Hong Kong’s SFC Sees Record Registrations in Q1 of 2018

The regulator also made 24% more requests for trading and account records from intermediaries from the previous quarter.

The Securities and Futures Commission (SFC) has published its quarterly report on Tuesday. Among other topics, the report highlighted a record number of licensees and registrations for financial firms and corporations.

In the period during April to June 2018, the Hong Kong regulator saw the number of licensees and registrants reach a record high of 45,099 – an increase of 4.4 percent from the same period last year. The number of licensed corporations also hit fresh highs, jumping by 8.9 percent to 2,775 year-on-year.

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During the quarter, the watchdog continued to monitor the markets and attempt to combat the rise of scams and unauthorized activity in the securities and futures market. In fact, it made 2,152 requests for trading and account records from intermediaries – an increase of around 24 percent from the previous quarter.

These requests were triggered by untoward price and turnover movement. Furthermore, the regulator reviewed 124 new listing applications. This is a jump of 69.9 percent from the previous quarter.

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In May, the Hong Kong regulator slapped a hefty fine of $57 million on Citigroup Global Markets Asia Limited. The firm was reprimanded for due diligence failures surrounding its sponsorship of a stock exchange listing application for Real Gold Mining Limited, a Chinese gold mining company.

Other key changes for the regulator include the amendment of rules standardizing the prescription of professional investors, which came into effect on July 13, 2018. The watchdog also concluded a consultation to increase the threshold for independent shareholder approval of a whitewash waiver to 75 percent% to enhance investor protection.

SFC follows in the footsteps of ESMA

According to the report, one of its key achievements was during the April to June 2018 period. This was the conclusion of a joint consultation with the Hong Kong Monetary Authority to mandate the use of Legal Entity Identifiers (LEIs) for over-the-counter (OTC) derivatives. The first phase of mandating the use of LEIs will begin on April 1, 2019.

This echoes European Union (EU) regulation under MiFID II implemented by the European Securities and Markets Authority (ESMA). Similar to the conclusion that the Hong Kong regulator reached, under MiFID II, LEIs are needed by firms in the EU to fulfill their reporting obligations.

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