SFC Issues Restriction Notices to Brokers for Client Misconduct

Clients from three brokers are suspected by the SFC of market misconduct.

The Securities and Futures Commission (SFC) of Hong Kong has issued its first announcement for the year this Friday, stating that it has issued restriction notices to three brokers as part of a wider investigation into market misconduct.

The notices prohibit the firms, which are Fulbright Securities Limited, Futu Securities International (Hong Kong) Limited and Gong Ping Securities Limited (brokers), from accepting or placing orders listed on derivative warrants in client accounts that are linked to suspected market misconduct.

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While the SFC does not identify who it suspects to have committed this market misconduct, in the statement released today it does highlight that it is not investigating the three brokers in question. In fact, the regulator states that the three companies have cooperated with its ongoing investigation.

Specifically, the restriction notice forbids the brokers from: “accepting instructions to place or placing, through the client accounts or on behalf of the client holding the accounts, any buy or sell order on any derivative warrants listed on the stock market operated by the Stock Exchange of Hong Kong Limited” without the SFC’s prior written consent.

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The SFC also assures clients of the broker’s that the restrictions will not affect their operations or their other clients who are not suspected of market misconduct. According to the statement, the watchdog believes the restriction notice is “desirable” when considering the interest of the public.

The notices were issued under section 204 of the Securities and Futures Ordinance (SFO). All three brokers are regulated and licensed under the SFO to conduct financial activities within Hong Kong.

SFC reportedly looking further into crypto

In addition to keeping an eye out for market misconduct, the SFC is also reportedly going to be cracking down on cryptocurrency products in the coming months. According to a report by Japanese outlet Nikkei, the regulator is planning to implement a new licensing regime.

Specifically, the regime will require firm’s whose holdings are made up of more than 10 percent worth of cryptocurrencies; then they will need to obtain a specific license from the SFC, as Finance Magnates reported.

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