Request for Proposals : Analysis and Advice on the Investor Compensation Fund

Transcription

1 Request for Proposals : Analysis and Advice on the Investor Compensation Fund 15 April

2 Request for Proposals Analysis and Advice on the Investor Compensation Fund The Securities and Futures Commission ( the Commission or the SFC ) now invites consultancy firms to submit proposals for conducting analysis and providing advice in relation to the Investor Compensation Fund ( the ICF ). Consultancy firms interested in submitting proposals should submit their proposal in accordance with the requirements stated in this Request for Proposals ( RFP ) on or before 14:00 on 31 May Late submissions will not be considered. 2

3 Table of Contents I. Introduction 4 II. Application Criteria 4 III. Application and Submission 4 IV. Background of the ICF 5 V. Analysis and Advisory Services sought 6 VI. General Information and Instruction 7 VII. Enquiry 8 VIII. Confidentiality 8 IX. Publicity 8 X. Conflict of Interest 8 XI. Prevention of Bribery 9 XII. Personal Data 9 XIII. Disclaimer 9 Annex A Acknowledgement and Undertaking 10 Annex B Personal Information Collection Statement 14 3

4 I. Introduction 1. The SFC is requesting proposals from consultancy firms (each a Proposer ) to advise and conduct analysis on certain matters relating to the ICF. Section IV below provides background information on the ICF and Section V sets out in more detail the specific analysis and advisory services sought. 2. The appointed consultant is expected to submit a written report, in both hard copy and soft copy, as soon as practicable but not more than 3 months from the date of the appointment. II. Application Criteria 1. In order for a Proposer s proposal to be eligible for consideration by the SFC, the Proposer must fulfil the following criteria. (i) The Proposer must possess experience in providing financial advisory services and be equipped with proven actuarial analysis and/or quantitative analysis skills. (ii) The servicing team must have staff members in Hong Kong as all substantive work relating to this RFP will have to be conducted in-house and cannot be delegated to any third party. (iii) The Proposer must provide at least one client reference (with contact details and a brief description of the services provided, preferably similar to the services we are requesting in this RFP) for the SFC s verification. 2. The Proposer must declare that it meets the application criteria at the time of submitting the proposal and provide proof that it meets the criteria upon request. 3. The Proposer must sign the Acknowledgement and Undertaking (at Annex A) to acknowledge that sections 378 and 379 of the Securities and Futures Ordinance ( the SFO ), which pertain to the preservation of secrecy and avoidance of conflicts of interests, impose statutory obligations on it. III. Application and Submission 1. Each Proposer is only allowed to submit one proposal. 2. Each Proposer should include details of contact persons in its proposal. 3. Each Proposer must submit its proposal (with both hardcopy and softcopy) in a sealed envelope together with the signed Acknowledgement and Undertaking. Please mark Ref: Securities & Futures Commission RFP for Analysis and Advice on the Investor Compensation Fund on the cover of the sealed envelope and deposit it into the tender box located at the reception counter of the Commission s offices at 30/F Cheung Kong Center, 2 Queen s Road Central, Hong Kong on or before 14:00 on 31 May 2016 ( Closing Date ). The Technical Part of the proposal and the Fee Schedule for the proposal must be submitted separately in two separate sealed envelopes. 4. The proposal on the Technical Part should include, but not be limited to, the following: (i) a brief description of the Proposer; (ii) proposed project team size and the contact information; (iii) expertise and qualifications of the core team members, each with brief bibliography 4

