The Securities and Futures Commission of Hong Kong and the UK's Financial Conduct Authority have signed a co-operative agreement in support of innovation in financial technology.

As part of their agreement, the regulators will co-operate by sharing information and referrals of innovative firms that want to enter each other’s markets.

Mr Ashley Alder, the SFC’s Chief Executive Officer, articulated the main reasons why many regulators want such agreements: "This will help both regulators stay abreast of innovation in financial services while providing...fintech firms...with enhanced channels for communicating with regulators." An official at the FCA agreed, adding that such agreements were "absolutely vital" if innovation was to happen on a global scale.

The FCA created its Innovation Hub in 2014 and the SFC set up its own Fintech Contact Point last year. The former is closely tied to the FCA’s statutory objective of promoting effective competition in the interest of consumers; the latter, according to the SFC's website, is still not quite up and running.

The SFC is interested in the following fintech sub-sectors.

• Automated trading systems, including ones that use algorithms.
• Financial product investment and distribution platforms, including robo-advisors and fund distribution platforms.
• Financing platforms, including peer-to-peer lending and equity crowdfunding platforms that offer securities or collective investment schemes.
• Distributed ledger technology, including the application of blockchain technology to licensed intermediaries, securities and capital markets.
• Big data, data analysis and artificial intelligence that is intended to support the front- and back-office operations of licensed intermediaries.
• Compliance, risk and regulatory IT, including software that supports regulatory compliance, regulatory reporting and know-your-customer controls.
• Cyber and data security, including secure client authentication.