It is by now common knowledge that the COVID pandemic put regulatory agencies in multiple countries under severe constraints, including delays due to staff working remotely and staffing shortages. For example, the Chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, admitted that the SEC was short-staffed, with 4 to 5 percent fewer staff than five years ago.
In Hong Kong, the situation at the Hong Kong Securities and Futures Commission (SFC) has apparently been exacerbated by the severe COVID restrictions that the Hong Kong government has placed on the population. The SFC reportedly lost 12 percent of its staff in 2021, compared with 5.1 per cent in 2020, and is finding it difficult to recruit new staff because of Hong Kong’s quarantine rules. SFC Chairman Tim Lui stated that the SFC’s most serious shortages were in junior professional staffing, which declined by 25 percent, and that the shortages had “been compounded by the limited ability to import talent from outside Hong Kong.”
Because the competition for financial talent in Hong Kong “is keen”, Lui said that the SFC had to set aside more money to compete with the private sector for staff, and to give a 4.5 percent pay rise to the current staff. The expected increase in SFC staff cost is HK$140.5 million (USD$18 million), which represents a 9.5 cent year-over-year increase. Total staff costs were projected to be HK$1.6 billion for the 12 months starting in April 2022.
Even with the planned hiring increases, however, the SFC’s total headcount by the end of March 2023 is projected to be 1,018 — only 3 per cent more than current levels. That modest increase appears unlikely to keep pace with the continuing vitality (even with COVID restrictions) of Hong Kong as an international financial center, and the projected growth of China’s capital market, for which Hong Kong will serve as a critical gateway, to $100 trillion. The SFC can only hope that the Hong Kong Legislative Council, which has the responsibility to review and approve government budgets, will recognize the need to provide the levels of financial support that the SFC will need in the near term and beyond.