5 and details of relevant experience; (iv) past relevant experience; (v) local and overseas references; (vi) methodology(ies) on analysing each of the matters described under paragraph V(1) below (please state the details and justifications for the suggested methodologies); (vii) deliverables (e.g. summary of quantitative analysis, reports, presentations and meetings, etc.); (viii) report format and outline; and (ix) expected timeline for the deliverables. 5. The proposal on the Fee Schedule Part should include an estimate of the total fees, a fee breakdown, a payment schedule and a brief description to explain the assumptions on which the fees are based and calculated and any other costs to be incurred. The proposed fee should be fixed and stated in Hong Kong dollars. 6. In case a black rainstorm warning or tropical cyclone warning signal No. 8 or above issued by the Hong Kong Observatory remains in force, or is expected to be issued, three hours before the closing time of this RFP, the closing time will be extended to 12:00 noon on the next working day of the Commission following the affected closing time. 7. Any application submitted after the time specified in paragraph III(3), as extended under paragraph III(6), will not be considered. 8. Each Proposer should keep its offer open for 180 days from the Closing Date of the RFP. IV. Background of the ICF 1. The ICF is established under the SFO to provide a measure of compensation to investors who have suffered loss (i) as a result of a default by a specified person (as defined in the Securities and Futures (Investor Compensation Claims) Rules ( the ICF Claims Rules )); and (ii) in respect of securities or futures contracts listed or traded (or to be listed or traded) on the Stock Exchange of Hong Kong Limited ( the SEHK ) or the Hong Kong Futures Exchange Limited ( the HKFE ). 2. Under the SFO, the Commission is primarily responsible for the administration and management of the ICF. However, some of these functions have been transferred to the Investor Compensation Company Limited ( the ICC ) or delegated to the Investor Compensation Fund Committee ( the ICFC ). In particular: (i) the ICC, which is a wholly owned subsidiary of the SFC and a recognized investor compensation company under the SFO, is responsible for receiving, assessing and determining claims against the ICF, and for pursuing recoveries against defaulting intermediaries 1 ; and (ii) the ICFC, which is an SFC committee established in 2003 under section 8 of the SFO, is responsible for reviewing and advising on the ICF s financial statements, and for approving payments out of the ICF funds, including to the ICC for operational expenses and the payment of claims. 1 For more information on the ICC, please refer to the ICC s website at 5

6 3. Currently, the maximum amount of compensation that may be paid out of the ICF is HK$150,000 per investor per default. This limit is set by the Securities and Futures (Investor Compensation Compensation Limits) Rules. 4. Two main sources of funding for the ICF are: (i) levies payable by investors ( ICF levies ) under the Securities and Futures (Investor Compensation Levy) Rules ( the ICF Levy Rules ); and (ii) investment income earned on the assets of the ICF. 5. In 2004, the Commission consulted the market on the adequacy of the HK$150,000 compensation limit, and various other matters relating to the size and funding model of the ICF. Consequent to that, it was decided to keep the compensation limit at HK$150,000, and to introduce a levy suspension and reinstatement mechanism whereby payment of the ICF levies can be suspended when the net asset value of the ICF is confirmed by auditors to have reached HK$1.4 billion, and subsequently reinstated when the net asset value is confirmed to have fallen to HK$1 billion. 2 In accordance with this mechanism, the levies have been suspended since 19 December 2005, and since then the ICF has been funded solely by investment income. 6. The current asset size of the ICF is about HK$2.2 billion, which is mainly invested in debt securities and pooled funds in accordance with the ICF s Investment Policy and Administrative Guidelines. For further information on the income and expenses of the ICF, please refer to the financial reports of the ICF which are set out in the SFC s annual reports The SFC regularly reviews the adequacy of the investor compensation limit, the asset size of the ICF and the trigger levels for suspending/reinstating the ICF levies. A methodology ( the Methodology ) is adopted for this purpose which has been developed and refined by the SFC over time and in light of experience gained in administering and managing the ICF. The Methodology is based on various criteria and assumptions (e.g. possible default scenarios, possible losses that might be suffered under such scenarios, etc) and takes into account available data on assets held by intermediaries. 8. The SFC is now seeking proposals from qualified consultancy firms to critically review the Methodology, and provide related analysis and advice. 9. Details of the Methodology (including the assumptions and criteria on which it is based), and other information relevant to applying the Methodology, will be provided to the successful Proposer after execution of a written contract in accordance with paragraph VI(3) below. V. Analysis and Advisory Services sought 1. The appointed consultant is expected to provide the following analytical and advisory services: (i) critically review the Methodology (including the assumptions and criteria on which it is based), and advise on its suitability for the purposes of ascertaining (both currently and on an on-going basis) the adequacy of the investor compensation limit, the asset size of the ICF and the trigger levels for suspending/reinstating the ICF levies; 2 Papers relating to the 2004 consultation (including the original proposals, feedback received and final conclusions) are available via SFC s website at 3 The SFC s annual reports are accessible via its website at 6

