The Securities and Futures Commission (SFC) today launched a two-month consultation on proposed enforcement-related amendments to the Securities and Futures Ordinance (SFO) (Note 1) to enable it to take more effective enforcement action.
The amendments would broaden the scope of some SFO provisions to expand the basis for the SFC to apply for remedial and other orders against a regulated person under section 213 (Note 2). They would also enable the SFC to address insider dealing perpetrated in Hong Kong involving overseas-listed securities and insider dealing involving Hong Kong-listed securities perpetrated elsewhere (Note 3).
Other amendments include clarifying an exemption in section 103(3)(k) of the SFO such that, unless authorised by the SFC, advertisements of investment products which are intended to be sold only to professional investors may only be issued to professional investors who have been identified in advance as such by an intermediary through its know-your-client and related procedures (Note 4).
"Effective enforcement is essential to safeguard the integrity of Hong Kong’s financial markets," said Mr Ashley Alder, the SFC’s Chief Executive Officer. "We review our enabling legislation from time to time to ensure that the SFC has the right regulatory tools to protect the interests of the investing public and uphold the quality of our markets."
The public is invited to submit their comments to the SFC no later than 12 August 2022 via the SFC’s website (www.sfc.hk), by email (enfconsultation@sfc.hk), by post or by fax to 2293 4002.
Notes:
- As a statutory body, the SFC’s work is defined and governed by the SFO, which sets out its powers, roles and responsibilities, including its investigative, remedial and disciplinary powers.
- Section 213 of the SFO enables the SFC to apply to the Court of First Instance for injunctions and other orders, including an order to restore the parties to any transaction to the position in which they were before the transaction was entered into.
- This would also apply to derivatives of these securities.
- Section 103 of the SFO prohibits the issue of advertisements and other documents containing prescribed content unless the issue has been authorised by the SFC. By virtue of the application of section 103(3)(k), this prohibition currently does not apply to advertisements and other documents made in respect of investment products which are or are intended to be sold only to professional investors, eg, individuals having a portfolio valued at not less than $8 million.
