Hong Kong’s Securities and Futures Commission (SFC) has appointed Julia Leung as executive director of its investment products division for a three-year term, effective from March 2 this year.

In an eagerly anticipated announcement, Leung succeeds Alexa Lam, who is set to retire at the end of the month, as tipped by AsianInvestor last September.

However, while Lam's full title is deputy CEO of the SFC and executive director of investment products and for the international and China divisions, Leung has not been named deputy CEO, at least for now.

Asked if Leung would subsequently be given the title, an SFC spokesperson told AsianInvestor: "No decision has been made yet at this point."

Asked if the SFC was actively searching for a deputy CEO, the spokesman declined to comment. It follows widespread speculation that Lam's dual role would be split into component parts.

It leaves question marks over how the deputy CEO post will be handled. It may be that Leung is being given the opportunity to prove herself worthy of the role. “I don’t think anyone else will be brought in now,” suggested one senior industry source.

Leung has strong experience as a political figure and financial regulator. She had been under-secretary of the treasury and financial services since 2008 until she stepped down at the start of last year. She has also served as an executive director at the Hong Kong Monetary Authority (HKMA).

But in many respects her appointment may surprise the market in the sense that she has not had hands-on experience of operating in Hong Kong's funds industry. It is understood Christina Choi, director of the SFC's investment products department, was under close consideration for the role.

“What has swung it for her [Leung] is her China experience and her governmental experience as undersecretary,” suggested the source. “She has a wealth of experience at the HKMA with international regulators and with China.

It's understood that she is also very close to Andrew Sheng, chief adviser to China Banking Regulatory Commission, who also served previously as SFC chairman.

In a statement, SFC chief executive Ashley Alder said: “I look forward to working closely with [Leung] in her new role heading the investment products division and as a member of our board.”

He also thanked Lam for her contribution to the development of the SFC and the city's financial services industry. "In particular her work on mainland projects which enabled Hong Kong to embed its role as a gateway connecting China to the rest of the world,” added Alder. “On behalf of our colleagues, I wish her a very happy retirement.”

Lam joined the regulator in 1999 and has been an executive director since December 2001. Her current term ends on February 28, 2015.

Leung’s appointment comes after months of speculation over Lam’s possible successor. Last September, one lawyer had told AsianInvestor: “I have heard they are having trouble finding someone that ticks all the relevant boxes.” The SFC is understood to have been seeking a replacement since mid-last year and likely earlier.

Lam had overseen the investment products and international and China divisions. As such, the role covers regulation of Hong Kong retail investment products, policies on international engagements and market development in mainland China and Hong Kong.

The SFC had sought “someone who is politically palatable and has good industry knowledge”, said one Hong Kong-based fund executive. “That’s a hard enough combination, but when you throw China into the mix, that makes it even tougher. “It has got to be someone who has political aspirations who takes the job,” he added.