Hong Kong Securities And Futures Commission Issues Quarterly Report

The Securities and Futures Commission (SFC) today published its latest Quarterly Report which summarises key developments from April to June 2022.

During the quarter, the SFC began a consultation on proposed enforcement-related amendments to the Securities and Futures Ordinance (SFO) to enable it to take more effective enforcement actions to protect the interests of investors and uphold market quality. The SFC also consulted the public on proposed changes to the position limit regime for listed futures and options contracts to address the needs of the market and better align the regime with the SFC’s regulatory policies and objectives.

In June, the SFC and the China Securities Regulatory Commission (CSRC) jointly announced the inclusion of eligible exchange-traded funds in Stock Connect and trading commenced on 4 July. The SFC also held its eleventh high-level meeting with the CSRC to discuss cross-boundary regulatory cooperation and market development initiatives.

The SFC has been playing an active part in initiatives to promote sustainability and tackle climate change. In June, the Green and Sustainable Finance Cross-Agency Steering Group, co-chaired by the SFC and the Hong Kong Monetary Authority, discussed the progress of the potential implementation of the International Sustainability Standards Board’s climate-related disclosure standards, carbon market opportunities and taxonomies, and also announced the launch of three public repositories (Note 1).

Also during the quarter, the SFC issued a statement to warn investors of the risks associated with investing in non-fungible tokens and remind the industry that these tokens may be subject to the SFC’s regulation where they cross the boundary between a collectible and a financial asset. The online submission of corporate licence applications, notifications and regulatory filings through the fully-digitalised licensing platform, WINGS, became mandatory on 1 April.

Key figures for the quarter include:

The number of licensees and registrants totalled 48,533, of which 3,261 were licensed corporations.
The SFC vetted 69 new listing applications, including six from pre-profit biotech companies.
The SFC authorised 35 unit trusts and mutual funds (including 17 Hong Kong-domiciled funds) and 47 unlisted structured investment products for public offering in Hong Kong. It registered 16 new open-ended fund companies.
60 in-depth inspections of licensed corporations were conducted to review their compliance with regulatory requirements.
The SFC made 1,392 requests for trading and account records triggered by untoward price and turnover movements.
It issued section 179 directions (Note 2) to gather additional information in 13 cases and wrote to detail its concerns in one case as part of its review of corporate disclosures.
Two licensed corporations and two individuals were disciplined, resulting in total fines of $7 million.

The report is available on the SFC website.

Notes:

The public repositories contain information about green and sustainable finance training, internship opportunities and data sources which helps support climate-change data analysis and capacity building.
Section 179 of the SFO gives the SFC the power to compel the production of records and documents from persons related to a listed company.