7 (ii) advise on possible changes or adjustments that might improve the Methodology; (iii) apply the adjusted/improved methodology to latest market data (to be provided by the SFC), and analyse the results of such application including in terms of its impact on the investor compensation limit, target size of the ICF and the trigger levels for suspending/reinstating payment of the ICF levies; (iv) advise on possible factors or considerations that might adversely affect the suitability of the Methodology, and the adjusted/improved methodology, for the purposes described in paragraph (i) above; (v) critically review the current sources for funding the ICF and, taking into account results of the analysis described in paragraph (iii) above, discuss alternative funding options and their implications; (vi) compare and evaluate the investor compensation limits, fund size and funding methodologies (both currently in force and under consideration, if any) adopted in respect of other compensation schemes, both in Hong Kong and in other major markets; and (vii) submit a report on the matters described in paragraphs (i) to (vi) above which should include (without limitation) detailed discussions of the studies conducted, methodologies applied, findings and recommendations. VI. General Information and Instruction 1. After submission of a proposal, each Proposer should inform the Commission in writing immediately of any circumstance or information which renders the proposal it submitted to be inaccurate or may otherwise affect its ability or qualification to provide the services as set out in its proposal. 2. The Commission may cancel this RFP or reject proposals at any time prior to an award, with no obligation to provide any reasons for doing so. 3. The Commission is not bound to accept any particular proposal which it may receive in response to this RFP. Acceptance of any proposal will be subject to terms and conditions to be agreed in a written contract. A Proposer should be aware that any proposals and responses and other materials submitted in response to this RFP may form part of such contract if the Proposer is selected. 4. If the Commission considers that any aspect of a proposal requires clarification from the Proposer, the Commission may request that the Proposer: (1) supplements its proposal; or (2) answers the Commission s queries orally or in writing, or in any manner that the Commission deems fit. 5. The Commission reserves the right to reject at its sole discretion any and all proposals received, whether prior to or after the interview with the Proposer(s). The Commission shall have the sole discretion in deciding which Proposer, if any, will be considered and/or interviewed. No proposal should be taken to have been accepted unless and until execution of the contract referred to paragraph VI(3) above. 7

8 6. All work done or services performed for the purposes of preparing a proposal in response to this RFP or otherwise in the course of the service provider selection process are on the Proposer s own account and not recoverable from the Commission. The Commission will not defray any costs and expenses incurred in the service provider selection process, including where applicable, in respect of any interview or the negotiation of any contract upon the conclusion of the service provider selection process. 7. All proposals submitted and other materials provided in response to this RFP and in connection with the service provider selection process will not be returned. VII. Enquiry 1. If you have any questions regarding this RFP, please them to icfreview@sfc.hk on or before 16 May The Commission reserves the right not to answer any questions received after 16 May VIII. Confidentiality 1. All information related to this RFP, including information disclosed by the Commission during the service provider selection process or thereafter, and whether given verbally or in written form, is to be considered strictly confidential and used only for the purpose for which it was disclosed. Information must not be released to any third party without the express written consent of the Commission. 2. All responses and other materials submitted in response to this RFP will become the property of the Commission. The Commission assumes no obligation and shall incur no liability regarding confidentiality of all or any portion of a response or any other material submitted in response to this RFP unless expressly agreed in writing to protect specifically identified information. However, for the avoidance of doubt, the Commission has no intention of publishing responses or other materials it receives in response to this RFP. IX. Publicity 1. The successful Proposer shall not publish or use any information in relation to this service nor include the name of the SFC in its list of clients without the prior written consent of the Commission. X. Conflict of Interest 1. No Proposer may have any interest which conflicts, or has the potential to conflict, with its duties to the Commission under the proposal. If a Proposer has any interest which conflicts, or has the potential to conflict, with its duties to the Commission and the ICC under the proposal, the Proposer should clearly state this in its proposal. This requirement extends to the Proposer s associates, associated persons, group companies and each member of the Proposer s professional staff (and their associates and associated persons). 8

9 XI. Prevention of Bribery 1. A Proposer shall not and shall procure that its directors, employees, agents, and subcontractors who are involved in this RFP do not offer, solicit or accept any advantage as defined in the Prevention of Bribery Ordinance, Cap 201 when conducting business in connection with this mandate. 2. Failure to so procure or any act of offering, soliciting or accepting advantage referred to in the paragraph above committed by the Proposer or by a director, officer, employee, agent or sub-contractor of the Proposer shall, without affecting the Proposer s liability for such failure and act, result in its proposal being invalidated. 3. The Proposer shall take all necessary measures (including by way of a code of conduct or contractual provisions where appropriate) to ensure that its directors, employees, agents and sub-contractors are aware of the obligations under this clause. XII. Personal Data 1. The Proposer shall be responsible for providing all necessary notifications to and/or obtaining the necessary consents from the relevant persons (or procure that such be done) in order for the Proposer to provide any personal data (as defined under the Personal Data (Privacy) Ordinance (Cap 486)) to the Commission in its proposal submitted in response to this RFP or otherwise in connection with the service provider selection process. In responding to this RFP, the Proposer will be taken to have provided all such notifications and/or obtained all such consents, and that it and all relevant persons have read and understood the Personal Information Collection Statement ( PICS ) attached as Annex B. XIII. Disclaimer 1. The information contained in the RFP or information provided subsequently to a Proposer whether verbally or in documentary form by or on behalf of the Commission, is provided to the Proposer on the terms and conditions set out in this RFP and all other terms and conditions subject to which such information is provided. 2. This RFP is not an agreement and is not an offer by the Commission to any third party. The sole purpose of this RFP is to provide Proposers with information to assist the formulation of their proposals to the Commission, and this RFP does not bind, and is not intended to bind, the Commission in any way. This RFP does not claim to contain all the information each Proposer may require. Each Proposer should conduct its own investigations and analysis and should check the accuracy, reliability and completeness of the information in this RFP, and where necessary obtain independent advice. The Commission makes no representation or warranty and shall incur no liability under any law, statute, rules or regulations as to the accuracy, reliability or completeness of this RFP. The Commission may in its absolute discretion, but without being under any obligation to do so, update, amend or supplement the information in this RFP. End 9

