PrepLicense: HK SFC · Study notes · Paper 19
SFC LE Paper 19: Depositary Services for Collective Investment Schemes
Paper 19 covers depositary services for collective investment schemes in practice: fund operations, custody, reconciliation and investor protection.
1. The Hong Kong fund management industry
The depositary sits at the centre of the fund ecosystem — understand how money and instructions flow between manager, administrator, distributor and investor.
2. Participants in the fund industry
The boundaries between participants determine where responsibility falls when things go wrong; scenario questions frequently test role identification.
3. Major types of managed funds
The structural differences between unit trusts, open-ended fund companies and mutual funds directly affect custody arrangements and the form of fiduciary duty.
4. Subscription and redemption
Dealing cut-offs, pricing points, settlement cycles and deferred redemption arrangements are the core of day-to-day depositary monitoring.
5. Custody and sub-custody
Selecting, monitoring and allocating responsibility across a sub-custody network for cross-market holdings, and how segregation is actually implemented.
6. Reconciliation and exceptions
Periodic cash and securities reconciliation, with investigation and escalation of differences, is the first line of defence.
7. Corporate actions and income
Notification, election and booking of dividends, rights issues, splits and consolidations require clear deadlines and records.
8. Investor protection
The depositary's oversight function is a key investor protection; understand the duty to intervene and report when the manager breaches.
Sources and how to use these notes
These notes are organised around the syllabus areas published by HKSI Institute and are conceptual summaries — use them to build a framework and to revise quickly before the exam. For specific provisions, numeric thresholds and question weightings, rely on the latest official HKSI study material and the SFC source texts.
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