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The new FAQ from Hong Kong’s Securities and Futures Commission is a useful addition to its circular on the use of external electronic data storage providers (EDSPs), particularly in providing practical guidance for those falling in scope of the requirements set out in the circular.
The EDSP regime was launched in late 2019. The regime relates to the storage of data with EDSPs such as Amazon, Microsoft and Bloomberg. For the SFC’s purposes, EDSPs include public and private cloud services, servers or devices for data storage at conventional data centres, and other forms of virtual storage of electronic information. Also included are technology services generating information that is then stored by these types of providers.
The regime was devised because the SFC was finding that its enforcement powers were hampered by inability to seize electronic records held by licensed corporations with EDSPs when these were needed for jurisdictional reasons.
Since the circular appeared, the SFC has been working closely with industry bodies to facilitate compliance with the new regime. Following these consultations, it has now published an FAQ on the topic.
What’s new in the EDSP FAQ?
The most significant change is that the FAQ now provides licensed corporations with an alternative route to obtaining undertakings from the EDSP. Instead, they can appoint two MICs responsible for EDSPs to provide the necessary undertaking in lieu of one from the EDSP.
Other clarifications in the FAQ relate to topics such as the appointment of MICs and/or ROs for the responsibilities defined within the circular, the use of affiliates for storage of regulatory records, and the required contents of audit trails.
Compliance with the EDSP regime
With the clarification provided by the EDSP FAQ, it’s now feasible for most licensed corporations in Hong Kong to achieve compliance with the regime. It’s advisable for firms to move swiftly to comply, submitting any relevant notifications in a timely manner.
We can help with any aspect of the regime, so please get in touch if you’d like to discuss.