10 Annex A Acknowledgement and Undertaking Acknowledgement in relation to the preservation of secrecy pursuant to section 378 of the Securities and Futures Ordinance ( SFO ) and avoidance of conflict of interests pursuant to section 379 of the SFO. Terms in this acknowledgement have the same meaning as given in the SFO, unless otherwise defined here. To: Section 378 of the SFO binds you and in particular subsection (1) of that section which provides as follows: (1) Subject to subsection (13A), except in the performance of a function under, or for the purpose of carrying into effect or doing anything required or authorized under, any of the relevant provisions, a specified person- (a) (b) (c) shall preserve and aid in preserving secrecy with regard to any matter coming to his knowledge by virtue of his appointment under any of the relevant provisions, or in the performance of any function under or in carrying into effect any of the relevant provisions, or in the course of assisting any other person in the performance of any function under or in carrying into effect any of the relevant provisions; shall not communicate any such matter to any other person; and shall not suffer or permit any other person to have access to any record or document which is in his possession by virtue of the appointment, or the performance of any such function under or the carrying into effect of any such provisions, or the assistance to the other person in the performance of any such function under or in carrying into effect any such provisions. TAKE NOTICE THAT IF YOU CONTRAVENE SECTION 378(1) OF THE SFO YOU COMMIT AN OFFENCE UNDER SECTION 378(10) OF THE SFO. ANY PERSON WHO COMMITS AN OFFENCE UNDER SECTION 378(10) IS LIABLE: (a) (b) on conviction on indictment to a fine of HK$1,000,000 and to imprisonment for 2 years; or on summary conviction to a fine of HK$100,000 and to imprisonment for 6 months. 10 Tel: (852) Fax: (852) Website:

11 Section 379 of the SFO binds you and in particular subsections (1), (2) and (3) of that section which provide as follows: (1) Subject to subsection (2), any member of the Commission or any person performing any function under any of the relevant provisions shall not directly or indirectly effect or cause to be effected, on his own account or for the benefit of any other person, a transaction regarding any securities, structured product, futures contract, leveraged foreign exchange contract, or an interest in any securities, structured product, futures contract, leveraged foreign exchange contract or collective investment scheme- (a) (b) which transaction he knows is or is connected with a transaction or a person that is the subject of any investigation or proceedings by the Commission under any of the relevant provisions or the subject of other proceedings under any provision of this Ordinance; or which transaction he knows is otherwise being considered by the Commission. (2) Subsection (1) does not apply to any transaction which a holder of securities or a structured product effects or causes to be effected by reference to any of his rights as such holder- (a) (b) (c) (d) (e) (f) to exchange the securities or structured product or to convert the securities or structured product to another form of securities or structured product; to participate in a scheme of arrangement sanctioned by the Court of First Instance under the Companies Ordinance (Cap 622) or the relevant Ordinance; to subscribe for other securities or another structured product or dispose of a right to subscribe for other securities or another structured product; to charge or pledge the securities or structured product to secure the repayment of money; to realize the securities or structured product for the purpose of repaying money secured under paragraph (d); or to realize the securities or structured product in the course of performing a duty imposed by law. (3) Any member of the Commission or any person performing any function under any of the relevant provisions shall forthwith inform the Commission if, in the course of performing any function under any such provisions, he is required to consider any matter relating to- (a) any securities, futures contract, leveraged foreign exchange contract, structured product, or an interest in any securities, futures contract, leveraged foreign exchange contract, collective investment scheme or structured product- (i) (ii) in which he has an interest; in which a corporation, in the shares of which he has an interest, has an interest; or (iii) which - Tel: (852) Fax: (852) Website: 11

