the Commission added to the newspaper that it had not conducted any investigation into the reasons for financial institutions moving out of Hong Kong.

Lee Tat Chee, chief executive of the HKMA’s Foreign Exchange Fund Investment Office, responded that he did not know what companies were being referred to in the report, but the HKMA maintains daily communication with the industry and will ask why when it learns that someone has left Hong Kong during a “chit chat”. I don’t know why there is a special concern (particular concern). The Chairman of the HKMA, Mr. Li Luren, told the newspaper that he was not aware that the HKMA had called the senior management to inquire about his whereabouts. He also said that the HKMA has no regulatory functions and will not be informed of the whereabouts of the senior management of the financial institutions concerned.

A spokesman for the Financial Services and the Treasury Bureau said the bureau did not conduct any investigation into the relocation of financial institutions in Hong Kong.

Luo Jia Cong, an economist who worked as a bank economist, said in an interview with this newspaper that calling financial institutions to inquire about the whereabouts of senior executives is an unofficial practice that helps the authorities understand the industry’s development and intentions, and in the past, senior regulators will also contact him privately. But if the official official inquiry should be recorded, will also be to counterparts, rather than individual senior inquiries.

Another local bank securities department senior said to this newspaper, to the financial institutions responsible for the representative (RO), for example, the company must regularly report to the SFC constant RO in Hong Kong, and RO must also regularly update personal information to ensure business continuity. However, according to normal procedures, it should be the regulator to contact the company’s supervisory department, rather than directly to individual inquiries. She continued that Hong Kong is facing the problem of brain drain and corporate withdrawal, which makes the Hong Kong government more nervous, but she thinks the government knows the reasons behind it well.

A fund manager pointed out that although it is not uncommon for the SFC to make inquiries to fund companies leaving Hong Kong, telephone inquiries from other institutions and the tone of the inquiries are uncommon, and there were no such practices in the past.

In recent years, a number of financial institutions have been scaling down their operations in Hong Kong, but with Hong Kong serving as a window to the mainland, few companies will exit the local market altogether. At the same Time, they will choose to expand the scale of business in other regions, including Citi and Goldman Sachs and other international investment banks to increase recruitment efforts in Singapore, while asset management companies will move offices from Hong Kong to Southeast Asia.

Many financial institutions withdraw from Hong Kong

Last year, a number of foreign financial institutions announced their withdrawal from Hong Kong after the implementation of the “Hong Kong version of the national security law”, including the world’s second largest asset management company Vanguard, which announced in August last year that it would withdraw from the ETF business in Hong Kong by delisting six ETFs listed on the Hong Kong Stock Exchange (388), and that its Asian headquarters would be moved from Hong Kong to Shanghai. to Shanghai. Most recently, US hedge fund Elliott Management will close its Hong Kong office and the functions will be transferred to its London office, while there are plans to propose in early 2018.

Motley Fool, a U.S. investment advisory firm, also said in an internal email that it has decided to close its Hong Kong office due to political considerations such as national security laws, and devote resources to expanding its global business.

On the other hand, Tokyo has already set up an office in Hong Kong, beckoning companies interested in pulling out of Hong Kong to offer advice on relocating to Tokyo, in the hope that Tokyo will replace Hong Kong as Asia’s top financial city.