he Securities and Futures Commission (SFC) today published its latest Quarterly Report which summarises key developments from July to September 2019.
Highlights include the launch of a public consultation on proposals to introduce a new type of regulated activity for trustees and custodians of collective investment schemes and the announcement of a new approach to regulate virtual asset trading platforms. The SFC also concluded a consultation on enhancements to the investor compensation regime to raise the compensation limit to $500,000 per investor per default (Note 1).
To address corporate misconduct, the SFC published a statement to remind directors and their advisers of their legal obligations when considering corporate acquisitions and disposals. Another statement explained the SFC’s general approach to tackle problems associated with backdoor listings and the trading of listed shells.
In addition, the SFC introduced new safeguards to protect client assets and published frequently asked questions to provide guidance to brokers on compliance with the newly-implemented securities margin financing guidelines.
The SFC and the Independent Commission Against Corruption entered into a memorandum of understanding in August to strengthen cooperation in combating financial crime.
Key figures for the quarter include:
- The number of licensees and registrants totalled 47,635, up 3.4% from last year, and the number of licensed corporations grew 7.2% to 3,048.
- The SFC conducted 106 on-site inspections of licensed corporations to review their compliance with regulatory requirements, up 28.8% year-on-year.
- The SFC authorised 22 unit trusts and mutual funds and 80 unlisted structured investment products for public offering. Two private open-ended fund companies were registered.
- 86 new listing applications were vetted.
- In reviewing corporate disclosure, the SFC issued section 179 directions to gather additional information in 15 cases and wrote to detail its concerns in four transactions (Note 2).
- It made 2,491 requests to intermediaries for trading and account records triggered by untoward price and turnover movements.
- Six licensed corporations and nine licensed representatives were disciplined, resulting in total fines of over $15 million.
The report is available on the SFC website.
- The changes will be implemented subject to the legislative process. The regime covers losses related to Hong Kong-listed securities or futures contracts which are attributable to the default of a broker. The current compensation limit is $150,000 per investor per default.
- Section 179 of the Securities and Futures Ordinance gives the SFC the power to compel the production of records and documents from persons related to a listed company.