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FSDC releases report on equity crowdfunding

The following is issued on behalf of the Financial Services Development Council:

     The Financial Services Development Council (FSDC) today (March 18) released a report entitled "Introducing a Regulatory Framework for Equity Crowdfunding in Hong Kong", which proposes options for establishing a framework to promote and regulate equity crowdfunding in Hong Kong.

     The Chairman of the FSDC, Mrs Laura M Cha, said, "The application of technology in finance has brought rapid changes in the financial services landscape. Internet finance, now being one of the growing areas in the financial services industry, represents a major trend in the evolution of the financial system, at both institutional and retail levels. To cope with the arising opportunities in the industry and new challenges in investor protection, the FSDC proposes introducing adjustments to the regulatory framework to facilitate the development of equity crowdfunding in Hong Kong.

     "As an international financial centre with abundant financial expertise and efficient fixed and mobile data transmission facilities, Hong Kong has the potential of developing into a hub for financial technology (Fintech) excellence. Equity crowdfunding is a major area of Fintech activities, one which not only breaks new ground in financing, but is also an innovative kind of community participation. The FSDC believes an appropriate avenue should be created to allow and regulate it."

     The report looks at different potential approaches for Hong Kong to regulate equity crowdfunding and underlines the importance of adopting appropriate initiatives to facilitate its development. Potential approaches range from full legislative action to maintaining the status quo, or, a middle option through introducing regulatory initiatives. The middle option includes granting conditional exemptions from the prospectus regime applicable to public offerings, licensing crowdfunding platforms and imposing risk-exposure limits on crowdfunding investors. The report further opines that the policy choice will necessarily involve striking a balance between innovation and entrepreneurship on the one hand and investor protection on the other. Nevertheless, the report notes that prudent investor choices will remain important, as investors must ultimately bear the risk of their own decisions.

     The full report has been uploaded to the FSDC website:

About the FSDC

     The Hong Kong Special Administrative Region Government established the FSDC in 2013 as a high-level, cross-sectoral advisory body to engage the industry in formulating proposals to promote the further development of Hong Kong's financial services industry and to map out the strategic direction for development.

     The FSDC has set up five committees, namely the Policy Research Committee, the Mainland Opportunities Committee, the New Business Committee, the Market Development Committee and the Human Capital Committee, as the five streams of its work.

Ends/Friday, March 18, 2016
Issued at HKT 16:16


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