Hong Kong's Securities and Futures Commission has signed a memorandum of understanding with FINRA, the Financial Industry Regulatory Authority of the US, promising mutual assistance in supervising and overseeing regulated entities that operate on a cross-border basis in the two jurisdictions.

The MoU came into effect on 9 May. It places great emphasis on the protection of investors from sharp practice, but also has the lofty ambition of making markets more honest and stable. It also wants to promote the integrity of "cross-border related entities," i.e. firms that are regulated by both authorities or that are regulated in one jurisdiction and related to corporations regulated in the other. As with other MoUs, this one has no legally binding clauses.

One important carve-out says: "In particular, this MoU does not affect any right of one authority to communicate with or to obtain information or documents from any person (i.e. firm) subject to its jurisdiction that is located in the jurisdiction of the other. However, one authority should communicate with the other prior to carrying out any cross-border on-site visit in the jurisdiction of the other authority."

The two regulators do not, according to the agreement, have to co-operate if it conflicts with somebody's laws, if a request for assistance is not made within the terms of this MoU, or if it is contrary to the public interest.

Non-public information is not to be gathered under the auspices of the MoU for enforcement purposes. No non-public information gathered in accordance with the MoU will be used in any judicial or other proceedings.