SFC Fines State Street Global Advisors Asia $4m for Regulatory Breaches
- State Street Global Advisors Asia's Tracker Fund of Hong Kong was found to have violated regulatory mandates.
Hong Kong’s Securities and Futures Commission (SFC), an independent statutory body set up to help police the country’s domestic securities and futures market, has formally reprimanded and fined State Street Global Advisors Asia Limited (SSGA) the sum of $4 million for acute failures to comply with regulations over specific funds, according to a SFC statement.
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In particular, the SFC fine stems from a lapse in the regulatory requirements related to the management of Tracker Fund of Hong Kong. The results follow after an SFC investigation that found evidence of wrongdoing between 2008 and 2013. As such, cash balances of SSGA’s Tracker Fund were found to have accrued no interest given that State Street Bank and Trust Company’s (SSBT) deposit rates on Hong Kong dollars were fixed at zero.
SSBT operated as Tracker Fund’s trustee and affiliate of SSGA – per the investigation, SSGA did not check the rate of interest offered by other banks. However, a disparity exists in the findings of the SFC investigation, whereby commercial interest rates on Hong Kong dollars (HKD) for a deposit of congruent size and term as Tracker Fund’s cash balances were higher than zero over the aforementioned period.
As such, the SFC has surmised that SSGA failed to properly ensure that the interest received on Tracker Fund’s HKD cash balances were at a rate not lower than the commercial rate for a deposit of that size, as necessitated by the legal Code on Unit Trusts and Mutual Funds.
Furthermore, the SFC investigation also unearthed that SSGA’s internal procedures on the management of Tracker Fund’s cash balances were lacking – by failing to adhere to requisite legal codes when depositing the fund’s cash balances with SSBT, SSGA did not properly manage or mitigate the conflict between the interests of the fund’s investors and the interests of SSGA/SSBT, according to the SFC manifest.
Given the regulatory lapses, the SFC levied a series of measures and fines against SSGA, which effectively resolved its concerns. This included a voluntary payment of $318,315 into Tracker Fund and the appointment of an independent reviewer to conduct an internal controls review, as well as the aforementioned fine.
Hong Kong’s Securities and Futures Commission (SFC), an independent statutory body set up to help police the country’s domestic securities and futures market, has formally reprimanded and fined State Street Global Advisors Asia Limited (SSGA) the sum of $4 million for acute failures to comply with regulations over specific funds, according to a SFC statement.
The new world of Online Trading Online Trading Online trading represents the trading of fiat currencies, digital currencies, commodities, stocks and indices, where traders and investors intend to make a profit, via the purchase or sale of the aforementioned products. This is done through an electronic network, made accessible by brokers in the form of an online trading platform or hub.Online trading continues to see a rapid growth year on year, due to a number of reasons. Firstly, the number of brokers offering their services, with more mone Online trading represents the trading of fiat currencies, digital currencies, commodities, stocks and indices, where traders and investors intend to make a profit, via the purchase or sale of the aforementioned products. This is done through an electronic network, made accessible by brokers in the form of an online trading platform or hub.Online trading continues to see a rapid growth year on year, due to a number of reasons. Firstly, the number of brokers offering their services, with more mone Read this Term, Fintech Fintech Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Read this Term and marketing – register now for the Finance Magnates Tel Aviv Conference, June 29th 2016.
In particular, the SFC fine stems from a lapse in the regulatory requirements related to the management of Tracker Fund of Hong Kong. The results follow after an SFC investigation that found evidence of wrongdoing between 2008 and 2013. As such, cash balances of SSGA’s Tracker Fund were found to have accrued no interest given that State Street Bank and Trust Company’s (SSBT) deposit rates on Hong Kong dollars were fixed at zero.
SSBT operated as Tracker Fund’s trustee and affiliate of SSGA – per the investigation, SSGA did not check the rate of interest offered by other banks. However, a disparity exists in the findings of the SFC investigation, whereby commercial interest rates on Hong Kong dollars (HKD) for a deposit of congruent size and term as Tracker Fund’s cash balances were higher than zero over the aforementioned period.
As such, the SFC has surmised that SSGA failed to properly ensure that the interest received on Tracker Fund’s HKD cash balances were at a rate not lower than the commercial rate for a deposit of that size, as necessitated by the legal Code on Unit Trusts and Mutual Funds.
Furthermore, the SFC investigation also unearthed that SSGA’s internal procedures on the management of Tracker Fund’s cash balances were lacking – by failing to adhere to requisite legal codes when depositing the fund’s cash balances with SSBT, SSGA did not properly manage or mitigate the conflict between the interests of the fund’s investors and the interests of SSGA/SSBT, according to the SFC manifest.
Given the regulatory lapses, the SFC levied a series of measures and fines against SSGA, which effectively resolved its concerns. This included a voluntary payment of $318,315 into Tracker Fund and the appointment of an independent reviewer to conduct an internal controls review, as well as the aforementioned fine.