Hong Kong’s securities regulator has surprised industry participants by naming Julia Leung as head of intermediaries to replace James Shipton, a move seen as highly unusual, and one that raises several questions.

Leung is currently head of investment products at the Securities and Futures Commission (SFC), a role she only took on in March last year. She will take up the new post, in what is seen as a sideways step, when Shipton’s term ends on June 19. The Commission will shortly start recruiting for Leung’s replacement.

And so the long search for a successor for Alexa Lam goes on, following her retirement last March. She had spent 17 years at the SFC, most recently as deputy chief executive and head of the China, international and investment products divisions.

The latest changes underscore how difficult it has been to find a successor and why the SFC resorted to splitting her role into component parts, a move tipped by AsianInvestor.

Industry sources were uncertain about the reasons behind the latest shuffle. For one thing, it is highly unusual for a division head to be moved on to a new role after such a short time, said a Hong Kong-based lawyer.

In addition, the investment products division is viewed as a more important SFC department than intermediaries and licensing, he said. “Products and enforcement are the traditional annals of power at the Commission.”

A Hong Kong-based investment industry executive agreed that Leung’s switch had come as a surprise. “Both [Leung and Shipton] were actively involved at the SFC’s regulatory conference this week, where nothing was said [about the changes],” he noted.

“It will be interesting to see how the SFC handles a replacement for Julia, whether an internal promotion or external candidate,” he said. “It’s a difficult position to fill.”

One contender to replace Leung is presumably Christina Choi, senior director of policy, China and investment products, who was passed over for the role last year. “If [Choi] is promoted now to head of products, she will have won an obvious internal political battle,” said the industry executive. “Why was she not appointed last year?”

Nevertheless, the SFC is obliged, as a government department, to consider both internal and external candidates, he added.

Leung’s transfer also raises the question of why Stephen Po, senior director and head of intermediaries supervision, is not being promoted to replace Shipton, said the executive.

He also questioned whether Leung's prior experience at Hong Kong's Financial Services and Treasury Bureau was particularly relevant for intermediary supervision. “But since an increasing part of [intermediary supervision] involves China, where she does have extensive experience, maybe this is what is being looked for."