The Securities and Futures Commission (SFC) today published consultation conclusions on its proposed guidelines for market soundings (Note 1).
The guidelines set out the principles and requirements applicable to licensed or registered persons when they conduct market soundings, which are most commonly seen in block trades. These requirements include implementing protocols to protect confidential information they are entrusted with during market soundings.
Respondents to the consultation generally supported the objectives of the proposals in upholding market integrity during market soundings, and many provided constructive feedback. To address their comments, the SFC has refined the scope of the guidelines, clarified some requirements, and incorporated respondents’ feedback in the guidelines as appropriate.
“The guidelines aim to address market integrity issues related to the abuse of confidential information entrusted by a client in the course of market sounding, resulting in an unfair playing field,” said Ms Julia Leung, the SFC’s Chief Executive Officer. “The new guidelines will enhance investor confidence in Hong Kong’s capital markets by providing clarity on regulatory expectations and deterring substandard conduct.”
The guidelines will be gazetted on 1 November 2024 and become effective on 2 May 2025. To facilitate intermediaries’ implementation of the guidelines, the SFC has also provided practice guidance and examples by way of frequently asked questions. Intermediaries have a transitional period of six months to comply with the guidelines.
Notes:
- The consultation began on 11 October 2023 and ended on 11 December 2023. The SFC received 27 written submissions from industry and professional associations, intermediaries, law firms, professional bodies, individuals and other stakeholders.