12 (A) (B) (C) (b) a person - (i) (ii) (iii) (iv) in the case of securities, is of or issued by the same issuer, and of the same class, as those in which he has an interest; in the case of a futures contract, is interests, rights or property based upon securities of or issued by the same issuer, and of the same class, as those in which he has an interest; or in the case of a structured product, is interests, rights or property based on a structured product of or issued by the same issuer, and of the same class, as that in which he has an interest; or by whom he is or was employed; of whom he is or was a client; who is or was his associate; or whom he knows is or was a client of a person with whom he is or was employed or who is or was his associate. TAKE NOTICE THAT IF YOU CONTRAVENE SECTION 379(1) AND/OR SECTION 379(3) OF THE SFO YOU COMMIT AN OFFENCE UNDER SECTION 379(4) OF THE SFO. ANY PERSON WHO COMMITS AN OFFENCE UNDER SECTION 379(4) IS LIABLE: (a) on conviction on indictment to a fine of HK$1,000,000 and to imprisonment for 2 years; or (b) on summary conviction to a fine of HK$100,000 and to imprisonment for 6 months. The term specified person is defined in section 378(15) of the SFO and means- (a) (b) the Commission; any person who is or was a member, an employee, or a consultant, agent or adviser, of the Commission; or (c) any person who is or was - (i) a person appointed under any of the relevant provisions; (ii) a person performing any function under or carrying into effect any of the relevant provisions; or (iii) a person assisting any other person in the performance of any function under or in carrying into effect any of the relevant provisions. Tel: (852) Fax: (852) Website: 12

13 The term person has the meaning attributed to it in s.3 of the Interpretation and General Clauses Ordinance Cap 1 which provides that person includes any public body and any body of persons, corporate or unincorporate, and this definition shall apply notwithstanding that the word person occurs in a provision creating or relating to an offence or for the recovery of any fine or compensation. We acknowledge that we have received and read carefully a copy of sections 378 and 379 of the Securities and Futures Ordinance (Cap 571, SFO ), and understand that these sections (in particular sections 378(1) and 379(1), (2) and (3)) impose statutory obligations on us. We further confirm that we understand and agree to be bound by the provisions of sections 378 and 379 of the SFO. Signature Name Title Company Date Witnessed by: Signature Name Title Date Tel: (852) Fax: (852) Website: 13

14 Annex B Personal Information Collection Statement 1. This Personal Information Collection Statement ( PICS ) is made in accordance with the guidelines issued by the Office of the Privacy Commissioner for Personal Data. The PICS sets out the policies and practices of the Securities and Futures Commission ( SFC ) with regard to Personal Data 4 submitted in response to this RFP and in connection with the service provider selection process and what you are agreeing to with respect to the SFC s use of the Personal Data for the purposes identified below. Purpose of Collection 2. The Personal Data provided in connection with the proposals submitted and other responses to this RFP and the service provider selection process will be used by the SFC for one or more of the following purposes: (i) for the administration of the service provider selection process; (ii) for the consideration and assessment of proposals submitted and other responses; (iii) for the purposes of performing the SFC s statutory functions under the Securities and Futures Ordinance ( SFO ) and other relevant Ordinances; (iv) for research or statistical purposes; and (v) other purposes as permitted by law. 3. The provision of Personal Data is voluntary. However, a failure to provide the requested Personal Data may result in the proposal submitted being ineligible for consideration by the SFC or otherwise invalidated. Transfer of Personal Data 4. Personal Data may be disclosed by the SFC to persons engaged by the SFC to assist it in the service provider selection process, and the SFC s performance of its statutory functions. 5. You consent to the transfer of your Personal Data to place(s) outside of Hong Kong for the purposes stated herein (such places may or may not offer the same or a similar level of personal data protection as in Hong Kong). Access to Data 6. You have the right to request access to and correction of your Personal Data held by the SFC about you in accordance with the provisions of the PDPO. Your right of access includes the right to request a copy of your Personal Data held by the SFC. The SFC has the right to charge a fee for processing of any data access request. 4 Personal Data means personal data as defined in the Personal Data (Privacy) Ordinance (Cap 486, PDPO ) 14

15 Retention 7. Personal Data provided to the Commission in connection with the proposals submitted and other responses to this RFP and the service provider selection process will be retained for such period as may be necessary for the fulfilment of the above-stated purposes (including any directly related purpose). Enquiries 8. Any enquiries regarding the Personal Data provided, or requests for access to Personal Data or correction of Personal Data, should be addressed in writing to: The Data Privacy Officer Securities and Futures Commission 35th Floor, Cheung Kong Center 2 Queen s Road Central Hong Kong A copy of the Privacy Policy Statement adopted by the SFC is available on the SFC s website at 15