Introducing Broker Agreement Template for Hong Kong

An Introducing Broker Agreement is a crucial legal document that governs the relationship between two licensed financial intermediaries in Hong Kong's securities and futures markets. You'll need this agreement when establishing referral partnerships where one broker introduces clients to another, creating a structured framework for commission sharing and regulatory compliance under Hong Kong law.

When do you need this document?

You require an Introducing Broker Agreement when your licensed brokerage wants to expand its client base through partnerships with other financial intermediaries. This document is essential if you're a smaller broker seeking to offer services through a larger principal broker's platform, or if you're a principal broker wanting to formalize relationships with introducing partners. The agreement becomes necessary when establishing referral arrangements that involve commission sharing, client introductions, or any form of business collaboration between licensed entities. International firms entering Hong Kong's market often use these agreements to partner with local brokers who understand regulatory requirements and client preferences.

Key legal considerations

Your agreement must clearly define the scope of permitted activities for the introducing broker, ensuring they don't exceed their SFC license limitations. Commission structures require transparent disclosure to comply with the Code of Conduct for Persons Licensed by the SFC, including how fees are calculated and distributed between parties. Client confidentiality provisions must align with the Personal Data (Privacy) Ordinance, establishing clear data sharing protocols and privacy protections. The agreement should specify anti-money laundering responsibilities under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, including customer due diligence requirements and record-keeping obligations. Risk management clauses must address liability allocation, indemnification arrangements, and termination procedures to protect both parties' interests.

Legal requirements in Hong Kong

Under the Securities and Futures Ordinance (Cap. 571), both parties must hold appropriate SFC licenses for their respective activities, with the introducing broker typically licensed for Type 1 (dealing in securities) activities. The agreement must comply with SFC's Code of Conduct requirements for client agreements and referral arrangements, including proper disclosure of commission structures and potential conflicts of interest. Documentation must meet the Anti-Money Laundering and Counter-Terrorist Financing Ordinance standards for customer identification and record-keeping, with clear procedures for ongoing monitoring. The Personal Data (Privacy) Ordinance requires specific provisions for handling client personal data, including consent mechanisms and data transfer protocols. Regular compliance monitoring and reporting mechanisms should be established to ensure ongoing adherence to regulatory requirements and SFC guidelines.